Measurement of the self-insurance loss reserving process for corporate entities with property and casualty retained risks: April 2008
Property and casualty self-insured loss reserves can be a significant and volatile estimate with a substantial impact on a company’s reported income. Relatively small changes in reserve estimates often have a leveraged impact on reported income, and self-insured costs can be a significant operating cost for a company. Because of this, there are advantages for corporate entities to have a strong control environment and a “best practices” self-insurance loss reserving process (the estimating and recording of unpaid losses and loss expenses). The benefits of a strong loss reserving process, which
The gold standard and maturity framework describes in detail, go beyond financial reporting, as a strong control environment allows senior management and the audit committee to make better informed company decisions on product pricing, retained risk along with its impact on capital allocation, and other business decisions.
