Reserve risk is perhaps the largest risk on many insurers'balance sheet, as it affects both solvency and earnings.The biggest driver of reserve deficiencies are changes incalendar-year trends, such as increases in inflation. This meansthe capability to measure inflationary trends in insurers' losstriangles is crucial nowadays.

With this in mind, Guy Carpenter & Company,LLC, has introduced MetaRisk Reserve 3.0, thelatest iteration of its reserve risk modelingtool. The global risk and reinsurance specialist and member ofMarsh & McLennan Companies (NYSE: MMC) says the new versionalso features improved Solvency II reporting and other enhancementsintended to help insurance organizations staycompliant with rating agency and ORSArequirements.

This version has also been integrated with MetaRisk 7.2®, GuyCarpenter's premier risk and capital management decision-makingtool, to produce reserve event files.

"MetaRisk Reserve 3.0 is the latest example of [our] commitmentto improvements in technology as insurance companies look for everycompetitive advantage in the increasingly complex global insuranceenvironment," says Don Mango, vice chairman and head of enterpriseanalytics for Guy Carpenter. 

Earlier this year, Guy Carpenter secured a U.S. patentfor the system's mode of determiningloss reserves. Using MetaRisk Reserve 3.0,companies can capture historical economic trends (such asinflation) to better understand how those trends canimpact their loss reserves. In turn, insurers can achievea more transparent view of reserve positions, according to thecompany.

The predictive modeling capabilities of MetaRisk can helpcompanies quantify reserve risk and consequently, allocate capitalmore effectively, refine reinsurance strategies, and improveenterprise risk management.