Introduction To Ratemaking And Loss Reserving For Property And Casualty Insurance May 2026

Introduction to Ratemaking and Loss Reserving for Property and Casualty Insurance

7. Regulatory & Financial Context

• NAIC (US) requirements for statutory reserves.
• IFRS 17 (international) – changes how reserves are discounted and presented.
• Risk-Based Capital (RBC) – reserves affect capital requirements.
• Role of appointed actuaries in signing reserve opinions.

Conclusion: The 65% loss ratio from ratemaking was wrong (actual 80%). The reserve prevented the company from falsely reporting a $6M profit. Introduction to Ratemaking and Loss Reserving for Property

1. The Basic Insurance Equation

$$Premium = Losses + Expenses + Profit$$ NAIC (US) requirements for statutory reserves

2. The Basic Insurance Equation

Both ratemaking and reserving revolve around the fundamental insurance equation: Conclusion: The 65% loss ratio from ratemaking was