Best reserving solution: Milliman, Arius
The combined effects of a soft market, intense competition and rising claim costs bite property and casualty firms – underlining the importance of excellent forward-thinking reserving practices.
Under-reserving today will force underwriters into future premiums tomorrow and pressure their future business, whereas excessive reserving could prevent seizing profitable opportunities to grow.
Actuaries must provide perceptive metrics about the expected value of reserves, and routinely assess reserve risk and its impact on how their company performs.
Milliman's Arius package helps actuaries facing these challenges, giving them exhibits, management reports and methods for their tasks, and the freedom to conduct customised analyses for company-specific circumstances.
By providing various actuarial projection methods and diagnostics – from commonly-used ones to statistical models most actuaries may lack - Arius aims to give the profession tools beyond what it may have built itself.
Actuaries can extract central estimates of their unpaid claim liabilities, and notions of variability around those central estimates. Through diagrams, analysts can better understand the nature of this variability to stakeholders such as boards, rating agencies, and regulators.
Milliman boasts Arius having pre-programmed, pre-tested functions in data structures that the system maintains, eliminates the potential risks of spreadsheets developed by many in-house insurance reserving teams. The automated first-cut selections allow actuaries to "spend more of their valuable time analysing data and less time assembling and manipulating it".
Milliman notes its system produces no exposed formulas nor "volatile manual links" aiding its calculations' reliability. The results from any one calculation instantaneously updates each relevant part of the analysis being conducted.
Those wanting bespoke reports can build their own and then apply them to other segments consistently.
Milliman says its system transforms decisions in the reserving process that demand actuarial judgement into information valuable to management, and makes the effects of the selections on a business "immediately apparent, allowing you to guide management's decision making based on a clearer understanding of the numbers".