I see 'projection of reserves' a lot, but I don't really know what it means.
Say we have a portfolio of 1000 policies issued in Jan 2015 and a projection of future claims, expenses, and reserves is made in Jan 2015.
e.g. In the projection, I see values of 10000 (Jan 2016) , 12000 (Jan 2017), 15000 (Jan 2018), etc. for the reserves.
What exactly does a reserve projection of 15000 in Jan 2018 mean mathematically? Is this just equal to 1000 * 3_V ?
What confuses me is that 3_V is conditional on a policy still being in force at time 3. (If a policy is no longer in force at time 3, then the reserve should be 0.) To me, it would be more likely that some people died and the number of in force policies at time 3 to be <1000.
I am concerned about the part in red above. In the 'projection', is 1000 or <1000 being used there? If it's 1000, wouldn't it overstate the actual reserve liability at time 3?
Hopefully someone can clarify this! Any help would be appreciated!
Say we have a portfolio of 1000 policies issued in Jan 2015 and a projection of future claims, expenses, and reserves is made in Jan 2015.
e.g. In the projection, I see values of 10000 (Jan 2016) , 12000 (Jan 2017), 15000 (Jan 2018), etc. for the reserves.
What exactly does a reserve projection of 15000 in Jan 2018 mean mathematically? Is this just equal to 1000 * 3_V ?
What confuses me is that 3_V is conditional on a policy still being in force at time 3. (If a policy is no longer in force at time 3, then the reserve should be 0.) To me, it would be more likely that some people died and the number of in force policies at time 3 to be <1000.
I am concerned about the part in red above. In the 'projection', is 1000 or <1000 being used there? If it's 1000, wouldn't it overstate the actual reserve liability at time 3?
Hopefully someone can clarify this! Any help would be appreciated!
Projection of reserves...what does it mean?
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