PROCEEDINGS May 15, 16, 17, 18, 2005 - Casualty Actuarial Society

ESTIMATING THE WORKERS COMPENSATION TAIL 591TABLE 1.2Two Indicators of an Increasing Proportion of theElderly Among Surviving ClaimantsPortion 80 Years ofPortion Who Will DieDY Age or Older Within Five Years0 0.0% 4.4%10 0.9% 9.4%20 10.9% 18.3%30 36.5% 30.1%40 51.2% 39.0%50 64.7% 47.2%60 100.0% 60.3%The percentages in Table 1.2 are based on 2000 mortality tables published by the Social SecurityAdministration (SSA), assuming 75% of the claimants are male, and a census of SAIF’s permanenttotal disability claimants by age-at-injury.age, so do their spouses. Often spouses reach an age where theycan no longer provide as much care as previously, and insurersthen pay for the increased cost of hiring outside assistants. Table1.2 indicates the percentage of surviving claimants who willbe 80 or older at the beginning of various years of development.It also shows the percentage of surviving claimants expected todie within the succeeding five years. It has also been observedthat incremental severities tend to undergo an increase during thelast years before a claimant’s death that exceeds normal rates ofmedical cost escalation.Table 1.2 indicates that for DYs 40 and higher, over half ofthe surviving claimants will be 80 or more years old. Clearly, thisfact could have been anticipated on an a priori basis. After all,if the average claimant were age 40 when injured, it should beexpected that 40 years after the injury year the average survivingclaimant would be about 80 years old. However, the abovetable underscores a reality that casualty actuaries may not haveheretofore given much consideration. The behavior of loss developmentfor later DYs may well be more adverse than what