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Loss Reserve Stability

Loss Reserve Stability


Loss Reserve Stability — this expression refers to an actuary's ability to predict future loss reserves based upon a specific set of circumstances. For example, once a viable risk retention group (RRG) has been operating for at least 5 years, the collective loss experience for future periods can be predicted with greater certainty than was possible for the earlier periods. This is because the majority of the data used to predict future losses were experienced RRG format, as opposed to those periods prior to the formation of the group.

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