Methodologies for Determining Reserve Liabilities in the Workers Compensation High Deductible Program

In this paper I describe several approaches for estimating liabilities under a high deductible program, including a proposal for a more sophisticated approach relying upon a loss distribution model. The discussion addresses several related issues dealing with deductible size and mix, absence of long-term histories, and the determination of consistent loss development actors among deductible limits. In addition, I propose several approaches for estimating aggregate loss limit charges, if any, and the asset value for associated servicing revenue.