On Indeterminate Claims Reserve Tables for Compensation [Discussion]

In his opening paragraph, Mr. Valerius states his problem as that of setting up reserves which will represent as nearly as possible the correct ultimate cost of compensation claims. He further states that such reserves are necessary for: (a) financial statements, (b) calculation of manual rates and (c) experience rating. No further mention is made regarding the necessity for correct reserves for statement and rate making purposes, but the paper deals entirely with the matter of values to be used for experience rating. Possibly the reason for this omission is that insurance laws require that compensation reserves must be calculated on a case basis and it is doubtful that insurance departments would favor the use of average values. Furthermore, in connection with the calculation of manual rates, the Schedule "Z" instructions do not permit the use of average values. The only exception to this general rule is in Pennsylvania where such a table is used in connection with certain cases.