A comparison of deterministic IBNR reserving to stochastic IBNR reserving in Kenya

Abstract

Different methods of reserving for claim liabilities of an insurer and in particular IBNR have been advanced throughout time. These methods strive to provide an estimate enough to cater for the future liabilities. Therefore it is important that the methods developed be as accurate as possible since an under reserving will mean more risk exposer to the insured’s while holding too much reserve is not maximizing the shareholders commitment of funds. A balance should be made to set aside a just enough amount of reserve, hence need for a good reserving technique.