loss forecasting
Predicting future losses through an analysis of past losses. Past loss data
must usually span a sufficient number of years (5 or more) to achieve some degree
of credibility. The time span is important because the most recent years' experience
most closely approximates current exposure, yet the earlier years' losses have
had more time to develop. The law of large numbers, exposure data, any anticipated
changes in company operations or structure, inflation, workers compensation
benefit changes, and any other relevant factors must be considered when forecasting
losses.
Links for IRMI Online Subscribers Only:
RF II.A-H