Loss Forecasting & Actuarial

We’ve developed multiple loss forecasting models to review and analyze loss projections, reserve deficiencies, and letters of credit (LOC) adequacy. Together we’ll be able to estimate future claims for new policy years, determine future increases likely on existing claims, and determine appropriate LOC amounts to be held by the insurance company.

We employ three proven models to achieve your goals:

Loss Rate Method: Uses industry loss development and inflation factors to generate a loss rate as a function of exposure base. From this we are able to generate an average loss rate and apply it to the future exposure to generate the loss pick. Each individual year is developed allowing us to generate ultimate cost for that year. The model is able to be run with minimal information. It’s most applicable to clients with annual losses of less than $1,000,000.

Monte Carlo Simulation: It’s heavily mathematical and widely accepted by underwriters, actuaries, and accountants. It provides loss projections at different retentions and probability of losses within ranges. This model is most applicable for clients with annual losses of $1,000,000 to $5,000,000.

Actuarial: Involves an actuarial determination of clients’ loss development factors and the projection of a loss pick using at least three different methods. This is used for clients requiring a certified actuary report. Hays Companies manages the entire process for our clients.