Ensuring a correct and accurate system for the reserving of motor insurance claims

Abstract

During the last thirty years or so the number of motor vehicles on the road in Malta has increased beyond everyone's expectations so much so that Malta's roads can be said to be among the most overcrowded in the European Union. Faced with this situation insurance companies in Malta have grown and adapted to the needs of the consumer with regard to motor vehicle insurance. In fact it can be said that nowadays the motor vehicle insurance department within the local insurance companies has grown hugely in importance and this class of insurance has now become an important pillar within the industry. This dissertation has studied the reserving methods used for motor insurance claims and the results show that the case-by-case method is by far the most widely used reserving method by insurance companies in Malta. The actuarial method is not yet used as much as it should be but with the advent of Solvency II the actuarial method will soon be in much greater use in conjunction with the case-by-case method.