Casualty Loss Reserve Seminar
An Insider’s Guide to WC Loss Reserving
Larry Vitale
Topics for Discussion

Frequency and Severity Trends

Loss Development




Trends in Country Wide
Variation by State
Primary and Excess
Trends in Excess

Tail of the Loss Payment Distribution – What’s in it?

Variation in Loss Reserves


Industry Net Reserves
Industry Excess Reserves
2
WC Frequency and Severity Trends
The Growth in WC Indemnity Claim Costs Has Eased in
Recent Years
21
19
+6.0%+2.0%
Annual Change 1992-1996: +1.3%
Annual Change 1997-2004: +7.4%
+4.7%
+2.2%
+9.6%
17
+10.9%
15
+9.4%
2001
2002
$19.1
1996
$17.7
1995
$16.9
1994
$16.5
$10.6
1993
$12.4
$10.0
1992
$11.4
$9.8
1991
$15.1
+4.9%+1.7%
$9.4
7
-3.1% -2.8%
$9.6
9
+1.0%
$13.6
11
+7.7%
+5.9%
$18.7
+9.0%
13
$9.9
Indemnity Claim Costs (000s)
Lost-Time Claims
2004
2005
5
1997
1998
1999
2000
2003
Accident Year
Source: State of Line, D Mealey Chief Actuary NCCI
3
WC Frequency and Severity Trends
Workers Compensation Indemnity Severity Is No
Longer Outpacing Wage Inflation
Lost-Time Claims
Percent Change
12
10.9
10
7.7
8
6.0
5.9
6
4.9
4.7
2
2.8
2.8
4.7
4.2
4.2
4.0
4
9.6
9.4
9.0
2.2 2.2 2.0
1.7
2.2
2.5
2.0
0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Accident Year
Change in CPS Wage
Change in Indemnity Cost Per Lost-Time Claim
Source: State of Line, D Mealey Chief Actuary NCCI
4
WC Frequency and Severity Trends
WC Medical Claim Cost Trends--Growth Continued in 2005
+8.5%
23
Annual Change 1992-1996: +4.1%
21
Annual Change 1997-2004: +9.5%
+10.3
+9.1%
19
+8.7%
17
+12.3%
1994
1995
1996
1997
1998
1999
2000
2001
2002
$19.0
$10.1
1993
5
$14.2
$9.4
1992
+1.3% -2.1%
$12.0
$8.9
1991
+6.8%
$11.1
$8.2
7
+9.0%
+7.4%
$8.4
9
+5.1%
$13.2
11
+8.3%
$16.0
+10.1%
$17.4
13
2003
2004
$22.7
+8.1%
+9.5%
$20.9
15
$8.3
Medical Claim Costs (000s)
Lost-Time Claims
2005
Accident Year
Source: State of Line, D Mealey Chief Actuary NCCI
5
WC Frequency and Severity Trends
Workers Compensation Medical Severity Has Been
Growing Much Faster Than the Medical CPI
Lost-Time Claims
14
12.3
Percent Change
12
10.3
10.1
9.5
10
6
4.5
5.1
3.6
4
2.8
3.2
8.5
8.1
7.4
8
9.1
8.7
8.3
3.5
4.1
4.6
4.7
4.0
4.4
4.2
2
0
1995
1996
1997
1998
Change in Medical CPI
1999
2000
2001
2002
2003
2004
2005
Year
Change in Medical Cost Per Lost-Time Claim
Source: State of Line, D Mealey Chief Actuary NCCI
6
WC Frequency and Severity Trends
Workers Compensation Medical Losses Are More Than Half of Total Losses
Medical
All Claims--NCCI States
1
Percentage
Medical:
44%
Medical:
52%
Indemnity
Medical:
58%
0.5
Indemnity:
56%
Indemnity:
48%
Indemnity:
42%
0
1985
1995
2005
Year
Source: State of Line, D Mealey Chief Actuary NCCI
7
WC Frequency and Severity Trends
Workers Compensation Lost-Time Claim Frequency Continues
