Loss Forecaster is capable of completing two different types of analyses - a Reserve Analysis and a Loss Projection.
A Reserve Analysis provides the Estimated Required Reserves for a loss-sensitive program as of a specific evaluation date. This type of analysis estimates remaining payments for prior years at a specific point in time based upon the limits in place for each of those years. Unlike the Loss Projection, a Reserve Analysis allows users to input a different deductible (or loss limit) for each period. You'll notice that a Reserve Analysis includes an additional column on the Loss Data Input screen with the heading “Loss Limit.” This is where you will input the limits in place for each period. In addition, the Excess Limit Data Input screen allows you to input losses above the indicated limit for each year.
A Loss Projection provides Projected Losses for a future period based on historical loss and exposure data. This type of analysis projects losses for a future period at a specific loss limit based on previous experience at that limit. Technically, a Loss Projection file can only include one limit at a time, as the chosen limit is applied to all prior periods in a "What if?" analysis to understand what these older periods would have looked like under the projected limit. So, regardless of the actual limits that were active during those periods, you'll be entering data in the Excess Limit Data Input screen as though each period was consistently subject to the limit input on the Loss Data Input screen. This information is compared to an exposure base to estimate a rate of losses per exposure and then applied to projected exposures to project losses for an upcoming period. You can produce separate Loss Projection files to look at separate limits, but again, only one limit may be analyzed per file. To do this, you should always begin with the lowest limit, then create copies of the file for higher limits. Our Lunch & Learn Webinar #1 shows some examples of how to do this.