Estimating Claims Reserves in Insurance Industries Evidence from the Egyptian Market

Purpose - Claims reserve plays a crucial role for the insurance industry. Reserves enable the insurance company to meet its obligations towards the insurers whenever accidents happen. Reserves appear as an item on the company’s balance sheet and is also necessary as a practical indicator for the insurance company’s performance and premium calculation. In specific, estimating Incurred but Not Reported (IBNR) claim reserve is a key task for the actuary to put aside the necessary money to meet the company’s obligations whenever needed. The purpose of this paper is to investigate the results of estimating reserves using the chain ladder method by employing different ways to calculate the development factor from year-to-year over the years following the occurrence of the accident.  
Design/methodology/approach – In this paper, the author uses real data from one of the well-known insurance companies in Egypt to study the accuracy of the estimation of the claim's reserves over the period 2012-2020. The author applies the chain ladder method of for reserves estimation where the method is investigated in detail by applying a number of suggested approaches to calculate the development factor from year-to-year over the years following the occurrence of the accident.  
Findings – The results show that there is no significant difference between the reserve estimation using different method of calculating the development factors.