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

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612 ESTIMATING THE WORKERS COMPENSATION TAILTABLE 3.5Indicated Paid Factors to UltimateEnd of Year of With 9% Without Ratio of 9% Inflation ReserveDevelopment Inflation Inflation to Zero Inflation Reserve10 2.684 1.152 11.115 2.469 1.110 13.425 2.019 1.054 18.935 1.594 1.022 27.050 1.192 1.003 64.0The paid factors to ultimate in the last column of Table 3.2above are exceptionally sensitive to future rates of claim inflation.Table 3.5 provides a comparison of the indicated tail factorswith and without inflation at various representative ages ofdevelopment.An example will put the implications of Table 3.5 into practicalterms. Suppose a claims adjuster reviews all PD claims openat the end of 25 years of development. For each PD claim, he estimatesthe medical portion by multiplying current medical paymentsby an annuity factor that is the life expectancy of theclaimant at his or her current age. The ratio of 18.9 in the rightcolumn of Table 3.5 is saying is that future medical paymentswill be 18.9 times the case reserve derived by this method. Onemight think that the error would decrease the more mature theaccident year became, but in actuality the percentage of error dramaticallyincreases at high maturities. In addition, the mortalitytable used by the claims adjuster may be out of date.Just as we have modeled the expected PLDF patterns for MPDlosses, analogous incurred loss development factor (ILDF) patternscan be estimated if we define total case reserves as theproduct of the latest year’s incremental payments times the averageannuity factor for all living PD claimants. This is presentedin Table 3.6.
ESTIMATING THE WORKERS COMPENSATION TAIL 613TABLE 3.6ExpectedILDFsifCaseReservesareBasedonZeroInflation Annuity FactorsUpward Zero Increm. Zero ZeroSum of Inflation Pd. to Inflation Inflation# Prior # Prior Annuity Prior Case Cum. Case IncurredDY Open Open Factor Open Reserve Paid Incurred ILDF Tail5 949 6,912.6 6.28 7.9 47.1 86.7 133.8 0.9756 2.0666 677 5,963.6 7.81 6.8 35.8 91.2 127.1 0.9500 2.1757 554 5,286.6 8.54 6.9 32.8 95.1 127.9 1.0059 2.1628 396 4,732.6 10.95 7.5 32.7 98.1 130.8 1.0231 2.1139 323 4,336.6 12.43 8.2 33.0 100.7 133.7 1.0225 2.06610 249 4,013.6 15.12 9.0 33.8 103.0 136.7 1.0222 2.02211 209 3,764.6 17.01 8.0 28.6 104.6 133.2 0.9744 2.07512 196.9 3,555.6 17.05 8.8 29.4 106.4 135.8 1.0193 2.03513 186.5 3,358.7 17.01 9.5 30.3 108.1 138.4 1.0195 1.99614 177.5 3,172.1 16.87 10.4 31.2 110.0 141.2 1.0197 1.95815 169.7 2,994.6 16.65 11.3 32.0 111.9 144.0 1.0199 1.92016 162.9 2,824.9 16.34 12.4 32.9 113.9 146.8 1.0200 1.88217 156.1 2,662.0 16.05 13.5 33.8 116.0 149.8 1.0202 1.84518 150.2 2,505.9 15.69 14.7 34.6 118.2 152.9 1.0203 1.80819 144.0 2,355.8 15.36 16.0 35.4 120.6 156.0 1.0204 1.77220 138.5 2,211.8 14.96 17.5 36.2 123.0 159.2 1.0204 1.73721 132.8 2,073.2 14.62 19.0 36.9 125.5 162.4 1.0205 1.70222 128.2 1,940.5 14.13 20.7 37.6 128.2 165.7 1.0205 1.66823 123.6 1,812.2 13.67 22.6 38.2 130.9 169.1 1.0204 1.63424 118.7 1,688.7 13.22 24.6 38.7 133.9 172.6 1.0203 1.60225 113.8 1,569.9 12.80 26.9 39.1 136.9 176.0 1.0202 1.57026 108.8 1,456.1 12.39 29.3 39.4 140.1 179.6 1.0200 1.53927 103.6 1,347.4 12.00 31.9 39.7 143.4 183.1 1.0198 1.50928 98.4 1,243.8 11.64 34.8 39.8 146.8 186.7 1.0195 1.48129 93.2 1,145.4 11.29 37.9 39.9 150.4 190.3 1.0192 1.45330 88.0 1,052.2 10.96 41.3 39.8 154.0 193.8 1.0189 1.42631 82.8 964.2 10.65 45.0 39.7 157.7 197.4 1.0185 1.40032 77.6 881.5 10.36 49.1 39.5 161.5 201.0 1.0181 1.37533 72.5 803.9 10.08 53.5 39.1 165.4 204.6 1.0177 1.35134 67.6 731.3 9.82 58.3 38.7 169.4 208.1 1.0172 1.32835 62.8 663.7 9.57 63.6 38.2 173.4 211.6 1.0167 1.30636 58.2 600.9 9.33 69.3 37.6 177.4 215.0 1.0163 1.28637 53.7 542.8 9.11 75.5 36.9 181.4 218.4 1.0157 1.26638 49.5 489.0 8.89 82.3 36.2 185.5 221.7 1.0152 1.24739 45.4 439.6 8.68 89.7 35.4 189.6 225.0 1.0147 1.22940 41.6 394.2 8.48 97.8 34.5 193.7 228.1 1.0142 1.211
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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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10 AN EXAMINATION OF THE INFLUENCE
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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 39Various
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RISKINESS LEVERAGE MODELS 53the TVA
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RISKINESS LEVERAGE MODELS 55We also
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RISKINESS LEVERAGE MODELS 57Mean Va
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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 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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WHY LARGER RISKS HAVE SMALLER INSUR
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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 181tur
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MODELING FINANCIAL SCENARIOS 183the
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MODELING FINANCIAL SCENARIOS 201neg
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MODELING FINANCIAL SCENARIOS 203ide
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MODELING FINANCIAL SCENARIOS 205tra
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MODELING FINANCIAL SCENARIOS 207mod
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MODELING FINANCIAL SCENARIOS 209TAB
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MODELING FINANCIAL SCENARIOS 211mak
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MODELING FINANCIAL SCENARIOS 213FIG
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MODELING FINANCIAL SCENARIOS 215str
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MODELING FINANCIAL SCENARIOS 223are
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MODELING FINANCIAL SCENARIOS 233ete
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MODELING FINANCIAL SCENARIOS 235[10
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MODELING FINANCIAL SCENARIOS 237[30
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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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INCORPORATION OF FIXED EXPENSES 681
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DISCUSSION OF PAPER PUBLISHED INVOL
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APPLICATION OF THE OPTION MARKET PA
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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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PRESIDENTIAL ADDRESS-NOVEMBER 14, 2
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PRESIDENTIAL ADDRESS 753me keep my
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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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