Actuarial Definitions (Property and Casualty)

Below is a list of commonly used terminology in actuarial science – property and casualty (P&C) insurance.



Accident Date – When the accident occurred. This is commonly used for actuarial reserving since it groups incidents together.

Report Date – When the accident was reported to the insurance company

Evaluation Year – Snapshot in time for a particular claim file. This is used during actuarial reserving to examine how the file changes over the life of the claim (eg: if in year 1 there was $2 incurred and in year 2 there was $3 incurred, then the claim is costing more than the claims adjuster thought and the actuarial estimate of IBNR should have taken this into account).

Actuarial Claim Definitions

Paid Claims – How much has been paid by the company on an insurance claim so far. No actuarial judgment here, it’s mostly for accountants to simply fill in.

Case Reserves – Also known as “Case Outstanding”, “Case OS”, or simply “OS”, this represents how much the claims adjuster believes still will be paid to settle this particular claim. Whether this amount is sufficient to cover the actual cost of the claim depends on the company’s policies. For actuaries, it’s best if this amount is always accurate, but usually just prefer that this policy is consistent so the actuary can adjust for it.

Case Incurred = Paid Claims + Case Reserves

IBNR = Incurred but not Reported
Represents amount of actuarial claims liability that hasn’t been incurred on the books yet.
This includes:
-claims that occurred but haven’t been reported to the company yet (Pure IBNR)
-claims that have been reported but have too much or too little case reserves (IBNER – Incurred but Not Enough Reported)
-claims closed but may be reopened
-Salvage and Subrogation not included in the case reserves

Actuarial Methods – P&C

See P&C actuarial loss reserving methods page for more detailed information on P&C loss reserving.

Chain Ladder Link Ratio – also known as “Link Ratio” or “Age to Age factor”
A ratio of claim development over a period of time.
=[claim amount @ time t]/[claim amount @ time t-1]

Chain Ladder Method
This is an actuarial method used to estimate final liability (or unpaid liability) of a set of insurance risks.
This method operates under the assumption how claims developed over time in the past will be a good estimate of how claims will develop for other years at the same age (time since claim accident/report).

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