its Decline
Lost-Time Claims
2
Percentage Change
Cumulative Change of -48% (1991-2004)
0.5
0.3
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
-2
-2.3
-4
-6
-4.2 -4.4
-4.5
-4.3 -3.9 -4.5
-4.5
-5.7
-6.5
-8
-10
-3.9
-6.9
-9.2
Accident Year
Source: State of Line, D Mealey Chief Actuary NCCI
8
WC Frequency and Severity Trends
Percent Change in Lost-Time Claim Frequency
Declines in Frequency Now Uniform by Size
of Loss
Size of Loss
6
4
2
0
-2
-4
-6
-8
-10
-12
-14
$0-$2K
$2-$10K
$10-$50K
$50K-Over
Overall Yearly Change in Frequency
-5%
2001
-7%
2002
-5%
2003
-4%
2004
Policy Expiration Year
Source: State of Line, D Mealey Chief Actuary NCCI
9
WC Frequency and Severity Trends
Claim Frequency Has Declined for All Industry Groups
Lost-Time Frequency per $1M of WageAdjusted Payroll
Policy Expiration Year
2000
2001
2002
2003
2004
1.2
Cumulative Change in Frequency
1.0
-17%
-20%
-12%
-16%
-17%
-19%
0.8
0.6
0.4
0.2
0.0
Manufacturing
Contracting
Office & Clerical Goods & Services
Miscellaneous
Overall
Policy Expiration Year
Source: State of Line, D Mealey Chief Actuary NCCI
10
Injury & Illness Rates per 1,000 FTE
Workers
WC Frequency and Severity Trends
Non-Fatal Incidence Rates Involving Days Away from
Work by Age Show Relationships Narrowing
30
25
20
15
10
5
1994
1995
Age 20-24
1996
Age 25-34
1997
1998
Age 35-44
1999
Age 45-54
2000
Age 55-64
2001
2002
Total 20-64
Age as a Driver of Freq. ^ Severity, H Shuford, Chief Economist NCCI
11
WC Frequency and Severity Trends
Average Paid Case Indemnity Severities Reported at 18
Months By Age & Accident Year
1991-2002
$14,000
Severity
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
1991
1992
20-24
1993
25-34
1994
1995
1996
35-44
1997
45-54
1998
1999
55-64
2000
2001
2002
Total Ages 20-64
Age as a Driver of Freq. ^ Severity, H Shuford, Chief Economist NCCI
12
Loss Development:
Trends in Country Wide
% Ultimate
NCCI Gross CW AY Loss Incurred Development
Comparison from Various CY
Annual Statistical Bulletins
100%
2005
2003
75%
2001
1999
1995
50%
12
36
60
84
Months
13
Loss Development:
Trends in Country Wide
NCCI Gross CW AY Loss Paid Development
Comparison from Various CY
Annual Statistical Bulletins
100%
% Ultimate
2005
2003
2001
60%
2001
1999
1995
20%
12
36
60
Months
84
14
Loss Development:
Individual State - Variation
State Incurred Loss Development Comparison:
NCCI Statistical Bulletin 2005 & Misc Rating
Bureaus
% Ultimate
100%
10% - tile
25% - tile
75% - tile
95% - tile
CW
70%
40%
1
3
5
Years
7
9
15
Loss Development:
Individual State - Variation
% Ultimate
State Paid Loss Development Comparison: NCCI Statistical
Bulletin 2005 & Misc Rating Bureaus
100%
55%
10% - tile
25% - tile
75% - tile
95% - tile
CW
10%
1
3
5
Years
