Reported losses with de-trended average open claim method
Reported losses with de-trended average open claim method. This method is also known as the Berquist-Sherman method. Average case basis reserves at prior levels of maturity are re-stated using an assumed trend rate. The case basis report losses are then adjusted to reflect a more stable average case reserve. Adjusted reported losses equal paid losses plus the number of open claims times the adjusted average open claim value. The trend rate was selected judgmentally based on a review of average paid claim severities and other indications. Methods similar to the reported loss development method, the Bornhuetter-Ferguson reported loss method, and the reported count and average value method are applied to adjusted reported losses. This method adjusts for case reserving methods that may have changed over time.
Reported loss development method
Reported loss development method. Case basis reported losses are projected to ultimate values based on historical development patterns. Historical loss development factors are reviewed and forecasted factors are selected. The selected factors are used to project ultimate paid losses. This method is most reliable when the insurers have stable case reserving practices. The case reserving practices of the participating companies combined are generally stable but at least one major insurer does not have stable case reserving practices.
HA ·