casualty loss reserve seminar 2002 session number 2 - workers’ compensation reserving – how and...
TRANSCRIPT
Casualty Loss Reserve Seminar 2002
Session Number 2
- Workers’ Compensation Reserving –
How and When Should You Slice the Cake?
Timothy L. WisecarverTimothy L. WisecarverFCAS, FCA, MAAAFCAS, FCA, MAAA
September 23, 2002September 23, 2002
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Casualty Loss Reserve Seminar 2002 How and When Should You Slice the Cake?
WHY DO WE SLICE THE DATA CAKE?WHY DO WE SLICE THE DATA CAKE?
Emergence PatternsEmergence Patterns
Settlement PatternsSettlement Patterns
Development PatternsDevelopment Patterns
Loss FrequencyLoss Frequency
Loss SeverityLoss Severity
Slicing Can Find and Use Differences in DataSlicing Can Find and Use Differences in Data
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Factors Affecting Data Organization DecisionsFactors Affecting Data Organization Decisions AvailabilityAvailability CredibilityCredibility HomogeneityHomogeneity - Within a Slice- Within a Slice - Across Slices- Across Slices
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
RULES FOR THIS PRESENTATIONRULES FOR THIS PRESENTATION
Many Possible Slices are ShownMany Possible Slices are Shown Many Possible Slices are Many Possible Slices are Not Not ShownShown Some Important Differences are NotedSome Important Differences are Noted Other Significant Differences are Other Significant Differences are NotNot Noted Noted ““Factors Affecting Data Organization Factors Affecting Data Organization
Decisions” are Assumed to Apply to All SlicesDecisions” are Assumed to Apply to All Slices
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
IndemnityIndemnity
vs.vs.
MedicalMedical
DifferencesDifferences Payment ComputationPayment Computation InflationInflation Payment TimingPayment Timing Claim MixClaim Mix Cost ContainmentCost Containment Population Being PaidPopulation Being Paid
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
BenefitsBenefits
vs.vs.
Loss AdjustmentLoss Adjustment
DifferencesDifferences
Payment ComputationPayment Computation InflationInflation Payment TimingPayment Timing Population Being PaidPopulation Being Paid
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
IndemnityIndemnity
vs.vs.
Medical-OnlyMedical-Only
ClaimsClaims
(Medical Losses)(Medical Losses)
DifferencesDifferences
Payment TimingPayment Timing
Cost ContainmentCost Containment
Medical Service MixMedical Service Mix
Injury MixInjury Mix
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
VocationalVocational
RehabilitationRehabilitation
vs.vs.
Other Indemnity LossesOther Indemnity Losses
DifferencesDifferences
Payment Payment ComputationComputation
InflationInflation Payment TimingPayment Timing Cost ContainmentCost Containment AdministrationAdministration
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Branch OfficeBranch Office
oror
RegionRegion
DifferencesDifferences
AdministrationAdministration Claims PersonnelClaims Personnel Industry MixIndustry Mix Injury MixInjury Mix Economic FactorsEconomic Factors
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Case Reserver(s)Case Reserver(s)
DifferencesDifferences
AccuracyAccuracy ConsistencyConsistency Work EnvironmentWork Environment
CaseloadsCaseloads
TrainingTraining
BacklogsBacklogs Case MixCase Mix
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
InsuranceInsurance
CompanyCompany
DifferencesDifferences
Book of BusinessBook of Business
Pricing ProgramsPricing Programs
ExpertiseExpertise
Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Self Insured EntitySelf Insured Entity
Individually Self InsuredIndividually Self Insured
Member of Group PlanMember of Group Plan
DifferencesDifferences
Cost ContainmentCost Containment IndustryIndustry Injury MixInjury Mix AdministrationAdministration Available InformationAvailable Information Economic FactorsEconomic Factors
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Cost ContainmentCost Containment
PPOPPO
CCOCCO
Fee ScheduleFee Schedule
MarketMarket
DifferencesDifferences
PricesPrices InflationInflation Payment TimingPayment Timing Injury MixInjury Mix Loss AdjustmentLoss Adjustment Risk SelectionRisk Selection Service ComplementService Complement
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
ProducerProducer
DifferencesDifferences
Risk SelectionRisk Selection Pricing ProgramsPricing Programs Industry MixIndustry Mix Injury MixInjury Mix Service ComplementService Complement
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
ReinsuranceReinsurance
ArrangementsArrangements
CededCeded
AssumedAssumed
DifferencesDifferences
Risk SelectionRisk Selection Administration Administration Claim MixClaim Mix Cost ContainmentCost Containment Coverage TermsCoverage Terms
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Self-InsuredSelf-Insured
AdministrationAdministration
SelfSelf
TPATPA
DifferencesDifferences
ExpertiseExpertise Cost ContainmentCost Containment Data Retrieving AbilityData Retrieving Ability Data Reporting AbilityData Reporting Ability Motivation, IncentivesMotivation, Incentives Case Reserve AccuracyCase Reserve Accuracy
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Market SegmentMarket Segment
VoluntaryVoluntary
Direct AssignmentDirect Assignment
Servicing CarrierServicing Carrier
DifferencesDifferences Risk SelectionRisk Selection ExpertiseExpertise Industry MixIndustry Mix Injury MixInjury Mix Pricing ProgramsPricing Programs Motivation, IncentivesMotivation, Incentives Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
