The Chain Ladder relies solely on reported numbers. Actuaries often use multiple methods and weigh them.
Introduction to Ratemaking and Loss Reserving for Property and Casualty Insurance
Where:
Actuaries must estimate two main types of liabilities:
Both functions rely on historical data, statistical inference, and professional judgment. Failure in either leads to insolvency (premiums too low or reserves too low) or uncompetitiveness (premiums too high).
This is the most fundamental reserving method. It assumes that the past pattern of claim development will continue into the future.