7
9
16
Loss Development:
Primary vs. Excess
WC Primary vs. Excess Loss Development Comparison
% Ultimate
100%
50%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Incurred RAA Total CY 2004
Incurred NCCI CW CY 2005
Paid RAA Total CY 2004
Paid NCCI CW CY 2005
Years
17
Loss Development:
Excess
2005 RAA WC Data: Excess Incurred Loss Development
Comparison
% Ultimate
100%
50%
Cal Yr '91-'95
Cal Yr '97-'00
Cal Yr '00-'04
0%
1
5
9
13
17
21
25
29
Years
18
Loss Development:
Excess
2005 RAA WC Data: Excess Paid Loss
Development Comparison
% Ultimate
100%
50%
Cal Yr '92-'96
Cal Yr '96-'00
Cal Yr '00-'04
0%
1
5
9
13
17
21
25
29
Years
19
Loss Development:
Excess
Impact of Attachment Points
on Historical Loss Development
Workers Compensation
2005 RAA WC Incurred Data
100%
Percentage of Ultimate
67%
All
Range 1
Range 2
33%
Range 3
Range 4
0%
1
8
15
22
29
Ye ars
20
Loss Development:
Excess
Impact of Attachment Points
on Historical Loss Dev elopment
Workers Compensation
2005 RAA WC Paid Data
100%
Percentage of Ultimate
67%
All
Range 1
Range 2
33%
Range 3
Range 4
0%
1
8
15
22
29
Ye ar s
21
Tail of the Loss Payment Distribution:
– What’s in it?

Give Perspective

Relied on a very good recent CAS paper by Richard
Sherman and Gordon Diss – Estimating The
Workers’ Compensation Tail

Focus on the Major Cause of the length of the
distribution's tail.

Show why care must be take when estimating the
distribution’s tail.
22
Tail of the Loss Payment Distribution:
What’s in it?
NCCI Annual Statistical Bulletins - CW Data
WC Frequency by Claim Type per 100,000 workers
CY
Average Data
Date
Fatal
PT
PP
TT
Lost
Time
Med
Only
Total
2005
6/99-6/00
5
7
459
909
1,379
4,951
6,330
Severity by Claim Type
CY
Fatal
PT
PP
TT
Lost Time
Medical
Only
Total
2005
192,756
635,884
59,674
9,872
30,192
568
7,023
Distribution of Aggregate Loss by Category
CY
Fatal
PT
PP
TT
Lost Time
Medical
Only
1997 - 2005
Average
cV
Trend
2.6%
13.5%
0.9%
8.3%
18.9%
5.1%
60.7%
4.3%
-0.7%
23.2%
7.4%
0.2%
94.8%
1.8%
0.0%
5.2%
32.3%
-2.2%
Distribution of Case Frequency by Category
CY
Fatal
PT
PP
TT
Lost Time
Medical
Only
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0.08%
0.09%
0.08%
0.08%
0.09%
0.09%
0.08%
0.06%
0.05%
0.06%
0.05%
0.11%
0.15%
0.13%
0.09%
0.09%
0.10%
0.09%
0.08%
0.05%
0.06%
0.07%
7.3%
7.2%
7.3%
7.0%
6.2%
6.1%
6.2%
7.2%
7.8%
8.2%
8.0%
14.4%
14.6%
14.5%
15.1%
15.9%
16.4%
16.5%
16.5%
16.1%
16.0%
16.0%
21.8%
22.1%
22.0%
22.2%
22.2%
22.8%
22.9%
23.8%
24.0%
24.3%
24.1%
78.2%
77.9%
78.0%
77.8%
77.8%
77.2%
77.1%
76.2%
76.0%
75.7%
75.9%
1997 - 2005
Average
cV
Trend
0.07%
20.0%
5.0%
0.09%
32.9%
8.0%
7.13%
10.0%
-1.1%
15.62%
5.4%
-1.3%
22.92%
4.1%
-1.2%
77.08%
1.2%
0.4%
23
Tail of the Loss Payment Distribution:
– What’s in it?
