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

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604 ESTIMATING THE WORKERS COMPENSATION TAILof incremental payments per open claim. In contrast, future incrementalMPD payments have almost no causal link to paymentsfor rapidly settled claims during early DYs.Table 3.1 provides a specific example of how this method isapplied. The specific steps to be taken in applying the incrementalpaid to prior open claim method are as follows:1. Incremental paid losses (A) and open counts (B) arecompiled by AY and DY.2. Historical averages of incremental paid to prior openclaim (C) are computed as to (A) divided by claim (B).3. Each historical average is trended to the expected severitylevel for the first calendar year (CY) (2003) after theevaluation date (12/31/2002), and a representative averageis selected for each DY [last row of (D)]. A trendfactor of 9% per year was assumed in this example.4. Ratios of open counts at successive year-ends are computed(E).5. The selected ratios from (E) by DY are used to projectthe number of open claims for each future DY of eachAY, thereby completing (B).6. Future values of incremental paid to prior open claim (C)are projected on the basis of the representative averagesin the last row of (D).7. Projections of incremental paid losses for future DYsfor each AY (A) are determined as the product of theprojected open counts from the lower right portion of(B) and the projected values of incremental paid to prioropen claim from (C).The descriptions in the lower right portion of sections (A),(B) and (C) of Table 3.1 also detail how the estimates in eachportion are derived.
ESTIMATING THE WORKERS COMPENSATION TAIL 605TABLE 3.1Sample Application of the Incremental Paid to PriorOpen Claim Method(A) Incremental Paid Losses ($000s)AY 12 24 36 48 60 721997 2,822.8 15,936.1 9,182.3 4,281.6 2,063.8 1,411.41998 2,638.0 14,249.9 9,096.4 2,935.8 3,214.71999 3,331.3 15,805.8 9,734.9 4,308.92000 3,170.4 18,602.1 12,462.02001 3,143.1 20,305.9 Product of Projected (B)2002 4,263.1 and Projected (C)(B) Open CountsAY 12 24 36 48 60 721997 362 1,112 793 490 375 3241998 338 888 628 431 3521999 343 840 664 4922000 268 867 7312001 276 897 Use Ratios from (D) to2002 333 Project Future Open Counts(C) Incremental Paid to Prior Open ClaimAY 24 36 48 60 721997 44,022 8,257 5,399 4,212 3,7641998 42,159 10,244 4,675 7,4591999 46,081 11,589 6,4892000 69,411 14,3742001 73,572 Selected Average at CY 20032002 Level (E) Adjusted for 9% Inflation(D) Incremental Paid to Prior Open Claim Trended to CY 2003 at 9%/Yr.AY 24 36 48 60 721997 67,734 11,656 6,992 5,004 4,1021998 59,511 13,266 5,554 8,1301999 59,676 13,769 7,0732000 82,467 15,6672001 80,194Avg. Latest 3 74,112 14,234 6,540 6,567 4,102(E) Ratio of Open Counts at Successive Year-EndsAY 24 36 48 60 721997 3.072 0.713 0.618 0.765 0.8641998 2.627 0.707 0.686 0.8171999 2.449 0.790 0.7412000 3.235 0.8432001 3.250Avg. Latest 3 2.978 0.780 0.682 0.791 0.864
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VOLUME XCII NUMBERS 176 and 177PROC
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FOREWORDActuarial science originate
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2005 PROCEEDINGSCONTENTS OF VOLUME
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2005 PROCEEDINGSCONTENTS OF VOLUME
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Editorial Committee, Proceedings Ed
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2 AN EXAMINATION OF THE INFLUENCE O
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AN EXAMINATION OF THE INFLUENCE OF
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RISKINESS LEVERAGE MODELSRODNEY KRE
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RISKINESS LEVERAGE MODELS 33There a
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RISKINESS LEVERAGE MODELS 35where f
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RISKINESS LEVERAGE MODELS 39Various
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RISKINESS LEVERAGE MODELS 51ple. Th
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RISKINESS LEVERAGE MODELS 55We also
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RISKINESS LEVERAGE MODELS 59APPENDI
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DISCUSSION OF A PAPER PRESENTED AT
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RISKINESS LEVERAGE MODELS 63known t
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RISKINESS LEVERAGE MODELS 65to be a
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RISKINESS LEVERAGE MODELS 67implies
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RISKINESS LEVERAGE MODELS 71a maxim
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RISKINESS LEVERAGE MODELS 734. INTE
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RISKINESS LEVERAGE MODELS 79REFEREN
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RISKINESS LEVERAGE MODELS 81EXHIBIT
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RISKINESS LEVERAGE MODELS 83
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ADDRESS TO NEW MEMBERS 151ateship a
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ADDRESS TO NEW MEMBERS 153You shoul
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ADDRESS TO NEW MEMBERS 155strength
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MINUTES OF THE 2005 CAS SPRING MEET
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MINUTES OF THE 2005 SPRING MEETING
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Volume XCII, Part 2 No. 177PROCEEDI
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MODELING FINANCIAL SCENARIOS 179Bab
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MODELING FINANCIAL SCENARIOS 209TAB
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WHEN CAN ACCIDENT YEARS BE REGARDED
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A NEW METHOD OF ESTIMATING LOSS RES
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ARCHITECTURE FOR RESIDENTIAL PROPER
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INCORPORATION OF FIXED EXPENSESGEOF
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DISCUSSION OF PAPER PUBLISHED INVOL
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THE “MODIFIED BORNHUETTER-FERGUSO
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ADDRESS TO NEW MEMBERS-NOVEMBER 14,
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ADDRESS TO NEW MEMBERS 743Now to an
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MINUTES OF THE 2005 CAS ANNUAL MEET
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REPORT OF THE VICE PRESIDENT-ADMINI
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2005 EXAMINATIONS—SUCCESSFUL CAND
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OBITUARIESROBERT GRANT ESPIECLYDE H
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OBITUARIES 825SIDNEY M. HAMMER1931
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OBITUARIES 827J. GARY LaROSE1947—
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OBITUARIES 829PAUL J. SCHEEL SR.193
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OBITUARIES 831LEO M. STANKUSCirca 1
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INDEX TO VOLUME XCIIPage2005 EXAMIN
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835GRAVES, CLYDE H.INDEX—CONTINUE
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837INDEX—CONTINUEDREPORT OF THE V
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PROCEEDINGS May 15, 16, 17, 18, 2005 - Casualty Actuarial Society

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