NCCI Research Papers Submitted to Casualty Actuarial Society Journal

Posted Date: September 25, 2009
    

Industry InformationResearch

The Workers Compensation Tail Revisited

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Large workers compensation triangles are hard to come by and, as a consequence, there is little public knowledge about the development patterns of mature workers compensation claims. By analyzing two (very) large workers compensation triangles, provided by SCF Arizona (indemnity) and SAIF Oregon (medical component of permanent disability claims), it is shown that the decay in (calendar year effect adjusted) incremental indemnity payments is continually decreasing (except when the data turn very sparse in the final few development years).

By way of contrast, the decay rate of (calendar year effect adjusted) incremental medical payments assumes a nearly constant (negative) value after about 20 development years. The latter evidence is significant as it calls into question the existence of a hypothesis previously discussed in literature according to which there is a bulge in incremental medical payments at high maturities at the level of the aggregate triangle.

This paper is under review for possible publication in the Casualty Actuarial Society journal Variance.

NCCI's 2007 Hazard Group Mapping

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At the beginning of 2007, NCCI implemented a new seven-hazard-group system, replacing the previous four-hazard-group system. This article describes the analysis that led to the assignment of classes to the new seven hazard groups. A hazard group is a collection of workers compensation classifications that have relatively similar expected excess loss factors over a broad range of limits. The new hazard groups are not simply a subdivision of the previous four; they are a substantially different mapping of classes to hazard group.

This paper is under review for possible publication in the Casualty Actuarial Society journal Variance.