A new co-authored white paper from Pinnacle and accounting firm Johnson Lambert discussing changes to accounting guidelines.

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As inflation continues to impact the economy, insurance companies face ongoing challenges of volatility in their investment portfolios along with higher operating costs and claim payouts. The process of estimating the liabilities for unpaid claims, often the largest liability on a property/casualty insurance company’s balance sheet, becomes even more complex with these changing variables. The results of the actuarial loss reserve analysis can have a substantial impact on an insurance company’s financial condition.

In addition, auditing standards have evolved in keeping with the times. Two new auditing standards are effective in 2023, placing a renewed emphasis on the loss reserve estimate and the use of an actuarial specialist. This discussion, a collaborative exploration of the topic by Pinnacle Actuarial Resources and consulting firm, Johnson Lambert LLP, may be used as a guide for management to understand the actuarial estimates and what methods and assumptions cause greater variability in the reserving process, and as such are more likely to be subject to further evaluation by auditors.