The Black Art of Reserving

Litigation Partner Randal Craft will speak at the Claims & Litigation Management Alliance Annual Conference on a panel titled "The Black Art of Reserving."

Mr. Craft will discuss how to establish a proper reserve. He will explore the following topics:

• the need for reserves by insurers, self insured entities or entities with high SIR and deductibles; the difference between a SIR and deductible and the role SIR and deductibles play in reserve decisions
• why self insureds and insurers must ensure that their reserving practices are sound
• the fatal mistake of under reserving and not having the funds needed to pay claims down the road
• the serious problems created by establishing excessively high reserves, thus pricing your products too high, adversely affecting your competitiveness in the marketplace and limiting your investment opportunity and potential investment returns
• the differences between “short tail” and “long tail” exposures and how outside factors, such as inflation and interest rates, impact reserves the role of actuaries and how “good” and “bad” reserve decisions effect what they do
• learn what “IBNR”, incurred but not reported, is all about and the significance of IBNR
• why underwriters need accurate reserves to do their jobs and properly price their products
• the role of the defense lawyer and how their input is handled from a domestic viewpoint versus a foreign insurer’s point of view and a self
• insured’s point of view and the differing reserving philosophies and methodologies between them
• the role of the broker as the policyholder’s advocate in terms of their claims experience and future premiums; understand the broker’s role, e.g. to ensure reserves are apportioned amongst different entities that may have involvement in the claim
• the difference between “step reserving” versus a “reserve movement”
• why there are differing philosophies on when and how reserves should be established
• differing methodologies such as loss occurrence versus inception of litigation and how these differences can affect self insureds, insureds with large SIRs and insurers
• SIR vs. Deductable – how are they treated differently in bankruptcy proceeding
• how to manage volume loss insureds and To whom is reserving information available - why or why not.