Rating based method disputes?
Hi, I am a bit confused what is meant by the rating based method "estimates credit-related URR only" since it also says later that there is a URR provision for disputes
"calculate dispute provision by considering any or all of:
→ insurer’s prior dispute-based reinsurance write-offs
→ industry data to the extent available and relevant
→ management’s judgment"
Is that basically saying that the rating based method has to account for disputes explicitly while it is implicitly included in the experience based method?
Comments
Yes.
In other words, if the reporting company uses RBM for URR, they will have to separately make a provision for disputes. But if they use EBM, provision for disputes is built into that.