Separation of Inflation and other Effects from the Distribution of Non-Life Insurance Claim Delays

Abstract

In recent years, as a result of more concentrated research together with the ravages wrought upon some insurers by inflation, the fundamental significance of the so-called run-off triangle in the calculation of provisions for outstanding claims has been increasingly recognised. The run-off triangle, which is a two-way tabulation—according to year of origin and year of payment—of claims paid to date, has the following form, where Cij is the amount paid by the end of development year j in respect of claims whose year of origin is i, i.e. Cij is the total amount paid in year of origin i and the following j years.The information relating to the area below this triangle is unknown since it represents the future development of the various cohorts of claims.