WC Permenant Total Incremental Medical Payments
Five Year Groupings of AY's - SAIF Corporation ($000's)
AY's
1931-35
1936-40
1941-45
1946-50
1951-55
1956-60
1961-65
1966-70
1971-75
20-24
6,818
10,227
25-29
6,583
12,158
30-34
1,570
2,933
5,121
35-39
746
1,506
1,908
40-44
327
830
2,227
45-49
50-54
62
289
302
259
797
943
55-59
60-64
10
2
204
8
5
60-64
WC Permenant Total Incremental Medical Payments
Five Year Groupings of AY's - Washington State Fund ($000's)
AY's
1940-44
1945-49
1950-54
1955-59
1960-64
1965-69
1970-74
20-24
25-29
840
1,055
1,589
5,380
7,014
183
750
2,244
1,765
4,741
8,383
30-34
35-39
40-44
45-49
50-54
55-59
149
258
989
2,153
1,581
5,318
294
384
1,115
1,879
1,186
271
273
1,757
2,170
243
194
1,400
101
291
131
Source: Estimating The Workers' Compensation Tail, R.Sherman & Gordon Diss
24
Tail of the Loss Payment Distribution:
What’s in it?
Medical Only Severity Escalation Rates
Medical
Severity
$28
32
34
37
37
42
46
48
56
63
73
79
88
99
114
144
162
188
205
230
247
258
264
268
279
298
335
361
372
383
403
434
454
501
540
604
658
Escalation
Rate
13.9%
4.4
11.1
0.0
12.2
9.5
5.8
15.7
12.2
16.3
7.9
12.1
11.8
15.5
26.5
12.2
16.2
8.9
12.1
7.4
4.6
2.4
1.4
4.4
6.8
12.3
7.7
3.0
3.1
5.1
7.7
4.5
10.4
7.7
12.0
9.0
9.3%
9.0%
9.2%
Source: Estimating The WC Tail, Sherman & Diss
The Drug Share of Medical Costs in Workers Compensation
Increases With Age of Claim
40
Percentage of Total Medical
Payments in Service Year
Accident Year
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Mean
Median
Geometric
mean
30
20
10
0
1
2
3
4
5
6
7
8
9
Number of Years Following Date of Injury
Prescription Drug Study, B Lipton, Practice Leader NCCI
25
Tail of the Loss Payment Distribution:
What’s in it?
Percentage Increase in male Life Expectancies
Based on Social Security Adminstration Mortality Tables
Current
Age
20
40
60
80
1980
1960
2000
1980
2020
2000
2040
2020
2060
2040
2080
2060
4.2%
7.0%
9.1%
11.9%
5.8%
8.2%
11.7%
6.5%
3.7%
5.2%
7.6%
8.7%
3.3%
4.5%
6.6%
10.0%
2.8%
3.8%
5.6%
8.6%
2.5%
3.3%
4.9%
7.6%
Two Indicators of an Increasing Proportion
of the Elderly Among Surviving Claimants
% 80+
Years Old
DY
0
10
20
30
40
50
60
Source:
0.0%
0.9%
10.9%
36.5%
51.2%
64.7%
100.0%
% Who Will
Die Within
Five Years
4.4%
9.4%
18.3%
30.1%
39.0%
47.2%
60.3%
Estimating The Workers' Compensation Tail, R.Sherman & Gordon Diss
26
Tail of the Loss Payment Distribution:
What’s in it?
