Application Of Improved Bootstrap Method In The Estimation Of Outstanding Claims Reserve

Since China’s reform and opening up, the insurance industry has maintained rapiddevelopment, and has made great achievements. However, as an emerging superpower,insurance industry of our country starts late, development level is relatively low andvery backward, so we need face various challenges. If our insurance companies wantto win in the fierce market competition, they should develop and improve their corecompetitiveness.For insurance companies, the main management method to improve thecompetitiveness is investment. While earning the most profit, in order to guarantee thenormal operation of insurance companies, the extraction of reserves, as well as theinvestment ratios decisions, is particularly important. The outstanding claims reserve isthe largest amount of non-life insurance company’s financial statements liability subject,the extraction of the reserve ratio is directly related to the insurance company profittargets and the ability of solvency. So, evaluating reserve has very important practicalsignificance.This article is divided into four parts.The first part introduces the significance of researching the outstanding claimsreserve, as well as the development of evaluation reserves domestically and abroad.The second part gives the definition and the classification of the outstandingclaims reserve, expounds the necessity of evaluating outstanding claims reserve, andsummarizes several kinds of traditional evaluation methods on outstanding claimsreserve.The third part introduces the Bootstrap method and the basic ideas on how toimprove the Bootstrap method, as well as application of the Bootstrap method beforeimprovement and after on the traditional chain ladder method. The fourth part gives an example, through analyzing actual data and comparingthe effect of applying the traditional Bootstrap method or improved Bootstrap methodon chain ladder method, proves that the improved Bootstrap method is effective andefficient.