Pricing the Hybrid

Pulis, Ralph Stephen

Non-Refereed Paper/Article
Casualty Actuarial Society Forum Casualty Actuarial Society - Arlington, Virginia
2007: Winter
175-187
http://www.casact.org/pubs/forum/07wforum/07w181.pdf

Abstract

The current literature describes pricing and reserving of medical malpractice insurance as written on either an occurrence or a claims-made basis. In current practice, many policies allow the reporting of incidents before a claim is submitted, to attach the claim to the current claims-made policy. This creates experience with characteristics of both types of experience. This paper addresses the blend of the two types of experience based on the acceleration of the attachment of claims from their true assertion date back into the claims-made period. The goal is to assign exposure in proportion to expected claims, and to determine the number of claims and the related reserves to expect to be assigned to the current claims-made policy and to the residual tail exposure, and to reflect the change in the final pricing of the policy.

Taxonomy Classifications

• Actuarial Applications and Methodologies > Ratemaking > Exposure Bases
• Business Areas > Professional Liability > Medical Malpractice - Claims-Made
• Business Areas > Professional Liability > Medical Malpractice -Occurence
• Actuarial Applications and Methodologies > Reserving > Reporting Lags
• Actuarial Applications and Methodologies > Reserving > Reserving Methods
• Actuarial Applications and Methodologies > Ratemaking > Trend and Loss Development

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