Claims & Loss Analysis Flashcards
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Read the first 7 Claims & Loss Analysis flashcards as text
An insurer uses a 'case reserve' for a reported claim. This reserve is set based on:
Answer: Individual adjuster evaluation of the specific claim's probable cost
Case reserves are individually established by adjusters for each specific reported claim based on known facts and anticipated costs.
Under the 'made whole' doctrine in subrogation, the insurer:
Answer: Cannot pursue subrogation until the insured is fully compensated for all losses
The made whole doctrine requires the insured to be fully compensated for all losses, including uninsured portions, before the insurer can recover subrogation proceeds.
A catastrophe model output shows a 1-in-100 year PML (Probable Maximum Loss) for a coastal property portfolio. An underwriter uses this to:
Answer: Evaluate aggregate exposure concentration and reinsurance needs
PML from catastrophe models helps underwriters assess portfolio-level exposure concentration and determine appropriate reinsurance protection.
The concept of 'pure premium' in loss analysis refers to:
Answer: The portion of premium needed to pay expected losses only
Pure premium equals expected losses per unit of exposure, excluding expense loadings and profit margin.
When evaluating a product liability claim, which factor most influences the underwriter's assessment of future claim potential?
Answer: Product distribution volume and geographic reach
Distribution volume and geographic reach determine the number of units in use (exposure base) and jurisdictional legal environments affecting claim potential.
A 'claims-made with extended reporting period' (tail coverage) provision protects against:
Answer: Claims reported after policy expiration for incidents that occurred during the policy period
Tail coverage extends the reporting window beyond policy expiration, allowing claims for incidents that occurred during the active policy period to still be submitted.
Loss triangles in actuarial analysis are primarily used to:
Answer: Track how claim costs develop and mature over time across accident years
Loss development triangles display cumulative paid or incurred losses by accident year across successive evaluation dates to reveal development patterns.