To begin, a client’s own historical losses are analyzed and used to project the future experience in terms of dollars of loss, the number of claims and average claim size. Because a forecast is an estimate of future events which may turn out better or worse than expected, our studies always provide a range of potential outcomes with associated probabilities. Providing our clients a loss forecast in the context of risk gives them more information for making risk management decisions.
For many of our clients, large claims have the greatest impact on overall costs and are the greatest source of volatility from year to year. We have the capability to model the potential for large claim activity separately from the more predictable smaller losses. This feature of our analysis provides a great deal of flexibility in our reports, allowing us to model the costs at various per occurrence or aggregate retentions, corridors, and excess layers of coverage – information that can be valuable at renewal time.