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

672 ESTIMATING THE WORKERS COMPENSATION TAILAPPENDIX DINCORPORATING THE TRENDED MORTALITY MODEL INTO THEINCREMENTAL PAID TO PRIOR OPEN CLAIM METHODTable C.1 displays each of the steps taken in incorporatingthe static mortality model into the incremental paid to prior openclaim method. The trended mortality method is the same as thestatic mortality method, except for Step (4), where projectionsof the number of claims closed due to death are derived. In thetrended method, mortality tables forecasted by the SSA for theappropriate future development year are used instead of somefixed historical mortality table. The differences between these tablesgrows exponentially for development years that are decadesinto the future. A sample of these differences is disclosed inTable 5.1 of Section 5. These differences are compounded bymedical costs that have risen dramatically due to expected highfuture rates of medical inflation.The focus of this Appendix is to disclose the specific mannerby which a series of 90 different mortality tables were derivedand applied to the expected number of surviving claimants byage-at-injury for every future development year. The final resultis a slowly evolving and elongating series of claims closurepatterns for each accident year out to 90 years of development.Standard mortality tables for each decade since 1970 andprojected tables for each decade through 2080 were obtainedfrom the actuarial publications section of the SSA Web Sitewww.ssa.gov/OACT/NOTES/pdf studies/.The separate male and female tables were combined into oneusing an assumed 75%/25% male/female mix, the proportionindicated from SAIF’s PD claimant census data. The resultingweighted mortality rates were then compiled into an array ofexpected mortality rates for each age at each future calendaryear.