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Retrospective Rating CAS Ratemaking Seminar March 11-12, 2004

Retrospective Rating CAS Ratemaking Seminar March 11-12, 2004. Jill Petker, Senior Actuary Liberty Mutual Group. Word Association: Retro Rating. What do you think of? What do customers think of? Large Deductible plans?. Risk Sharing. Risk Sharing. Per-Occurrence Excess.

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Retrospective Rating CAS Ratemaking Seminar March 11-12, 2004

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  1. Retrospective RatingCAS Ratemaking SeminarMarch 11-12, 2004 Jill Petker, Senior Actuary Liberty Mutual Group

  2. Word Association: Retro Rating • What do you think of? • What do customers think of? • Large Deductible plans?

  3. Risk Sharing

  4. Risk Sharing

  5. Per-Occurrence Excess

  6. Liberty’s Methodology for WC • Frequency-Severity Approach • Focuses on Serious Claims • Exposure, Experience, Characteristics • Discount and Profit/Risk

  7. Aggregate Excess • WC: Bureau Table M or L • GL/Auto: ??? • Independent Company Parameters • Independent Company Methodology • Discount and Profit/Risk

  8. Severity or Aggregate Loss?

  9. Impact of Non-Uniform Trendon Per-Occurrence Excess Ground-Up Trend +9% Excess of $250k: Uniform Trend +17% Non-Uniform +21%

  10. Impact of Loss Forecasts on Aggregate Excess Original Expected Primary $500k Aggregate/Max $750k Entry Ratio 1.50 Probability Blown 17% Expected Agg XS $87k

  11. Impact of Loss Forecasts on Aggregate Excess Original+20% Expected Primary $500k $600k Aggregate/Max $750k $750k Entry Ratio 1.50 1.25 Probability Blown 17% 25% Expected Agg XS $87k $129k

  12. Retrospective Rating • Risk Sharing • Per-Occurrence Excess • Aggregate Excess • Rateable Losses • Challenging Actuarial Issues

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