Tag Archives: claims reserving

Milliman updates Claim Variability Benchmarks with valuable industry data for P&C insurers

Milliman announced today that it has released version 2.0 of its Claim Variability BenchmarksTM (CVB), an insurtech solution that helps property and casualty (P&C) insurers increase efficiencies and provides richer analysis in the face of regulatory and economic change such as reserve range and cash flow requirements, Solvency II, and International Financial Reporting Standard (IFRS) 17.

As part of the firm’s family of state-of-the-art actuarial reserve analysis systems, this release of CVB adds new industry benchmarks for claim frequency, severity, and loss development patterns for all major P&C insurance coverages, helping actuaries better model and understand their claim costs. Additional benchmarks are provided to help measure the correlations of experience among various lines of business. The new system also adds both Mack and Merz- Wüthrich distributions to aid insurers working with Solvency II and IFRS 17 reporting.

In addition, the new release provides a free version so that all actuaries can easily evaluate these important benchmarking tools.

Our CVB solution is specifically designed to help our clients, and insurers of all sizes, better understand their data and compare their trends and results to industry benchmarks. This release provides a number of new and  sophisticated calculations, so actuaries can gain more confidence in their estimates and focus on the areas where their substantial expertise can provide the most value to their organizations, especially important in this time of pandemic-based industry disruption.

To learn more about Milliman’s Claim Variability Benchmarks, click here.

Navigating regulatory complications to determine black lung claims

Estimating future liabilities for even the most basic line of business involves in-depth analysis of data, expert knowledge of modeling, and professional application of assumptions. Black lung liabilities take reserving to an entirely different level.

Black lung compensation is rooted in a complex regulatory and legislative history.

The disease itself—pneumoconiosis—involves sophisticated and often conflicting medical and scientific evidence and opinions. Against a backdrop of social and political turbulence is a labyrinth of complex if not incomprehensible data. These unusual liabilities require actuarial and case reserving models that are truly unique, applying methodologies not used in any other line of business.

In this article, Milliman’s Christine Fleming and Travis Grulkowski discuss legislative and regulatory complications regarding black lung disease, including the highly complex, non-standard actuarial approaches for evaluating and estimating black lung liabilities.

New modeling and allocation capabilities in Milliman’s Arius solutions provide richer analysis and reporting

Milliman announced today that it has released version 2020b of its Arius® solutions, a family of state-of-the-art reserve analysis systems for property and casualty insurers. This update provides significant enhancements to the systems’ analytical capabilities, together with key additions to the reporting and data management tools.

This release adds new generalized linear modeling (GLM) capabilities to help actuaries better model and understand their claim costs. GLM tools can be especially valuable when analyzing periods of inflationary pressure on the claim process or significant changes in claim handling within a company or throughout the industry.

In addition, the new release of Arius Enterprise®—Milliman’s reserving solution designed specifically for larger insurers and self-insureds—helps actuaries analyze results at one level of detail and then report on them at different levels. The system’s new allocation tools more reliably and efficiently perform the summary and reporting work that is typically accomplished using riskier spreadsheets.

Our Arius solutions are specifically designed to help our clients better understand and account for the complexities in their business. This release provides a number of new tools to help actuaries with sophisticated calculations, as well as data and report management, so they can focus on the areas where their substantial expertise can provide the most value to their organizations.

Individual claim reserving models: Adding value

Individual claim models (ICMs) is an emerging area of research and practice which uses individual claim level data to estimate loss reserves. Evolution in technology with respect to efficient data collection, storage and analysis has made ICMs more accessible. ICMs are most effective as a complement to existing models in a loss reserve analysis. Milliman consultants Alexandre Boumezoued and Jeff Courchene offer some perspective in this article.

A quantum leap in benchmarking P&C reserve ranges

Traditional development pattern benchmarks have provided some support in estimating fundamental liabilities, but even here, the process has long been a one-dimensional exercise, at least until now. A recently developed benchmarking tool, which includes percentiles at all stages of development, allows for the calibration of a benchmark that better resembles your portfolio. As such, this rigorously back-tested tool can provide actuaries an added level of confidence in the reasonableness of an entity’s reserve ranges. The next generation benchmarking tool, known as claim variability guidelines, is derived from extensive testing that involved all long-tail Schedule P lines of business and more than 30,000 data triangle sets. Milliman’s Mark Shapland provides perspective in this article.

The future of (individual) reserving

In most cases, the current reserving practice consists of using methods based on claim development triangles for point estimate projections and capital requirement calculations. Taking advantage of the information embedded in individual claims data is a promising alternative to address the need for more accurate models within the reserving practice. This white paper by Milliman’s Laurent Devineau, Fabrice Taillieu, and Alexandre Boumezoued examines the innovative opportunities offered by alternative individual reserving models and the main challenges with their implementation.