The Kerper–Bowron Method: A Foundational Change for Service Contract Claim Estimation and Accounting

The Kerper–Bowron Method (KB Method) is a patent-pending approach that revolutionizes service contract loss estimation and accounting by introducing a precise, contract-level approach to forecasting expected losses and cancellations. Building on a prior 2007 paper, this update presents the Earned Contract formula, aligning with Solvency II and modern accounting standards. By leveraging a probabilistic exposure base and Generalized Linear Models, the KB Method enhances accuracy in claims and cancel liabilities as well as other liability and asset estimates across global service contract markets. This methodology offers superior precision, automation, and compliance, redefining actuarial and financial practices for vehicle and other service contracts.