Formula Used
Expected Claim Count = Exposure Units × Claim Frequency
Base Expected Claims = Expected Claim Count × Average Severity
Trended Claims = Base Expected Claims × (1 + Claim Trend)Years
Risk Load = Trended Claims × Confidence Factor × Severity Variation ÷ √Expected Claim Count
Gross Reserve = Trended Claims + Risk Load
Discounted Reserve = Gross Reserve ÷ (1 + Discount Rate)Years
Net Reserve Need = Discounted Reserve − Reinsurance Credit
Technical Premium = Net Reserve Need ÷ (1 − Expense Ratio − Profit Margin)
Solvency Ratio = (Existing Reserve + Capital Required) ÷ Net Reserve Need × 100
How to Use This Calculator
Enter the exposure count, claim frequency, and average claim severity. Add the expense ratio, target margin, expected claim trend, and discount rate. Use the confidence factor to set the risk level. Add current reserves, expected reinsurance recovery, and capital factor. Press calculate to view the result above the form. Use the CSV or PDF button to export the same scenario.
Example Data Table
| Scenario |
Exposure |
Frequency |
Severity |
Trend |
Confidence |
| Base Research Case |
10,000 |
4.50% |
$1,800 |
4.00% |
1.645 |
| Higher Risk Case |
10,000 |
5.80% |
$2,150 |
5.25% |
1.960 |
| Stable Case |
12,500 |
3.75% |
$1,500 |
2.50% |
1.282 |
Actuarial Research Planning Guide
Purpose
This calculator supports practical actuarial research work. It helps users test claim costs, reserves, premiums, and capital needs. It is useful for early pricing studies. It also supports reserve reviews and risk discussions. The page keeps every input visible. That makes the result easier to audit.
Expected Claims
The first step is expected claim count. It uses exposure and frequency. The next step is base expected claims. That value uses average severity. A claim trend then projects future cost. This matters when claims grow over time. Medical costs, repair costs, and legal costs can change quickly. Trend keeps the model realistic.
Risk Load
Research models should not stop at averages. Actual results can move above or below the mean. The severity variation input adds uncertainty. The confidence factor sets the strength of the safety margin. A larger factor creates a larger risk load. That load supports more cautious planning. It is helpful when data is limited.
Reserve View
The gross reserve includes trended claims and risk load. The discount rate then brings that amount to present value. Reinsurance recovery reduces the reserve need. Existing reserve is compared with the net need. A positive gap suggests more reserve may be required. A negative gap suggests the reserve may be sufficient.
Premium View
The technical premium adds expense and profit structure. This is a simple pricing view. It does not replace a full filing model. It helps teams compare assumptions quickly. The combined ratio shows claim and expense pressure. A high ratio warns that the premium may be weak.
Solvency View
Capital required is based on the selected capital factor. The solvency ratio compares available support with net reserve need. This signal can guide management review. It can also support board reporting. Users should test several scenarios. Sensitivity testing shows which assumption drives risk. That habit improves actuarial judgment and communication.
Best Use
Use this calculator as a research worksheet. Save each scenario. Compare base, adverse, and stable cases. Check the formulas before relying on results. Adjust inputs when new data arrives. Pair the output with professional review. Actuarial decisions need data, judgment, and governance.
FAQs
1. What does this calculator estimate?
It estimates expected claims, risk load, reserves, technical premium, capital need, solvency ratio, and combined ratio using common actuarial planning assumptions.
2. Is this calculator only for insurance companies?
No. It can help students, researchers, analysts, consultants, and finance teams review risk scenarios in a structured actuarial format.
3. What is claim frequency?
Claim frequency is the expected claim rate for the exposure group. For example, 4.5% means 4.5 expected claims per 100 exposure units.
4. What is average severity?
Average severity is the average cost of one claim. It should include the claim amount your research model wants to measure.
5. Why is a confidence factor included?
The confidence factor adds a safety margin. Higher values create a larger risk load and a more cautious reserve estimate.
6. What does reinsurance recovery mean?
Reinsurance recovery is the expected percentage of discounted reserve transferred away from the retained risk estimate.
7. Can I export the results?
Yes. Submit the form with the CSV or PDF button. The page will download the calculated scenario report.
8. Does this replace professional actuarial work?
No. It is a research and planning tool. Formal actuarial work needs detailed data, assumptions, validation, and qualified review.