Post-Reform Ratemaking: Adjustment of Pre-Reform to Post-Reform Loss Development Patterns

Ratemaking data, particularly loss development patterns, for a state which has enacted major workers compensation reform is not available for a number of years following reform. As a result adjustment, or actuarial judgment, needs to be applied to historical pre-reform data to reflect expected post-reform loss development patterns. The adjusted pattern can then be incorporated into traditional ratemaking methodologies. This paper offers a model to calculate actuarially appropriate adjustments for this situation.