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

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606 ESTIMATING THE WORKERS COMPENSATION TAILTable 3.2 presents a sample application of this method in estimatingincremental payments for accident year 2002, assuming5,000 ultimate PD claims and a series of additional assumptionsderived from SAIF’s historical loss experience (as described inAppendix B).The following observations can be made about the phenomenaexhibited in Table 3.2:² Incremental payments consistently increase for every DY fromthe 11th through the 40th, a counterintuitive pattern.² The PLDFs consistently increase for every DY from the 11ththrough the 31st.² This method produces projected PLDFs out to 85 years ofdevelopment. Such development is possible because a workercould be injured at age 16 and live to be over 100.² Incremental payments do not decrease below the local minimumof $1.7 million during the 11th year of development untilthe 65th year of development.To understand why incremental payments, as well as PLDFs,tend to increase during many “mature” years of development, itis helpful to examine how the two key components of the incrementalpaid to prior open claim method change over successivedevelopment years.This section illustrates how a static mortality model hasbeen incorporated into the incremental paid to prior open claimmethod. It describes the main framework of the method, whileAppendix C covers the derivation of various assumptions thatinvolve a complex analysis.As is evident from Column (4) in Table 3.3, it was assumedthat incremental payments per prior open claim would increaseby 9% per year for every DY beyond the seventh, except forthe 11th DY. This was based on an analysis of SAIF’s historical
ESTIMATING THE WORKERS COMPENSATION TAIL 607TABLE 3.2Estimation of Incremental MPD Payments for AY 2002by Static Mortality ModelPaid toPrior Incremental CumulativeDevelopment # Prior Open Paid Loss Paid Loss Paid FactorYear Open ($000s) ($000,000s) ($000,000s) PLDF to Ultimate1 460 ¤ 13.5 6.2 6.2 44.5792 460 78.4 36.1 42.3 6.8187 6.5383 1,531 16.6 25.4 67.7 1.6014 4.0824 1,366 8.4 11.5 79.2 1.1692 3.4925 949 7.9 7.5 86.7 1.0948 3.1896 677 6.8 4.6 91.2 1.0530 3.0297 554 6.9 3.8 95.1 1.0420 2.9078 396 7.5 3.0 98.1 1.0314 2.8189 323 8.2 2.7 100.7 1.0271 2.74410 249 9.0 2.2 103.0 1.0222 2.68411 209 8.0 1.7 104.6 1.0163 2.64112 197 8.8 1.7 106.4 1.0165 2.59813 187 9.5 1.8 108.1 1.0167 2.55614 178 10.4 1.8 110.0 1.0171 2.51315 170 11.3 1.9 111.9 1.0175 2.46916 163 12.4 2.0 113.9 1.0180 2.42617 156 13.5 2.1 116.0 1.0185 2.38218 150 14.7 2.2 118.2 1.0190 2.33719 144 16.0 2.3 120.6 1.0195 2.29320 139 17.5 2.4 123.0 1.0201 2.24821 133 19.0 2.5 125.5 1.0205 2.20222 128 20.7 2.7 128.2 1.0212 2.15723 124 22.6 2.8 130.9 1.0218 2.11124 119 24.6 2.9 133.9 1.0223 2.06525 114 26.9 3.1 136.9 1.0228 2.01826 109 29.3 3.2 140.1 1.0232 1.97327 104 31.9 3.3 143.4 1.0236 1.92728 98 34.8 3.4 146.8 1.0239 1.88229 93 37.9 3.5 150.4 1.0241 1.83830 88 41.3 3.6 154.0 1.0242 1.79531 83 45.0 3.7 157.7 1.0242 1.75232 78 49.1 3.8 161.5 1.0242 1.71133 73 53.5 3.9 165.4 1.0240 1.67134 68 58.3 3.9 169.4 1.0238 1.63235 63 63.6 4.0 173.4 1.0236 1.594
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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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RISKINESS LEVERAGE MODELSRODNEY KRE
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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 SPRING MEETING
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Volume XCII, Part 2 No. 177PROCEEDI
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WHEN CAN ACCIDENT YEARS BE REGARDED
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ARCHITECTURE FOR RESIDENTIAL PROPER
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INCORPORATION OF FIXED EXPENSESGEOF
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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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