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

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626 ESTIMATING THE WORKERS COMPENSATION TAILTABLE 6.3Comparison of MPD Loss Reserve as a Percentage ofthe Total Workers Compensation Loss Reserve(Based on Different PLDF Assumptions; Dollars inMillions)Indicated by Indicated by Percentage Increase inMaturity Historical Trended Mortality MPD Reserve Due to Using(Years) PLDFs PLDFs Trended Mortality Rates10 $29.6 $41.3 +39:715 28.3 39.6 +39:625 25.5 34.6 +35:835 20.0 27.0 +34:9Clearly, the trended mortality model indicates MPD loss reservesthat are significantly larger than straight historical experiencewould indicate.7. SENSITIVITY CONSIDERATIONSThe most significant factor affecting the indications in thispaper is the applicable retention. This paper presents indicationson an unlimited basis. Tail factors and PLDFs at more matureyears of development should be expected to be significantly lessat relatively low retentions. This is evident on an a priori basis.Consider a hypothetical PD claimant injured on December 15,2003, at age 35.9 years, with a life expectancy of 40 years. Hismedical costs are $5,000 during 2004, and future medical inflationis 9% per year. Indemnity losses are a flat $25,000 per year,beginning in 2004. Table 7.1 indicates the total cumulative losspayments at the end of each of the first 41 years of development.For this hypothetical PD claimant, net paid losses would topout by the end of the ninth year of development with a retentionof $250,000; after 16 years with a $500,000 retention; after26 years with a $1 million retention; and after 37 years with a$2 million retention.
ESTIMATING THE WORKERS COMPENSATION TAIL 627TABLE 7.1Cumulative Loss Payments for Hypothetical PDClaimant(A) (B) (C) (D) (E) (F)Incremental Cumulative Cumulative CumulativeAge of Medical Medical Indemnity LossClaimant DY Payments Payments Payments Payments35 1 0.0 0.0 0.0 0.036 2 5.0 5.0 25.0 30.037 3 5.5 10.5 50.0 60.538 4 5.9 16.4 75.0 91.439 5 6.5 22.9 100.0 122.940 6 7.1 29.9 125.0 154.941 7 7.7 37.6 150.0 187.642 8 8.4 46.0 175.0 221.043 9 9.1 55.1 200.0 255.144 10 10.0 65.1 225.0 290.1 (a)45 11 10.9 76.0 250.0 326.046 12 11.8 87.8 275.0 362.847 13 12.9 100.7 300.0 400.748 14 14.1 114.8 325.0 439.849 15 15.3 130.1 350.0 480.150 16 16.7 146.8 375.0 521.8 (b)51 17 18.2 165.0 400.0 565.052 18 19.9 184.9 425.0 609.953 19 21.6 206.5 450.0 656.554 20 23.6 230.1 475.0 705.155 21 25.7 255.8 500.0 755.856 22 28.0 283.8 525.0 808.857 23 30.5 314.4 550.0 864.458 24 33.3 347.7 575.0 922.759 25 36.3 383.9 600.0 983.960 26 39.6 423.5 625.0 1,048.5 (c)61 27 43.1 466.6 650.0 1,116.662 28 47.0 513.6 675.0 1,188.663 29 51.2 564.8 700.0 1,264.864 30 55.8 620.7 725.0 1,345.765 31 60.9 681.5 750.0 1,431.566 32 66.3 747.9 775.0 1,522.967 33 72.3 820.2 800.0 1,620.268 34 78.8 899.0 825.0 1,724.069 35 85.9 984.9 850.0 1,834.970 36 93.6 1,078.6 875.0 1,953.671 37 102.1 1,180.6 900.0 2,080.6 (d)Note: (a) Development stops if return is $250K. (b) Development stops if return is $500K. (c) Developmentstops if return is $1M. (d) Development stops if return is $2M.
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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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AN EXAMINATION OF THE INFLUENCE OF
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RISKINESS LEVERAGE MODELSRODNEY KRE
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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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MINUTES OF THE 2005 SPRING MEETING
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Volume XCII, Part 2 No. 177PROCEEDI
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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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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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