Reserving Issues for Workers Compensation

Due to current forces acting on workers compensation, the practitioner faces a considerable challenge when attempting to predict future workers compensation loss development from historical data. The panel will illustrate this difficulty by exploring several aspects of variability in workers compensation results between insurers, and by discussing evidence relating to the level of reserve adequacy in the industry. The long tail of workers compensation loss development presents particular difficulties. The panel will discuss the evaluation of the tail, including methods that may be used to supplement historical data which is sparse or which may not be representative of future expected development. The panel will offer insights into analytical methods for evaluating the effects on loss development of current workers compensation trends, such as changing inflation rates, shifts in the mix of medical and indemnity losses, changing mortality, emergence of new injury definitions, statutory and judicial changes in benefits, and implementation of cost containment measure. With the rapid growth in assigned risk pools over the past few years, assumed reserves are a very significant item for almost every insurer writing workers' compensation. The panel will discuss National Workers Compensation Reinsurance Pool reserves.