Factors Affecting the Number of Open MPD Claims for a Single Accident Year
(1)
(2)
(3)
# Open at
Develop-
End of
Prior DY
ment Year
[(5) of Prior
(DY)
DY End]
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
460.0
1531.0
1366.0
949.0
677.0
554.0
396.0
323.0
249.0
209.0
196.9
186.5
177.5
169.7
162.9
156.1
150.2
144.0
138.5
132.8
128.2
123.6
118.7
113.8
Newly
926
2790
866
215
91
47
19
11
8
5
4
3
3
3
3
2
2
1
1
0
0
0
0
()
0
(5)
Estimated
# Open at
Claims
Estimated # Closed for
Reported of Claimant
Claims
(4)
Deaths
3.5
15.0
17.3
14.1
10.3
7.9*
6.9
5.3
4,7
3.9
3.5
3.6
3.6
3.7
3.8
3.9
4.0
4.2
4.3
4.4
4.5
4.7
4.8
4.9
5.1
End of
Current DY
Other
[(1)+(2)-
Reasons
(3)-(4)]
462.5
1704.0
1013.7
617.9
352.7
162.1
170.1
78.7
77.3
41.1
12.5
9.8
8.4
7.1
5.9
4.9
3.9
3.0
2.2
1.4
0.0
0.0
0.0
0.0
0.0
460.0
1531.0
1366.0
949.0
677.0
554.0
396.0
323.0
249.0
209.0
196.9
186.5
177.5
169.7
162.9
156.1
150.2
144.0
138.5
132.8
128.2
123.6
118.7
113.8
108.8
Source: Estimating The Workers' Compensation Tail, R.Sherman & Gordon Diss
27
Tail of the Loss Payment Distribution:
What’s in it?
A Comparison of SAIF's Historical Factor
with Extrapoliated Tail Factors at 15 Years
(Based on a Fit to Historical PLDF's for DY 10-15)
Extrapolation Method
Indicated Tail
Factor At
15 Years
Extrapolated Reserve as a
%-age of Reserve
Indicated by SAIF's History
Linear Decay
Exponential Decay
Inverse Power Curve
1.046
1.128
1.234
3.5%
9.8%
17.9%
SAIF's Historical Factors
2.309
100.0%
Source:
Estimating The Workers' Compensation Tail, R.Sherman & Gordon Diss
28
Tail of the Loss Payment Distribution:
What’s in it?
Model v. Actual SAIF PLDFs Less 1.0
0.07
0.05
0.04
SAIF
Model
0.03
0.02
0.01
58
54
50
46
42
38
34
30
26
22
18
14
10
0
6
DPLF Less 1.0
0.06
Year of Development
29
Tail of the Loss Payment Distribution:
What’s in it?
Cumulative Loss Payments for Hypothetical PD Claimant
(A)
Age of
ClaimAnt
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
Source:
(B)
DY
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
(C)
Incremental
Medical
Payments
0.0
5.0
5.5
5.9
6.5
7.1
7.7
8.4
9.1
10.0
10.9
11.8
12.9
14.1
15.3
16.7
18.2
19.9
21.6
23.6
25.7
28.0
30.5
33.3
36.3
39.6
43.1
47.0
51.2
55.8
60.9
66.3
72.3
78.8
85.9
93.6
102.1
111.3
121.3
132.2
144.1
(D)
Cumulative
Medical
Payments
0.0
5.0
10.5
16.4
22.9
29.9
37.6
46.0
55.1
65.1
76.0
87.8
100.7
114.8
130.1
146.8
165.0
184.9
206.5
230.1
255.8
283.8
314.4
347.7
383.9
423.5
466.6
513.6
564.8
620.7
681.5
747.9
820.2
899.0
984.9
1,078.6
1,180.6
1,291.9
1,413.1
1,545.3
1,689.4
(E)
Cumulative
Indemnity
Payments
0.0
25.0
50.0
75.0
100.0
125.0
150.0
175.0
200.0
225.0
250.0
275.0
300.0
325.0
350.0
375.0
400.0
425.0
450.0
475.0
500.0
525.0
550.0
575.0
600.0
625.0
650.0
675.0
700.0
725.0
750.0
775.0
800.0
825.0
850.0
875.0
900.0
925.0
950.0
975.0
1,000.0
(F)
Cumulative
