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record for each of its "accident years"; i.e., calendar years
whose associated liabilities would be covered by the policies
issued for those years. The actuarial focus was on determining
appropriate IBNR reserves. Parthenon's claims personnel set the
amounts of case reserves on reported claims.
Typically, reserve adequacy studies would be made by the
actuary in the first or second quarter of a year, assessing the
adequacy of reserves posted by Parthenon as of December 31 of the
previous year. For 1986 and prior years, reserve studies were
made under the direction of Mr. Klaassen. For 1986 and later
years, reserve studies were made by Mr. Biscoglia.
During late 1984, Parthenon instituted a practice of
assigning statistically developed average reserve values to newly
opened claims' files pending actual investigation and evaluation
of the claim, in contrast to the previous practice of assigning a
nominal reserve amount for that interim period. During early
1985, Parthenon's claims department implemented new procedures
for increasing the efficiency of loss incident reporting. The
acceleration in timing and amount of reported losses caused by
those developments raised problems with the actuarial prediction
of IBNR losses.
Effective January 1, 1986, the policy issued by Parthenon
was a claims made policy, not an occurrence policy as had been
the case in prior years. Consequently, Parthenon went from
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