The prediction of adequate amount of claims reserve is often one of the greatest problems to face by an insurance company. In this paper, we introduce the use of maximum likelihood for London chain ladder method. The theoretical bases of efficiency of using maximum likelihood principal method on London chain ladder were shown. The result of the maximum likelihood approach shows the usefulness of investigating this method. An instance was used to demonstrate its efficiency and applicability.

claims reserve, maximum likelihood, chain ladder, London chain ladder.