Loss
Payments
0.0
30.0
60.5
91.4
122.9
154.9
187.6
221.0
255.1
290.1
326.0
362.8
400.7
439.8
480.1
521.8
565.0
609.9
656.5
705.1
755.8
808.8
864.4
922.7
983.9
1,048.5
1,116.6
1,188.6
1,264.8
1,345.7
1,431.5
1,522.9
1,620.2
1,724.0
1,834.9
1,953.6
2,080.6
2,216.9
2,363.1
2,520.3
2,689.4
Effects of Retention on Development
Development Stops if Ret'n is $250K
Development Stops if Ret'n is $500K
Development Stops if Ret'n is $1,000K
Development Stops if Ret'n is $2,000K
Estimating The Workers' Compensation Tail, R.Sherman & Gordon Diss
30
Variation in Loss Reserves:
Net WC Industry
Industry Aggregate - Net Workers Compensation 2005 Reserves and Variation Calculated
(000) omitted
As Reported In Aggregate Annual Statement
Clarks' Estimation Methodology
Loss Development
CY / AY
Net Earned
Premium
Net Ult. Loss:
Def. and Cost
Containment
Net Total
Reserves
Net
Ultimate LR
Net Ult. Loss:
Def. and Cost
Containment
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
25,638,936
23,865,669
23,074,078
21,384,901
23,481,111
26,096,142
29,266,668
32,398,205
36,394,348
38,958,050
17,139,569
18,379,251
20,018,486
20,181,132
21,510,182
21,171,896
20,493,071
21,183,208
23,198,220
25,986,135
2,141,106
2,506,431
3,060,344
3,475,410
4,079,342
4,778,653
6,298,990
8,864,568
13,519,030
21,190,570
66.8%
77.0%
86.8%
94.4%
91.6%
81.1%
70.0%
65.4%
63.7%
66.7%
16,945,390
18,210,021
19,835,475
20,038,434
21,633,003
21,353,595
19,904,295
19,573,541
19,846,378
22,279,921
Total
Source:
69,914,444
Net Total
Net
Reserves Ultimate LR
1,947,038
2,337,224
2,877,375
3,333,245
4,202,486
4,960,928
5,710,206
7,254,887
10,167,184
17,484,354
60,274,925
66.1%
76.3%
86.0%
93.7%
92.1%
81.8%
68.0%
60.4%
54.5%
57.2%
Difference
Process Parameter
Std Dev Std Dev
Total
Std Dev
cV
194,068
169,207
182,969
142,165
(123,144)
(182,275)
588,784
1,609,681
3,351,846
3,706,216
182,093 149,146
199,507 173,343
221,363 205,553
238,254 229,999
267,522 276,421
290,662 311,878
311,841 343,631
351,498 412,977
416,109 553,949
545,672 1,134,554
235,377
264,293
302,082
331,156
384,677
426,324
464,033
542,311
692,825
1,258,956
12.1%
11.3%
10.5%
9.9%
9.2%
8.6%
8.1%
7.5%
6.8%
7.2%
9,639,519
1,013,154 2,658,245
2,844,776
4.7%
Best Averages And Aggregates - 2005
31
Variation in Loss Reserves:
Net WC Industry
Industry Aggregate - Net Workers Compensation 2005 Reserves and Variation Calculated
(000) omitted
CY / AY
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Total
Source:
As Reported In Aggregate Annual Statement
Clarks' Estimation Methodology
Cape Cod
Net Earned
Premium
Net Ult. Loss: Net Total
Def. and Cost Reserves
Containment
25,638,936
23,865,669
23,074,078
21,384,901
23,481,111
26,096,142
29,266,668
32,398,205
36,394,348
38,958,050
Net Ult. Loss: Net Total
Def. and Cost Reserves
Containment
17,139,569
18,379,251
20,018,486
