ACTUARIAL SERVICES
Sigma provides actuarial services to governmental entities, associations, self-insureds, trusts and commercial insureds (in a wide variety of healthcare, retail, entertainment, public entity, service and manufacturing industries) throughout the country. We have extensive experience with a broad range of insurance coverages, with specialization in workers' compensation, automobile, general, products and professional liabilities.
Sigma is dedicated to offering professional services to its clients and prides itself in the method used to communicate the results of the analysis. We are known for providing an easy to read and understand analysis full of colorful graphics and free of actuarial jargon. The findings are presented in such a way that individuals not necessarily familiar with actuarial principles and procedures can follow and reasonably understand how the calculations are made and the implications of the results. The analyses of loss data are objective and reference the most recently available insurance industry statistics when necessary and appropriate.
Actuarial services provided typically include the following types of analyses:
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Actuarial Reserve Analyses
An actuarial reserve analysis provides a professional opinion regarding the loss reserves required for unpaid claims incurred as of a specific date. A reserve analysis is typically prepared to meet regulatory or financial reporting criteria and is often required by external auditors as part of the audit process. The analysis is most frequently prepared for a self-insured trust, a captive insurance company, a corporation that uses a loss sensitive cash-flow plan or as part of the due diligence process for mergers/acquisitions or divestitures. A general list of uses include the following.
- Actuarial reserve certification
- Satisfaction of self-insurance requirements
- Negotiation of security requirements and letters of credit
- Acquisition due diligence
- Evaluation of expected liabilities for financial statements
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Loss Projections and Loss Probability Studies
A loss projection includes actuarial estimates of ultimate loss costs for completed policy periods, and projected losses for current and future periods. A loss probability study provides a range of confidence intervals around the projected losses in which the actual losses will lie. These analyses can be most useful in helping to define appropriate levels of risk retention and policy limits, and are typically scheduled to be completed prior to the renewal of the insurance program so that they can be used in market negotiations. A general list of uses include the following:
- Insurance budgeting
- Determination of funding requirements within deductible or self-insured retention
- Negotiation of price for aggregate coverage
- Selection of retention levels
- Cost allocation
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Cash Flow Analyses
This type of analysis is important when the finance department is interested in the timing of the payout of required reserves. The types of analyses include the following.
- Payout analysis indicating the probable amount of payments by fiscal year
- A present value analysis that indicates the current value of expected future payments at one or more designated discount rates
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Analysis of Effectiveness of Loss Control Program
This type of analysis is utilized to measure the costs of an insurance program subsequent to implementing a loss control program versus a benchmark cost. The outcome of this analysis will determine the effectiveness of the program. A unique use of this product has been to calculate a bonus based on the amount of improvement due to the implementation of a loss control program.
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Input to Risk Management Analyses
Our actuarial services are also used as the front-end analyses for the following types of risk management consulting studies.
- Risk management due diligence evaluations and recommendations for company mergers, acquisitions and divestitures
- Self-insurance feasibility studies that evaluate the considerations and cost efficiencies in becoming a qualified self-insurer
- Risk financing alternatives
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