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

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608 ESTIMATING THE WORKERS COMPENSATION TAIL40 42 97.8 4.1 193.7 1.0215 1.42745 26 150.5 3.9 213.6 1.0185 1.29450 15 231.6 3.5 231.8 1.0152 1.19255 8.1 356.3 2.9 247.6 1.0118 1.11660 4.0 548.2 2.2 260.0 1.0085 1.06365 1.7 843.5 1.4 268.6 1.0053 1.02970 0.56 1,297.8 0.73 273.5 1.0027 1.01075 0.13 1,996.8 0.26 275.7 1.0009 1.00380 0.019 3,072.3 0.06 276.3 1.0002 1.000485 0.002 4,727.2 0.01 276.4 1.0000 1.0000For the first DY only, the number of claims open at the end of the year is shown.After DY 35, the italicized amounts are shown only for each fifth DY.The PLDFs in this table closely fit SAIF’s 10-year historical average factors.TABLE 3.3Estimation of Incremental Payments by StaticMortality Model(1) (2) (3) (4)# Open % Decline Increm. Pd. toDevelopment at End of in Prior Prior Open % SeverityYear (DY) Prior DY Open Counts ($000s) Change1 0.0 13.4782 460.0 78.425 481.93 1,531.0 16.607 ¡78:84 1,366.0 10.8 8.388 ¡49:55 949.0 30.5 7.903 ¡5:86 677.0 28.7 6.781 ¡14:27 554.0 18.2 6.924 2.18 396.0 28.5 7.547 9.09 323.0 18.4 8.226 9.010 249.0 22.9 8.967 9.011 209.0 16.1 8.036 ¡10:412 196.9 5.8 8.759 9.013 186.5 5.3 9.548 9.014 177.5 4.8 10.407 9.015 169.7 4.4 11.343 9.020 138.5 3.8 17.453 9.025 113.8 4.2 26.854 9.030 88.0 5.6 41.318 9.035 62.8 7.1 63.574 9.040 41.6 8.4 97.816 9.045 25.8 9.6 150.502 9.0
ESTIMATING THE WORKERS COMPENSATION TAIL 609incremental severities for these DYs (see Section C.3 of AppendixC). The fact that SAIF’s historical PLDFs for DYs 40—54 are noticeably higher than those predicted by this model (seeFigure 1.1) is evidence that there are additional costs associatedwith caring for elderly claimants, who comprise the majority ofclaimants during these DYs.The basis for our selection of 9% as the long-term rate of medicalcost escalation is presented in Section C.3 of Appendix C.This assumed annual rate of change in the total cost per claimshould be expected to be noticeably greater than the change inthe medical component of the CPI. Key reasons for this are1. Larger increases in unit costs. The types of servicesprovided to permanently disabled claimants will likelyinflate at a greater rate than that of overall medical services.Examples of these include prosthetic devices, newdrugs, surgeries and so on.2. Increasing utilization. The rate at which claimants utilizegiven services has tended to increase over time.3. Shifting mix of services. There has been a trend towardthe greater utilization of more expensive alternatives ofcare.Because of these three factors, SAIF’s historical rate of medicalcost escalation for PD claims has consistently exceeded thechange in the medical CPI by a discernable margin. As shownin Table C.4.1, the average rate of MPD cost escalation from1966 to 2003 was 9.2%, while the average annual change in themedical CPI was 6.8%. Therefore, the average annual change inutilization and mix for 1966—2003 was 2.4%. For 1998—2003,the average utilization and mix change was much larger (i.e.,7.4%, per Table C.4.3).In Table 3.2 incremental payments continue to increase untilage 40 because the impact of claims inflation is greater than theforce of mortality in closing existing claims.
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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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DISCUSSION OF A PAPER PRESENTED AT
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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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MODELING FINANCIAL SCENARIOS 209TAB
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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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THE “MODIFIED BORNHUETTER-FERGUSO
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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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