20,181,132
21,510,182
21,171,896
20,493,071
21,183,208
23,198,220
25,986,135
2,141,106
2,506,431
3,060,344
3,475,410
4,079,342
4,778,653
6,298,990
8,864,568
13,519,030
21,190,570
69,914,444
Net
Ultimate LR
66.8%
77.0%
86.8%
94.4%
91.6%
81.1%
70.0%
65.4%
63.7%
66.7%
17,058,062
18,281,734
19,817,921
20,094,765
21,483,886
21,230,017
20,162,994
19,989,128
20,327,430
20,990,290
2,059,710
2,408,937
2,859,821
3,389,576
4,053,369
4,837,350
5,968,905
7,670,474
10,648,236
16,194,723
60,091,101
Net
Ultimate LR
Difference
66.5%
76.6%
85.9%
94.0%
91.5%
81.4%
68.9%
61.7%
55.9%
53.9%
81,396
97,494
200,523
85,834
25,973
(58,697)
330,085
1,194,094
2,870,794
4,995,847
9,823,343
Process Parameter
Std Dev Std Dev
Total
Std Dev
cV
Payroll
(00,000)
191,693
207,308
225,878
245,910
268,913
293,770
326,326
369,926
435,856
537,515
243,159
266,940
295,506
325,636
359,145
392,106
432,485
480,013
541,199
617,431
11.8%
11.1%
10.3%
9.6%
8.9%
8.1%
7.2%
6.3%
5.1%
3.8%
16,158,377
16,932,578
17,803,026
18,421,852
18,887,742
18,877,167
18,898,350
18,841,327
18,980,085
18,906,587
2,598,807
4.3%
149,599
168,168
190,533
213,464
238,056
259,704
283,821
305,888
320,822
303,807
1,035,402 2,383,640
Best Averages And Aggregates - 2005
32
Variation in Loss Reserves:
Net WC Industry
Relative Comparison of % Ultimate Patterns vs Industry Average
AY
Implied
Industry
%
Difference
Clark's
Methods
%
Difference
10
9
8
7
6
5
4
3
2
1
0.991
1.000
1.006
0.999
1.001
0.993
0.947
0.897
0.830
0.824
0.9%
0.0%
-0.6%
0.1%
-0.1%
0.7%
5.3%
10.3%
17.0%
17.6%
1.000
1.007
1.013
1.004
0.992
0.981
0.971
0.967
0.967
0.961
0.0%
-0.7%
-1.3%
-0.4%
0.8%
1.9%
2.9%
3.3%
3.3%
3.9%
33
Variation in Loss Reserves:
Net WC Industry
Workers Compensation AY Loss Defense & Cost
Containment Expense Ratios
As Reported--Private Carriers
100
93
90
Percent
At first Report
As of 12/31/2005
96
95
88
85
82
80
75
70
78
79
77
77
76
72
71
71
71
70
69
67
66
65
68
68
65
60
55
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Accident Year
34
Variation in Loss Reserves:
Excess WC
Excess Workers Compensation Incremental Paid Loss a/o 12/31/2004
Development Year
AY
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
Source:
33
34
78
8
96
129
99
88
319
205
255
426
214
681
256
824
(000 omitted)
35
93
9
188
149
163
95
163
313
200
249
502
561
335
36
47
20
203
83
118
141
123
175
256
190
269
304
37
-9
9
75
67
206
127
109
1,054
337
211
718
38
20
11
157
41
129
98
106
181
120
203
39
1
10
15
16
94
310
131
188
143
40
8
49
113
30
123
334
119
218
41
21
4
224
3
102
172
24
42
8
8
250
11
50
325
43
-5
-3
73
16
238
44
27
16
222
7
45
13
12
253
46
19
-9
14
RAA Workers Compensation Paid Loss Data - 2005.
35
Variation in Loss Reserves:
Excess WC
Comparison of Excess Paid Development
% Ultimate
100%
Inverse Power Curve
Extrapolation
Linear Decay
67%
33%
0%
1
7
13
19
Years
25
31
36