Understand and Manage COVID Impacts with Confidence

The COVID-19 pandemic created unprecedented challenges for businesses and insurers alike. Claim patterns shifted overnight, industries paused or adapted rapidly, and uncertainty became the norm. Subsequent climate diasters, wars, economic shifts, or other drivers of uncertainty, are having reverberating repercussions and directly impact business activity, with insurance and reinsurance being a significantly affected industry.

How can insurers make informed decisions in such conditions?

This is where ICRFS and the Probabilistic Trend Family (PTF) modeling framework gives an immediate strategic advantage.

What makes the Probabilistic Trend Family (PTF) modelling framework different?

An optimal (parsimonious) PTF model captures volatility in the data using interpretable parameters on a log scale (i.e., percentage scale). The model includes:

• Development year trends
• Accident year levels (differences between them are modeled as trends)
• Calendar year trends (e.g., social inflation)
• Normal distributions around trends, with variances that may change over time.

PTF is designed to explicitly measure and quantily social inflation trends - like those driven by COVID - but, more than that, it provides the analyst with the mechnanisms to incorporate future expectations by controlling future assumptions.

Forecasting scenarios in the PTF framework are:

• Auditable – each step and input can be traced
• Explicit – assumptions are clearly stated
• Controllable – all future inputs and parameters can be adjusted based on judgement

The model forecasts distributions for each future cell, enabling a detailed, transparent view of future variability.

This means you don’t just see the numbers — you understand what’s driving them - and can make more informed strategic decisions about the future.

COVID Was a Calendar Shock as well as an Accident shock

COVID didn’t just change claims temporarily — it reshaped the landscape.

• Business shutdowns
• Remote working - directly impacting auto and worker's compensation portfolios
• Court delays and healthcare system changes
• And later, a return to a “new normal”

All of these impact claims on a calendar year basis. PTF is built to measure trends that emerge in this way.

Traditional methods do not have trends in the calendar direction and it is very difficult to know how to adjust ratios to reflect reality.

In contrast, PTF helps you see them clearly — and plan accordingly.

Be in Control — Not at the Mercy of the Unknown

With ICRFS and PTF, you can:

• Directly measure the impact of COVID on your claims experience.
• Easily update future assumptions as the post-COVID world evolves.
• Reflect realistic business expectations — including the risk of increasing social inflation.

Even during the pandemic, actuaries using ICRFS were able to build reliable projections by incorporating expected recovery paths and changes in economic behavior.

Built-In Flexibility with Transparent Risk Management

The Variation in Mean Ultimate (VMU) lets you:

• Track how your reserve expectations are changing - are losses emerging acording to current future assumptions.
• If not, companies can adjust assumptions gradually — without big shocks to your business.

The end result is that board members can make data driven decisions with confidence. The Probabilistic Trend Family modeling frameworks of ICRFS provide a critical strategic advantage.

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