DeductiblesDeductibles
LargeLarge
SmallSmall
NoneNone(Claim, Accident, (Claim, Accident,
Aggregate)Aggregate)
DifferencesDifferences
InflationInflation Payment TimingPayment Timing Case Reserve AccuracyCase Reserve Accuracy Risk SelectionRisk Selection Motivation, IncentivesMotivation, Incentives Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
JurisdictionJurisdiction
State Act (Which One(s))State Act (Which One(s))
USL&HWUSL&HW
FELAFELA
DifferencesDifferences
Benefit LevelsBenefit Levels Payment Payment
ComputationComputation InflationInflation Payment TimingPayment Timing AdministrationAdministration Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Pricing Program(s)Pricing Program(s)
Guaranteed CostGuaranteed Cost
Loss SensitiveLoss Sensitive
DifferencesDifferences
Risk SelectionRisk Selection
Cost ContainmentCost Containment
Market ConditionsMarket Conditions
Motivation, IncentivesMotivation, Incentives
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Size of LossSize of Loss
CatastrophesCatastrophes
Large LossesLarge Losses
Other LossesOther Losses
DifferencesDifferences
Case Reserve AccuracyCase Reserve Accuracy InflationInflation Payment TimingPayment Timing Claim MixClaim Mix Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Layer of LossLayer of Loss
DifferencesDifferences
InflationInflation Case Reserve AccuracyCase Reserve Accuracy Payment TimingPayment Timing Claim MixClaim Mix Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Claim StatusClaim Status
Open vs. ClosedOpen vs. Closed
DifferencesDifferences
Case Reserve AccuracyCase Reserve Accuracy Payment TimingPayment Timing Claim MixClaim Mix Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Traumatic InjuryTraumatic Injury
vs.vs.
Occupational DiseaseOccupational Disease
DifferencesDifferences
Medical Service MixMedical Service Mix Case Reserve AccuracyCase Reserve Accuracy Payment TimingPayment Timing Claim MixClaim Mix Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Type of InjuryType of Injury
DeathDeath
Permanent/TemporaryPermanent/Temporary
Partial/TotalPartial/Total
Medical OnlyMedical Only
DifferencesDifferences
Accuracy of ReservesAccuracy of Reserves Payment TimingPayment Timing Payment MixPayment Mix Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Suggested “Slice”Suggested “Slice”
Special AccountsSpecial Accounts
SizeSize
ManagementManagement
Business ActivitiesBusiness Activities
Industry SegmentsIndustry Segments
DifferencesDifferences
Risk SelectionRisk Selection Case Reserve AccuracyCase Reserve Accuracy Payment TimingPayment Timing Payment MixPayment Mix Cost ContainmentCost Containment
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data?
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect:
Amounts of Loss or ExpenseAmounts of Loss or Expense
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect:
Amounts of Loss or Expense Amounts of Loss or Expense
Timing of PaymentsTiming of Payments
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Casualty Loss Reserve Seminar 2002 How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect:
Amounts of Loss or Expense Amounts of Loss or Expense
Timing of PaymentsTiming of Payments
Recognition of Loss or ExpenseRecognition of Loss or Expense
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect:
Amounts of Loss or Expense Amounts of Loss or Expense
Timing of PaymentsTiming of Payments
Recognition of Loss or Expense Recognition of Loss or Expense
Numbers of ClaimsNumbers of Claims
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Casualty Loss Reserve Seminar 2002 How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect:
Amounts of Loss or Expense Amounts of Loss or Expense
Timing of PaymentsTiming of Payments
Recognition of Loss or Expense Recognition of Loss or Expense
Numbers of ClaimsNumbers of Claims
Average Loss or ExpenseAverage Loss or Expense
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Casualty Loss Reserve Seminar 2002 How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect: Amounts of Loss or Expense Amounts of Loss or Expense Timing of PaymentsTiming of Payments Recognition of Loss or Expense Recognition of Loss or Expense Numbers of ClaimsNumbers of Claims Average Loss or ExpenseAverage Loss or Expense Loss or Expense per Exposure UnitLoss or Expense per Exposure Unit
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Casualty Loss Reserve Seminar 2002 How and When Should You Slice the Cake?
What Matters in Our Data?What Matters in Our Data? Things That Affect:Things That Affect:
Characteristics of a Book of BusinessCharacteristics of a Book of Business
Pertinent to Our Analytical TechniquesPertinent to Our Analytical Techniques
oror
Features of Specific Interest forFeatures of Specific Interest for
Research, Management or RegulationResearch, Management or Regulation
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
What Should We Pursue?What Should We Pursue?
Is the “Slice” Available?Is the “Slice” Available? How Important Is the “Slice”?How Important Is the “Slice”? What Will the “Slice” Cost?What Will the “Slice” Cost?
TimeTime
MoneyMoney
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Casualty Loss Reserve Seminar 2002How and When Should You Slice the Cake?
Additional Potentially Useful Partitions of Additional Potentially Useful Partitions of Workers Compensation DataWorkers Compensation Data
(Suggested by CLRS Attendees)(Suggested by CLRS Attendees)