Principles of Actuarial Science Principles of Loss Reserving      Extrapolation methods are based on specific assumptions about the process by which claims are reported and resolved. The user of a "loss reserving method" is responsible for verifying that the assumptions of a particular model are reasonable for the problem at hand.      Mathematical models, such as generalized least-squares methods, are based on less restrictive assumptions than the popular extrapolation methods. Again, the user is responsible for verifying that the assumptions of a particular model are reasonable for the problem at hand.      One advantage of mathematical models of the loss development process is that they provide information about the potential error in the reserve estimate, if the model's assumptions are reasonable.      Non-mathematical scientific models are infinitely adaptable. The user is responsible for creating a set of statements that reflect the problem at hand, the data available, and the estimate of future payments. The statements in a scientific model include observations from data and descriptions of the claims processes, and are not restricted to mathematical relationships. Principles of Ratemaking      The CAS is working on a draft of actuarial principles. From that source and others, we've developed the following set of principles to guide our work.      Please share your thoughts with us.

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