Question: Actuarial Operations, Loss Reserves, and Underwriting
This discussion forum has three parts:
Part 1: In previous weeks, while studying the claim function, we examined the process of setting reserves for individual claims. That process is just one important part of a much larger picture that is of vital importance to the actuarial operations of an insurance company. This topic explores the actuarial function and its ratemaking process which happens to rely heavily on loss reserves and analysis. These loss reserves go beyond just the case-by-case reserves because they must also include (a) reserves for claims that have occurred but have not yet been reported (how could you possibly know that, you might be wondering), (b) inadequate reserves on existing claims, and (c) settled but reopened claims. For part one of the discussion forum, describe something that you learned and found particularly interesting from the actuarial operations chapter. Be sure to explain the significance of the concept you describe to the success of an insurance organization.
Part 2: Explain how the actuarial function factors into loss reserves for an insurance company and the implications of loss reserves that are inaccurate (both too high or too low). You are encouraged to introduce an outside source (in addition to the textbook) or two to expand your post on actuarial operations. For example, a recent trade press article on the perils of inadequate incurred but not reported (IBNR) loss reserves, or an article on an insurance company in turmoil (at least partially) due to actuarial shortcomings.
Part 3: Read the attached article "Actuaries vs. Underwriters: Can Analytics Bring Them Together?" and then offer your impressions of the article. Specifically, why might there be a tension between actuaries and underwriters in the first place?
Length: 300 words for Initial Post.
Attachment:- Assignment Files.rar