ASOP 43
(PROPERTY/CASUALTY UNPAID CLAIM ESTIMATES)
SECTION 2
(DEFINITIONS)

Section 2
Definitions

ASOP 43 | §2.0 | INTRO TO SECTION 2

The terms below are defined for use in this actuarial standard of practice.

ASOP 43 | §2.1 | ACTUARIAL CENTRAL ESTIMATE

An estimate that represents an expected value over the range of reasonably possible outcomes.

ASOP 43 | §2.2 | CLAIM ADJUSTMENT EXPENSE

The costs of administering, determining coverage for, settling, or defending claims even if it is ultimately determined that the claim is invalid.

ASOP 43 | §2.3 | COVERAGE

The terms and conditions of a plan or contract, or the requirements of applicable law, that create an obligation for claim payment associated with contingent events.

ASOP 43 | §2.4 | EVENT

The incident or activity that triggers potential for claim or claim adjustment expense payment.

ASOP 43 | §2.5 | METHOD

A systematic procedure for estimating the unpaid claims.

ASOP 43 | §2.6 | MODEL

A mathematical or empirical representation of a specified phenomenon.

ASOP 43 | §2.7 | MODEL RISK

The risk that the methods are not appropriate to the circumstances or the models are not representative of the specified phenomenon.

ASOP 43 | §2.8 | PARAMETER RISK

The risk that the parameters used in the methods or models are not representative of future outcomes.

ASOP 43 | §2.9 | PRINCIPAL

The actuary’s client or employer. In situations where the actuary has both a client and an employer, as is common for consulting actuaries, the facts and circumstances will determine whether the client or the employer (or both) is the principal with respect to any portion of this standard.

ASOP 43 | §2.10 | PROCESS RISK

The risk associated with the projection of future contingencies that are inherently variable, even when the parameters are known with certainty.

ASOP 43 | §2.11 | UNPAID CLAIM ESTIMATE

The actuary’s estimate of the obligation for future payment resulting from claims due to past events.

ASOP 43 | §2.12 | UNPAID CLAIM ESTIMATE ANALYSIS

The process of developing an unpaid claim estimate.