To determine the company’s liabilities in accordance with the Insurance Commission’s Circular (CL No. 2016 – 67)
The results include unearned premium reserves, unexpired risk reserves, outstanding claims, incurred but not reported, incurred but not enough reported, loss adjustments, expenses payable and catastrophic reserves.
To understand the behavior of factors leading to the realization of a claim (e.g., accidents for car insurance: by type of accident, age group of driver, geographical region, etc.)
The results of an Experience Study provide the basis for determining whether insurance rates are reflective of the experience.
Loss Distribution Studies
Provides a picture of how losses (for a given insurance area) are spread out, within the perspective of amount of loss against risk level
The results from this study allow the insurer to understand the range of « expected » losses, vs that of catastrophic losses.
Premium Rate Determination
The services described above are necessary in ascertaining whether the premium rates are sufficient to cover a certain portion, if not all, of the expected losses.
The subsequent step is deciding which portion of the losses should be assigned to a reinsurer.