Edition 1: Development Patterns: Purpose Before Charts

Development patterns are familiar territory for actuaries. We calculate them, review them, debate them — and then often leave them behind, summarised in a sentence or relegated to an appendix.

The challenge is rarely how to produce link ratios or development curves. It is deciding when they deserve attention, how they should be shown, and when saying less is actually clearer.

This edition focuses on that decision. Rather than introducing new chart types, it steps back to ask what development visuals are for: who they serve, what question they answer, and what role they play in a reserving narrative. By starting with intent — insight, assurance, or record — familiar charts can be used more deliberately, and sometimes omitted altogether.

How Development Is Traditionally Shown

The typical views included in actuarial reports are: 

·         The expected % development by development period

·         The loss ratio development to date for each accident period

Link ratios are mostly kept as a triangle and seldom makes it to a slide pack or report.

These views are familiar to actuaries, but familiarity alone does not make a visual useful. The challenge is not how to calculate development — it’s deciding when development patterns deserve attention.

The Decision Framework

Start with intent, not the chart

As link ratios and development patterns are something that gets actuaries excited but not a lot of other people, we usually do not include them in reports or slide decks.  It is only when we need to highlight significant changes or impacts that we need to have a way to show them to our audience.

Therefore, before deciding how to show, ask the following: Is this visual for insight, assurance, or for record?

This will determine if we show patterns and what we show.  The same dataset can justify very different visuals — or none at all — depending on this choice.  link ratios ≠ always the right visual.  And we have permission to not include it at all.

Choosing the Right Development Visual

Once intent is clear, the right chart often becomes obvious — and in some cases, the right choice is not to show a chart at all.

The table below reframes development visuals not by chart type, but by the question they must answer.

The three intents behind development visuals

1. Visuals for Insight

Key question:

Is there anything here that deserves attention?

For insight-focused audiences, development patterns are optional, not mandatory.

The visual earns its place only if it changes understanding.

When patterns are stable

• Do not default to a chart

• A short statement may be clearer than any visual:

“Development patterns reviewed — no material changes observed.”

When something has changed

For example, a single development period drifting upward may matter more than smooth long-term stability.

The chart should explain how it changed, not how development works.

Good fits

• Indexed trend lines to show direction

• Dot or range plots to show volatility

• Before/after splits for structural breaks

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2. Visuals for Assurance

Key question:

Is this reasonable, stable, and consistent?

Here, familiarity is a feature, not a flaw. Unexpected visuals in assurance contexts can undermine confidence, even when technically correct.  These visuals exist to build confidence, not surprise.

Assurance visuals don’t seek insight — they seek trust.

Typical needs

• Year-on-year consistency

• Clear linkage to methodology

• Evidence of judgement, not just mechanics

Effective visuals

• Small-multiple link ratio charts

• Selected vs prior averages

• Benchmark overlays

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3. Visuals for Record Keeping

Key question:

Could someone rebuild this in three years’ time?

This is where traditional actuarial charts genuinely shine — but only when they are clean and intentional. These visuals are not designed to persuade — they are designed to be defensible. Documentation visuals aren’t persuasive — they’re archival.

Core visuals

• Full development triangles

• Link ratio heatmaps (used sparingly)

• Selection diagnostics and residuals

Design emphasis

• Clear separation between data and judgement

• Explicit notes

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Applying the Framework to Standard Charts

Now you re-read the classic charts through the framework:

Loss ratio development charts	Strong for showing overall emergence Weak at isolating which periods drive change
Development curves	Effective for assurance and continuity Can mask variability across accident years
Link ratio triangles	Essential for record and validation Rarely appropriate for insight audiences

From Selection to Consequence

The below chart includes the single period development selected as well as the resulting % development by development period. This is shown for the current period as well as the previous to demonstrate the consequence of the selection made.

This view shifts the focus from whether a selection looks reasonable in isolation to how it shapes the implied development path.

Closing

Once intent is clear, the value of a development visual is no longer measured by how complete it looks, but by what it reveals.

Standard charts answer many questions well — particularly around continuity, reasonableness, and documentation — but they are less explicit about consequence. The final example in this edition makes that consequence visible, linking a single-period selection directly to its implied development path. It is not a new technique so much as a shift in emphasis: from reviewing inputs in isolation to understanding their effect.

And if this framing helps answer some questions more clearly, it naturally raises another: what else remains hidden by the charts we default to?