Introduction To Ratemaking And Loss Reserving For Property And Casualty Insurance !!link!! -

This is the most fundamental reserving method. It assumes that the past pattern of claim development will continue into the future.

Consider this chain:

[ \textGross Premium = \frac\textExpected Losses + \textExpected LAE + \textUnderwriting Expenses + \textRisk & Profit Margin1 - \textPremium Taxes - \textContingency Allowance ] This is the most fundamental reserving method