Tag Archives: reserve analytics

Milliman’s latest Arius release provides enhanced cash flow analysis to help actuaries with business planning and international reporting

Milliman announced today that it has released the latest version 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, reporting, and data management tools.

This release provides expanded cash flow analysis and reporting to help actuaries and insurance analysts more easily address IFRS 17, Solvency II, and other management requirements. It also provides enhanced interpolation and extrapolation capabilities so that actuaries can take full advantage of valuable historical and industry data.

In addition, the new release of Arius Enterprise® – Milliman’s reserving solution designed specifically for larger insurers and self-insureds – now takes advantage of Microsoft’s Azure Data Explorer (ADX) for high-performance processing of very large datasets.  ADX is a new Azure-based database technology that provides significant performance improvements over traditional technologies for the vast amounts of data available to insurers. With ADX, Arius can execute complex data queries up to 30 times faster than traditional database solutions, aggregating large volumes of claims data – even billions of records – without incurring performance costs.

Our clients are continually finding additional ways that Arius can improve the efficiency and reliability of their overall reserving process. These latest enhancements in analysis, reporting, and data handling will allow actuaries to analyze their results in more detail and provide richer reporting and more informed management decision-making.

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.

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.

Milliman wins three InsuranceERM Americas Awards for its insurtech products and risk consulting services

Milliman is pleased to announce that the firm has won three 2020 InsuranceERM Americas Awards for its insurtech products and risk consulting services. The goal of the IERM Americas Awards is to highlight enterprise risk management leaders in the Americas.

In the technology category, Milliman’s Nodal™ was named “Analytics Solution of the Year” while Milliman’s Arius Enterprise® won “Cloud Technology of the Year.” Awards in these categories recognize insurtech solutions that enable strategic decision-making and provide risk insights that can improve efficiency and operations for (re)insurers. For instance Nodal, Milliman’s predictive modelling platform for early claim intervention, uses machine learning to comb through unstructured data and identify high-risk claims, and has helped clients reduce claims severity by 15% and overall losses by 41%. Meanwhile, Milliman’s Arius, one of the industry’s most comprehensive reserve analysis solutions, has saved clients hundreds of hours per year while simultaneously improving analyses and governance over data and processes.

Milliman was also recognized with a 2020 InsuranceERM Americas Award for its risk consulting services, with three members of the firm’s Chicago Life ERM practice taking home “Risk Team of the Year.” Anthony Dardis, Ariel Weis, and Chloe Lau have, combined, over 60 years’ experience on both the assets and liabilities sides of life insurance, and are well-known for their benchmarking capabilities and “practical-first” approach to risk management.

“Transformation in the insurance industry begins by leveraging new technologies in conjunction with the latest data and expert analysis, three areas in which Milliman excels,” says Milliman President and CEO Steve White. “Managing complex risks requires both the best expertise and the most innovative tools, so we feel gratified to have won IERM Americas Awards for both our risk consulting and technology solutions.”

For more information on Milliman’s insurtech products, including Nodal and Arius, click here. For more information on Milliman’s enterprise risk management solutions, click here.

Beyond the familiar reserve analytic methods

The paid chain ladder and the incurred chain ladder are two of the most frequently used methods that actuaries employ to develop indicated loss reserves for property and casualty companies. Their popularity stems from both their ease of use and simple familiarity. However, there are other reserve analysis methods, such as Bornhuetter-Ferguson, that can prove extremely valuable.

In an article entitled “A fresh look at actuarial reserving methods,” Milliman’s Susan Forray discusses the results from a test of 30 less-common analytic methods. Here is an excerpt:

The results of the analysis were surprising. In brief, we found that the methods exhibiting the greatest skill over time were not the most popular but rather those that best satisfied the following two criteria:

1. They relied, at least in part, on case reserves in their evaluations.
2. The paid-to-date data they used did not directly influence the indicated unpaid loss.

We identified different methods satisfying both criteria, each of which exhibited greater skill than the incurred chain ladder – and significantly greater skill than the paid chain ladder.

…The results of our study suggest that there are many more valuable methods for reserve analysis beyond the incurred- and paid-chain-ladder methods, and that the paid chain ladder, in particular, should not receive the weight if often does. Of course, this is a general observation, and a particular company’s circumstances always should be considered in selecting methods for any reserve analysis.

…The ongoing challenge is identifying which new methods to select among the handful indicated and how to weight them against the more common methods already in our actuarial toolbox. This is an area for possible future work.

Whichever methods actuaries ultimately decide to use when performing reserve analyses, this study strongly suggests we should all consider methods beyond the familiar chain-ladder approach.

This article was first published in the May/June issue of Contingencies.