Estimating Accident Year Losses From Self-Insured Workers' Compensation 'Pay-As-You-Go' Data

The annual costs of workers compensation for many businesses are small compared to rotai payroll or formal costs of production. As a result, many such entities do not maintain data in accident or injury year at all, nor reserve for open claims, and maintain records only for paid loss amounts on a calendar year basis without regard to injury year. Often with a change in ownership or management, the new management team requests an estimate of the funding levels on a fully accrued basis. This paper presents an approach to determining the expected injury year ultimate loss amounts from a combination of calendar year exposure and loss payment data.