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MIRA II Summary of Project Status

MIRA II Summary of Project Status. Actuarial Committee-Education Session March 26, 2008. MIRA II Web Services. MIRA II Project Major Functions & Resources. John Pedrick-Chief Actuarial Officer. MIRA Reserves are not Financial Reserves Reserves for Financial Statement

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MIRA II Summary of Project Status

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  1. MIRA IISummary of Project Status Actuarial Committee-Education Session March 26, 2008

  2. MIRA II Web Services MIRA II Project Major Functions & Resources John Pedrick-Chief Actuarial Officer MIRA Reserves are not Financial Reserves • Reserves for Financial Statement • Independent, Outside Analysis • Ultimate Cost for All Claims, Past/Present • Ratemaking-Estimating Next Year’s Claim Cost • Set Overall Rate Need • Distribute Overall Premium to Employers • NCCI Classes • Experience Rating • Experience Rating • Bill Hansen • Rex Blateri

  3. MIRA II Web Services MIRA II Project Major Functions & Resources MIRA II –Education/Project Update Progression • March: • Project Team & Timeline • Improvements • April • Transparency • May • Fair Isaac Presentation • Results of MIRA II • June • Implementation Update • Actuarial Report

  4. MIRA II Web Services MIRA II Project Major Functions & Resources MIRA II Use of MIRA II Reserves Primary Use: • Individual Claim Reserve for Experience Rating/Rate Calculation Additional Use: • Claim Settlements • Subrogation Collections • Claim Management

  5. MIRA II Web Services MIRA II Project Major Functions & Resources MIRA II What is Predictive Modeling? Predictive modeling is a process used in predictive analytics to create a statistical model of future behavior. Predictive analytics is the area of data mining concerned with forecasting probabilities and trends. A predictive model is made up of a number of predictors, variable factors that are likely to influence future behavior or results.

  6. MIRA II Web Services MIRA II Project Major Functions & Resources MIRA II What Does that Mean? Using the past (historical claim data, trends, relationships, correlations) to predict the future (ultimate claim cost)

  7. MIRA II-Major Project Components • System Development • Web Services Design and Development • Logic and Rules • Training • Communication (Internal/External) • Reprediction System Development • Each function of the project requires the involvement of multiple BWC departments/divisions and numerous BWC staff. See handout of listing of individual tasks and resources.

  8. Executive Staff Sponsors: John Pedrick-Chief Actuarial Officer Leo Genders-Chief Information Officer Keary McCarthy-Chief of Communications Tina Kielmeyer-Chief of Customer Service MIRA II Web Services MIRA II Project Major Functions & Resources MIRA II Team Leaders Executive Staff Sponsors: John Pedrick-Chief Actuarial Officer Leo Genders-Chief Information Officer Keary McCarthy-Chief of Communications Tina Kielmeyer-Chief of Customer Service

  9. MIRA II-Project Timeline

  10. MIRA II-Events/Tasks Current & Future Events • Clarify Implementation Date • System Interface Testing • Data Modeling (FIC) • Web Services Testing • MIRA II Review (initial education) with Internal Staff • Actuarial Review of Initial Reserve Predictions Completed Events • Injury Type Mapping • Prediction Control (start-stop) Logic • MIRA II Web Design • Input API Data Elements • Open/Closed Claim Indicator • Project Resource Website for Internal Customers

  11. MIRA II-Summary of Improvements MIRA II System • MIRA II has better predictive modeling software • React to changes to payments and cost patterns • Distinguishes between inconsequential claim data and true cost drivers • Learns complex relationships in the claim data • MIRA II is more flexible • Allows BWC more control • MIRA II reserves on individual claim, not aggregate

  12. MIRA II-Summary of Improvements Data • More historical claim data • Uses financial/transactional claim payment data • Emphasis on more recent historical claim data • More accurate claim data

  13. MIRA II-Summary of Improvements BWC • Focus on transparency • Provide customers with weekly reserves • Education of customers • Web services • Established mapping and logic that is more closely related to BWC specific claims processes and rules • Start/Stop Logic • Open/Closed Claim Logic

  14. $1,000,000 $1,000,000 $100,000 $100,000 Final Total Paid Final Total Paid $10,000 $10,000 $1,000 $1,000 $100 $100 $100 $1,000 $10,000 $100,000 $1,000,000 $100 $1,000 $10,000 $100,000 $1,000,000 MIRA II Prediction MIRA I Prediction Claim-level Accuracy –MIRA I vs MIRA II 25% Split Sample Prediction Scatter Plots Prediction vs. Final Total Paid at 180 Days

  15. MIRA II Aggregate Accuracy

  16. Thank You Rex BlateriBWC Actuarial DivisionMIRA II Project Manager614-466-8709

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