Centre for reserving excellence

Reserving for most general insurance lines of business has now matured to the point whereby it has became a commodity product, typically produced using an insurer's own internal resources. While this dramatically reduces the visible expense of undertaking a reserving review, value is often left on the table if the reserving process is not optimally established.

A well run reserving process will:

• Efficiently utilise resources;
• Minimise cost;
• Improve pricing;
• Include a robust data integrity and assurance regime;
• Link seamlessly with company systems, revenue accounts, reporting frameworks and the planning and budgeting process;
• Provide clear, readily understood outputs that are fit-for-purpose and which provide useful operational information to management;
• Manage expectations with appropriate and timely communication;
• Incorporate sound, stable technical models which fit the claims experience, and use forward assumptions appropriate with this experience;
• Make appropriate allowance for large claims;
• Generally improve the understanding of the business.

Such a process has business-wide benefits and will improve efficiency and generate optimal business value from the reserving exercise.