Case 6: Late reported claims example

Tony88pass

Hi Graham,

Can you explain why the late reported claims is not the same as a data error or missing claims, looks like an error from the insurer side?

graham

The effect of "late-reported claims" on the original reserve analysis might be similar to effect of "missing claims" because in both cases there was a group of claims missing form the data the actuary used in the analysis. Also, the final action is the same in both cases: reflect. The difference is in how you get to this conclusion.

The decision tree specifically asks whether there was an error. This is the "E" in "EWDP", and having claims missing from the database is an error.

But late-reported claims is not an error. This is a normal reporting lag between an insurer and reinsurer. Here is a quote from the source text:

The source text then goes on to the next question in the decision tree and provides an explanation as follows:

Note that the date the insurer increased the reserves is important. In this example, the insurer increased reserves before Dec 31, but did not notify the reinsurer until after Dec 31.