Assessment of the property-casualty actuarial reserving process
At PwC, we have experience dealing with many types of companies, including large multinational insurance and reinsurance companies. Based on our experiences with these companies and the information we have gathered from companies regarding corporate governance of the loss reserving process, we have developed a framework of key principles that exemplify a Gold Standard reserving process. We consider the key elements of this framework to be consistent with a best-practices reserving model. For the most part, for each of the key elements described, the Gold Standard is consistent in principle with the actual practice we have observed at one or more companies that operate at or near an optimal level. However, for certain elements of the reserving process, we are unaware of companies operating at a gold-standard level. Consequently, we developed what we believe to be a Gold Standard from a financial reporting perspective, based on our collective judgment and the overarching goal of having a reserving process that operates optimally.
While the Gold Standard described in this document is based upon observed or desired practice for larger insurance and reinsurance companies, the principles involved also apply to smaller insurers and many self-insurers. By referring to the principles that underlie the Gold Standard Framework, smaller insurers and selfinsurers can identify opportunities to improve their current processes and practices.