Student Needing Assistance for Project

[PCnewbie17]

Hi, I'm a student and am looking for insurance expertise in order to complete a business case.

I'm provided with the Direct Written Premium, Loss Ratio (indemnity only), Loss Adjustment Expense Ratio, and Combined Ratio for 2014-2017. However I only have the # of Claims, Average Indemnity Paid per Claim, Litigation Rate (% of claim), Fraud Investigation Rate (% of claim), and Subrogation referral rate (% of Claim) for only 2017. Goal is to forecast for the next 5 years to provide quantitative info/ROI to a hypothetical CFO on why they should adopt a new IT system.

Couple questions:
1. For calculating "total loss" is it calculated via A) # of claims X average indemnity paid per claims or B) Direct Written Premium X Loss Ratio (indemnity only)?
2. Do I need to subtract from the total claims the sum of Litigation Rate, Fraud Investigation Rate, and Subrogation referral rate claims? These numbers are provided for a reason and thats the only reason why I think they would be provided.

Thanks in advance for your help!

 

[insurance1822]

LOL wow! How I don't miss all this crap from college! You're better served getting an answer from an actuarial forum as most of us idiots just sell insurance. Shawnwalker (if he chimes in) may be able to answer or 1 other guy...but yeah...over most of our heads.

Are you going into actuarial work? It is a FANTASTIC field to get into.

 

[Matt37]

1) B
2) Your combined is the key % as that will encompass as expenses incurred (litigation, investigation, inspection, blah blah) ... so don't subtract .

Finally- tell your professor in the real world actuaries set these up one time in processing systems and then they do all the work automatically.. so it is a silly project... (just kidding, don't say that)

I had to do a start up business idea project in college, this was in 1975... my idea was a third party company that would deliver food from any restaurant. My professor gave me C- stating "costs would be to high for revenue generated"

Fast forward to 2017: UberEATS launched today in Pittsburgh (https://about.ubereats.com/en/restaurants/)