Reserves for Reopened Claims on Workmen's Compensation

Reopening of closed claims occurs in most lines of insurance, but in the case of Workmen's Compensation these reopenings have acquired a major importance because of their frequency and the success with which these reopened claims are pressed. Most companies make the reserve for reopened claims a part of the reserve for Incurred But Not Reported Claims, calculated at the end of each year for the purpose of the Annual Statement. However, it appears that the methods used for the calculation of the reserves on regular I.B.N.R. claims do not lend themselves readily for estimating the liability arising out of reopened claims. The excellent paper by Thomas Tarbell (see Proceedings of the Casualty Actuarial Society Vol. XX) relates the I.B.N.R. reserves to the experience of the immediate past (usually eleven months experience of the cur-rent year) modified by current factors such as comparative volume of exposure (the volume of business in force), accident frequency and average claim cost.