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

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6<strong>18</strong> ESTIMATING THE WORKERS COMPENSATION TAILTABLE 5.2Sample Layout of Summarized ResultsCalendar Year of Payments–for Every Fifth AccidentYear at Every Fifth Development YearDevelopment YearAY 5 10 <strong>15</strong> 20 25 30 35 40 45 50 55 60 65 70 75 801970 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 20491975 1979 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049 20541980 1984 1989 1994 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 20591985 1989 1994 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 20641990 1994 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 20691995 1999 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 2069 20742000 2004 2009 2014 2019 2024 2029 2034 2039 2044 2049 2054 2059 2064 2069 2074 2079manent disability claimants for more recent accident years areexpected to live longer than their counterparts from old accidentyears. This is a direct consequence of declining mortality rates.As a result, a higher percentage of PD claimants will still bealive at any given age of development. Therefore, the percentageof claims closed will decline at any given age, and thus simplepaid loss development projections will need to be adjusted upwardto reflect these declines in claims disposal ratios. Hence,tail factors that reflect the effects of declining mortality ratesmust increase over successive accident years for every possibledevelopment age.While the general effects of anticipated future mortality trendsare easy to grasp, the best way to quantify these effects is to constructa heuristic model designed to isolate the effects of mortalitytrends on PLDFs and paid tails. The trended mortality model wehave constructed is such that² The only thing that changes over time is mortality rates, ashistorically compiled and as officially forecasted by the SSA.² Medical inflation is a constant 9% per year, both historicallyand prospectively. Support for this assumption is provided inSection C.4 of Appendix C.
ESTIMATING THE WORKERS COMPENSATION TAIL 619² The number of ultimate reported claims for every accidentyear, from 1966 through 2002, is held at a constant level of5,000 per year.² Claim reporting and closure patterns for SAIF’s PD claimantsover the past 10 calendar years served as the basis for thesekey assumptions in order to make the model as realistic aspossible.By designing a model where claimant mortality rates are theonly thing that changes from accident year to accident year, theeffects of mortality trends can be clearly seen. Details of themodel are presented in Appendices C and D.Projections of the number of open claims were derived fromthe heuristic model for each accident year from 1966 through2002 at the end of every development year from the first tothe 80th. As noted above, each accident year was assumed tohave 5,000 ultimate reported claims. Claim closure patterns, forreasons other than death of the claimant, were held constant forall accident years. The only thing that varied from accident yearto accident year in the model was the number of claims closeddue to death. In this way the effects of mortality trends on thenumber of open claims at the end of each development year foreach accident year can be isolated.What is evident from the summarized results presented in Table5.3 is that the expected number of open claims at any givenyear of development will slowly increase as one moves from theoldest accident years to the most recent.For example, at the end of 35 years of development, the numberof open claims is expected to increase from 50 for accidentyear 1970 to 62 for accident year 2000. This is an increase of24% in the number of open claims. And at the end of 60 years ofdevelopment, the number of open claims is expected to increasefrom 3.5 to 5.0, an increase of 42.9%. The percentage rate ofincrease in the number of open claims for each given column
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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 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 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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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 753me keep my
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MINUTES OF THE 2005 CAS ANNUAL MEET
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MINUTES OF THE 2005 ANNUAL MEETING
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REPORT OF THE VICE PRESIDENT—ADMI
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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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