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

ESTIMATING THE WORKERS COMPENSATION TAIL 617TABLE 5.1Comparison of Mortality Rates and Claims Open atDifferent Development Years for Accident Year 2002Mortality Table Group Claims Open at % GreaterAssumed Survival Rate Prior Year-End OpenDY Static Trended Static Trended Static Trended Claims30 2000 2031 0.941 0.946 88.0 91.5 4.035 2000 2036 0.926 0.933 62.8 67.4 7.340 2000 2041 0.914 0.922 41.6 46.5 11.745 2000 2046 0.902 0.912 25.8 30.3 17.350 2000 2051 0.890 0.902 15.0 18.7 24.255 2000 2056 0.875 0.889 8.1 10.8 33.360 2000 2061 0.853 0.872 3.99 5.82 46.165 2000 2066 0.821 0.846 1.68 2.78 65.470 2000 2071 0.772 0.811 0.560 1.11 98.975 2000 2076 0.709 0.767 0.131 0.351 167.980 2000 2081 0.637 0.719 0.019 0.082 329.885 2000 2086 0.545 0.716 0.002 0.018 1086.8reserve indicated by the trended mortality method is decidedlygreater than that indicated by the static mortality method.To fully present the projections of the trended mortality modelwould require the display of arrays consisting of 37 rows andabout 90 columns, with the rows representing accident years andthe columns years of development. Since this would be unwieldy,summary arrays will be presented in which data for every fifthaccident year are shown at the end of every fifth developmentyear. An example is given in Table 5.2.Table 5.2 shows the calendar year mortality table that shouldbe used in determining the probability of continuation of a claimfor each AY-DY combination. If a current table (e.g., 2000) isused, differences between the static and trended mortality rateswill increase the further the year of the appropriate mortalitytable is from CY 2000.What effects will the above trends in mortality have on MPDloss reserves? It is not hard to foresee the general effects. Per-