Mortgage reinsurance, with unique claim timing and loss emergence patterns, demands a thoughtful reserving approach, with key differences from other property and casualty lines. We consider the dynamic and hybrid loss-ratio methods to be the most robust when reserving for reinsurers' mortgage exposures. Loss-ratio methods can provide a tailored assessment of the risks, taking many factors into consideration. In this paper, we discuss:
- What is mortgage reinsurance for loss reserves?
- What is the standard primary mortgage insurer approach for loss reserves?
- Three ways to improve delinquency-based mortgage reinsurance risk management
- Review of potential alternative reserving methodologies
- Implementing a best-in-class approach