Page 131 - 34-1
P. 131
NTU Management Review Vol. 34 No. 1 Apr. 2024
provided in-house that has an impact on firm financial reporting.
Finally, this research is important because P-C insurance is important (Chan, Peng,
and Tsai, 2021; Chen and Gu, 2019; Yeh and Lin, 2018). A significant deficiency in loss
reserves is associated with insurer insolvency, making loss reserving practices important
to all of a firm’s stakeholders including regulators. Over-reserving is important also, as it
affects tax revenues contributed by P-C insurers, misstates income to the insurer’s owners
and can affect premium rates for some lines of business. For example, over-reserving in
some instances has been shown not to be in stockholders’ interests.
Areas of future research could relate the incentive compensation structure of in-
house Appointed Actuaries to loss reserving error patterns. Case studies where deficient
loss reserves lead to insolvency might provide clearer insight on exactly how managerial
discretion is used prior to insolvency. It would be interesting, also to distinguish between
an officer in-house actuary and a non-officer in-house actuary in our regression model to
determine the relative impact of an external actuary on loss reserving accuracy vis à vis an
officer in-house actuary.
123
