Under one method of estimating a loss reserve, the reserve is based on life expectancy, duration of disability, and similar factors. This method of estimating loss reserves is called the
A) judgment method.
B) tabular value method.
C) loss ratio method.
D) average value method.

Question

Quizplus · Accepted Answer

The method of estimating loss reserves based on life expectancy, duration of disability, and similar factors is known as the tabular value method. The judgment method involves the insurer's expert opinion in predicting future losses, while the loss ratio method is based on historical loss experience. The average value method is used when the loss amounts are fairly consistent and can be averaged out over a period.

Under One Method of Estimating a Loss Reserve, the Reserve