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Timothy L. Wisecarver FCAS, FCA, MAAA September 8, 2003
Casualty Loss Reserve Seminar Session Number Workers’ Compensation Reserving – How and When Should You Slice the Cake? Timothy L. Wisecarver FCAS, FCA, MAAA September 8, 2003
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WHY DO WE SLICE THE DATA CAKE? Emergence Patterns Settlement Patterns
Casualty Loss Reserve Seminar How and When Should You Slice the Cake? WHY DO WE SLICE THE DATA CAKE? Emergence Patterns Settlement Patterns Development Patterns Loss Frequency Loss Severity Slicing Can Find and Use Differences in Data
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Factors Affecting Data Organization Decisions
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Factors Affecting Data Organization Decisions Availability Credibility Homogeneity - Within a Slice - Across Slices
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
IN THIS PRESENTATION: Many Possible Slices are Shown Many Other Possible Slices are Not Shown Some Important Differences are Noted Other Significant Differences are Not Noted “Factors Affecting Data Organization Decisions” are Assumed to Apply to All Slices
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Suggested “Slice” Indemnity vs. Medical
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Suggested “Slice” Indemnity vs. Medical Differences Payment Computation Inflation Payment Timing Claim Mix Cost Containment Population Being Paid
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Benefits vs. Loss Adjustment Differences Payment Computation Inflation Payment Timing Population Being Paid
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Suggested “Slice” Differences
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Suggested “Slice” Indemnity vs. Medical-Only Claims (Medical Losses) Differences Payment Timing Cost Containment Medical Service Mix Injury Mix
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Other Indemnity Losses
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Suggested “Slice” Vocational Rehabilitation vs. Other Indemnity Losses Differences Payment Computation Inflation Payment Timing Cost Containment Administration
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Branch Office or Region Differences Administration Claims Personnel Industry Mix Injury Mix Economic Factors
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Case Reserver(s) Differences Accuracy Consistency Work Environment Caseloads Training Backlogs Case Mix
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Insurance Company Differences Book of Business Pricing Programs Expertise Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Self Insured Entity Individually Self Insured Member of Group Plan Differences Cost Containment Industry Injury Mix Administration Available Information Economic Factors
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Cost Containment PPO CCO Fee Schedule Market Differences Prices Inflation Payment Timing Injury Mix Loss Adjustment Risk Selection Service Complement
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Producer Differences Risk Selection Pricing Programs Industry Mix Injury Mix Service Complement
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Reinsurance Arrangements - Treaty - Facultative - Ceded - Assumed Differences Risk Selection Administration Claim Mix Cost Containment Coverage Terms
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Self-Insured Administration Self TPA Differences Expertise Cost Containment Data Retrieving Ability Data Reporting Ability Motivation, Incentives Case Reserve Accuracy
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Market Segment Voluntary Direct Assignment Servicing Carrier Differences Risk Selection Expertise Industry Mix Injury Mix Pricing Programs Motivation, Incentives Cost Containment
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(Claim, Accident, Aggregate)
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Suggested “Slice” Deductibles Large Small None (Claim, Accident, Aggregate) Differences Inflation Payment Timing Case Reserve Accuracy Risk Selection Motivation, Incentives Cost Containment
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State Act (Which One(s))
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Suggested “Slice” Jurisdiction State Act (Which One(s)) USL&HW FELA Differences Benefit Levels Payment Computation Inflation Payment Timing Administration Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Pricing Program(s) Guaranteed Cost Loss Sensitive Differences Risk Selection Cost Containment Market Conditions Motivation, Incentives
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Size of Loss Catastrophes Large Losses Other Losses Differences Case Reserve Accuracy Inflation Payment Timing Claim Mix Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Layer of Loss Differences Inflation Case Reserve Accuracy Payment Timing Claim Mix Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Claim Status Open vs. Closed Differences Case Reserve Accuracy Payment Timing Claim Mix Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Traumatic Injury vs. Occupational Disease Differences Medical Service Mix Case Reserve Accuracy Payment Timing Claim Mix Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Type of Injury Death Permanent/Temporary Partial/Total Medical Only Differences Accuracy of Reserves Payment Timing Payment Mix Cost Containment
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
Suggested “Slice” Special Accounts Size Management Business Activities Industry Segments Differences Risk Selection Case Reserve Accuracy Payment Timing Payment Mix Cost Containment
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What Matters in Our Data?
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? What Matters in Our Data?
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What Matters in Our Data?
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Amounts of Loss or Expense
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What Matters in Our Data?
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Amounts of Loss or Expense Timing of Payments
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What Matters in Our Data?
Casualty Loss Reserve Seminar How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Amounts of Loss or Expense Timing of Payments Recognition of Loss or Expense
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What Matters in Our Data?
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Amounts of Loss or Expense Timing of Payments Recognition of Loss or Expense Numbers of Claims
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What Matters in Our Data?
Casualty Loss Reserve Seminar How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Amounts of Loss or Expense Timing of Payments Recognition of Loss or Expense Numbers of Claims Average Loss or Expense
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What Matters in Our Data?
Casualty Loss Reserve Seminar How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Amounts of Loss or Expense Timing of Payments Recognition of Loss or Expense Numbers of Claims Average Loss or Expense Loss or Expense per Exposure Unit
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What Matters in Our Data?
Casualty Loss Reserve Seminar How and When Should You Slice the Cake? What Matters in Our Data? Things That Affect: Characteristics of a Book of Business Pertinent to Our Analytical Techniques or Features of Specific Interest for Research, Management or Regulation
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Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake?
What Should We Pursue? Is the “Slice” Available? How Important Is the “Slice”? What Will the “Slice” Cost? Time Money
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(Suggested by CLRS Attendees)
Casualty Loss Reserve Seminar 2003 How and When Should You Slice the Cake? Additional Potentially Useful Partitions of Workers Compensation Data (Suggested by CLRS Attendees)
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