Introduction To Ratemaking And Loss Reserving For Property And Casualty Insurance

| Aspect | Ratemaking | Loss Reserving | |--------|------------|----------------| | | Before policy effective date | After policy effective date | | Uncertainty | Future events (unknown losses) | Past events (partially known) | | Data | Historical + prospective | Historical development | | Regulatory focus | Rate adequacy, discrimination | Solvency, timely payment | | Actuarial standard | ASOP No. 12 (P&C Pricing) | ASOP No. 36 (Reserves) |

Loss reserving is the process of estimating the total cost of claims that have occurred as of a specific date. Because many claims take years to settle, insurers must set aside a liability on their balance sheet to ensure they can pay these future obligations. | Aspect | Ratemaking | Loss Reserving |

Compares the projected loss ratio to the permissible loss ratio. Because many claims take years to settle, insurers