What is the primary purpose of loss triangulation?

The primary purpose of loss triangulation is to organize data and identify patterns. This method is particularly useful in the insurance industry for analyzing claim data over time. By structuring the data into a triangular format, insurers can observe trends and develop insights related to incurred losses, payments, and reserves.

Loss triangulation allows actuaries and analysts to examine how losses evolve over various reporting periods and to identify patterns that can inform the estimation of future liabilities. It provides a visual representation that can help highlight trends in the claims experience, which is critical for accurate forecasting and financial planning. This systematic approach to organizing past loss data plays an essential role in assisting insurance companies in making informed decisions regarding their reserves and overall financial health.