Appointed actuaries are required to opine on the adequacy of reserves held in the year-end financial statement including a provision of adverse deviation or margin. While it is not possible to distinguish the explicit PAD from the implied conservatism in Incurred But Not Paid (IBNP) estimates from historical, available data, we can calculate the total ultimate margin in the claims reserve estimates that occurred by comparing original booked estimates to actual claim runout. This whitepaper explores the total level of margin (both implicit and explicit margin combined) included in the reported claims reserves by examining NAIC filing data from 2016 through 2022.

Claims Reserve Margin in the Health Annual Statement: A Review of 2016-2021