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Your claims activity

Money. Your claims activity . will drive your rate. What do you want to pay?. Claim Costs Include:. the actual money paid on a claim (medical bills and compensation) the reserve or money intended to pay estimated future costs for that claim. Actual. Estimated.

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Your claims activity

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  1. Money Your claims activity will drive your rate. What do you want to pay?

  2. Claim Costs Include: • the actual money paid on a claim (medical bills and compensation) • the reserve or money intended to pay estimated future costs for that claim Actual Estimated

  3. Reserve Example Medical $ 5,000 $10,000 TT Compensation Reserves $50,000 Total Value $65,000 $15,000 Value without Reserves

  4. Claim Costs = Rates Now, how do we begin to divide the bill equitability so each employer pays the correct premium? Rate setting spreads costs equitably

  5. Payroll as measure of exposure Past as best predictor of future Rating Concepts Expected losses as determinant of base rates for a manual classification Industry Classification by degree of hazard

  6. Experience Rating A mandatory rating plan for medium-to large employers in which the employer pays a higher or lower percentage of the base rate as determined by the employer’s loss history Experience Modification + - 50 100 150 Credit Average Penalty

  7. Experience Rating Rates as of 7/1/2008 for private and 1/1/2008 for public employers Jan 1 Jan 1 Jan 1 thru Dec 31 04 03 05 06 07 2008 2009 Experience Period (4 calendar years) Green Year Rating Year

  8. Experience Rating Rates as of 7/1/2009 for private and 1/1/2009 for public employers Jan 1 Jan 1 Jan 1 thru Dec 31 05 04 06 07 08 2009 2010 Experience Period (4 calendar years) Green Year Rating Year

  9. OHIO HISTORICAL SOCIETY01/01/2003-12/31/2007 TOTAL MOD: TOTAL LIMITED DIFF DIFF/TLL C% TOTAL EXPERIENCE LOSSES: LOSSES: MODIFIER MODIFIER: $71,677 $51,837 $19,840 0.3827 0.25 10% 1.10

  10. New Reserve System MICROINSURANCE RESERVING ANALYSIS SYSTEM (MIRA) Created by HNC Insurance Solutions Software program with 10 years of BWC history

  11. MIRA Features Individualized Claim Reserving • Cost Drivers • Data Elements • ICD-9 Codes • Award • Gender • Age • Classification • Others

  12. 20 Claim Data Elements Yellow indicates when an IC order may be required MIRA

  13. MIRA Reserve Calculation • MIRA will provide the ultimate cost of a claim at a specific point in time with the information available on the claim.

  14. MIRA Reserve Calculation • MIRA Total Incurred Amount • - BWC Payments made to date • = MIRA Reserve

  15. Total Incurred Cost Prediction Payments Med/Comp MIRA Reserve Week 1 $50,000 $500 Med $500 Comp $49,000 Week 2 $50,000 $500 Med $500 Comp $48,000 Week 3 $30,000 $500 Med $500 Comp $27,000 MIRA Methodology MIRA

  16. Need To Focus On Medical Management • On-going medical • expenses will matter • Pain management • Treatments • Prescriptions

  17. Need To Focus On Return-To-Work • Medical Only Status = • zero reserves • Lost Time Claims are automatically reserved

  18. Need To Focus On Return-To-Work Policy • Salary continuation and/or followed by Living Maintenance = • zero reserve • BWC pays Temporary Total (TT) = • reserve • BWC pays TT followed by LivingMaintenance =50% reduction of reserve

  19. QUESTIONS? Stay Tuned

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