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The role of the unexpired risk reserves and outstanding loss reserves in general insurance business

Author

Listed:
  • PARTACHI Ion

    () (Academy of Economic Studies of Moldova, Republic of Moldova)

  • VEREJAN Oleg

    () (Academy of Economic Studies of Moldova, Republic of Moldova)

  • BRADU Marcel

    () (Academy of Economic Studies of Moldova, Republic of Moldova)

  • VEREJAN Victoria

    () (Academy of Economic Studies of Moldova, Republic of Moldova)

Abstract

The intent of this article is to introduce the topic of both Unexpired Risk Reserve and loss Reserving, especially of the Incurred but not reported reserves (IBNR). We will focus on the purpose, common definitions and basic principles. We will explore the common techniques used by practicing actuaries in estimating of Unexpired Risk Reserve and loss reserves. Unexpired Risk Reserve is the present value of loss and expense payments to be provided for by premiums covering the period from the valuation date to expiry on all contracts in force on the valuation date. A loss reserve is a provision for an insurer’s liability for claims. Loss reserving is a major challenge to the casualty actuary because the estimation process involves not only complex technical tasks but considerable judgment as well. This are a critical point, as the actual financial reserves in the accounts has a direct impact on shareholder’s equity, solvency, and also on underwriting profit.

Suggested Citation

  • PARTACHI Ion & VEREJAN Oleg & BRADU Marcel & VEREJAN Victoria, 2009. "The role of the unexpired risk reserves and outstanding loss reserves in general insurance business," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(2 Special), pages 58-66, July.
  • Handle: RePEc:rom:econmn:v:12:y:2009:i:2special:p:58-66
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    File URL: http://www.management.ase.ro/reveconomia/2009-2s/11.pdf
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    References listed on IDEAS

    as
    1. Florica BADEA & Eugen BURDUS, 2009. "Contributions on the Lean Management in the current evolution of a company," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(1), pages 168-179, June.
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    More about this item

    Keywords

    reserves for unexpired risks; equalization loss reserves; outstanding loss reserves; IBNR; claim rate; average cost per claim method; run-off triangle;

    JEL classification:

    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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