Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Health - Disability
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

Search Actuarial Jobs by State @ DWSimpson.com:
AL AK AR AZ CA CO CT DE FL GA HI ID IL IN IA KS KY LA
ME MD MA MI MN MS MO MT NE NH NJ NM NY NV NC ND
OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY

Reply
 
Thread Tools Search this Thread Display Modes
  #1  
Old 08-20-2019, 01:02 PM
katiefricker katiefricker is offline
CAS
 
Join Date: Oct 2017
College: Arizona State Alumni
Posts: 5
Question Reserving without Historical Claims Experience?

Hi friends,

I'm trying to set reserves (short-term) for a new startup client. With only three in-force groups and three total months of experience, their claims triangle is very very sad.

Are there any actuarial or CAS papers that outline certain methods to be used in these situations?

Currently, I'm naively assuming that the ultimate incurred claims will exactly equal the durationally-adjusted expected claims.

Thanks!
Reply With Quote
  #2  
Old 08-20-2019, 01:31 PM
Dr T Non-Fan Dr T Non-Fan is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: Just outside of Nowhere
Posts: 97,206
Default

What kind of insurance?

I'll move the thread to the specific insurance forum once I'm informed.

Meanwhile, do you have any reason to believe that the ultimate incurred claims will not exactly equal the duration-adjusted expected claims? I.e., does this result in negative reserves already?
__________________
"Facebook is a toilet." -- LWTwJO

"45 es un titere" -- Seal of The President of The United States of America protest art
Reply With Quote
  #3  
Old 08-20-2019, 01:32 PM
Dr T Non-Fan Dr T Non-Fan is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: Just outside of Nowhere
Posts: 97,206
Default

posted at the top of this forum:
General Actuarial Non-Specific Actuarial Topics - Before posting a thread, please browse over our other sections to see if there is a better fit, such as Careers - Employment, Actuarial Science Universities Forum or any of our other 100+ forums.
__________________
"Facebook is a toilet." -- LWTwJO

"45 es un titere" -- Seal of The President of The United States of America protest art
Reply With Quote
  #4  
Old 08-20-2019, 01:40 PM
katiefricker katiefricker is offline
CAS
 
Join Date: Oct 2017
College: Arizona State Alumni
Posts: 5
Default

Quote:
Originally Posted by Dr T Non-Fan View Post
What kind of insurance?

I'll move the thread to the specific insurance forum once I'm informed.

Meanwhile, do you have any reason to believe that the ultimate incurred claims will not exactly equal the duration-adjusted expected claims? I.e., does this result in negative reserves already?
Specifically major-medical health insurance (~2.5 month payment lag), but we frequently use P&C reserving methods at our company.

On your second point, no. I'm just interested in reading about robust reserving methods and maybe validate that my approach is OK.
Reply With Quote
  #5  
Old 08-20-2019, 01:49 PM
Dr T Non-Fan Dr T Non-Fan is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: Just outside of Nowhere
Posts: 97,206
Default

OK, I'll move it to .... Health.

There is no magic, approved method for three months of experience. Do what you're doing, and adjust as you think necessary. Renewal will be more difficult if using the reserves as part of the pricing process.
__________________
"Facebook is a toilet." -- LWTwJO

"45 es un titere" -- Seal of The President of The United States of America protest art
Reply With Quote
  #6  
Old 08-20-2019, 01:53 PM
Dr T Non-Fan Dr T Non-Fan is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: Just outside of Nowhere
Posts: 97,206
Default

If you have an inventory of claims received but unprocessed, you can estimate those amounts.
__________________
"Facebook is a toilet." -- LWTwJO

"45 es un titere" -- Seal of The President of The United States of America protest art
Reply With Quote
  #7  
Old 08-20-2019, 04:26 PM
katiefricker katiefricker is offline
CAS
 
Join Date: Oct 2017
College: Arizona State Alumni
Posts: 5
Default

Good point... I'll request pending claims data from them. Thanks!
Reply With Quote
  #8  
Old 08-20-2019, 04:44 PM
LICENSED TO ILL's Avatar
LICENSED TO ILL LICENSED TO ILL is offline
Member
 
Join Date: Oct 2005
Posts: 906
Default

One of my clients insisted I use the B-F reserve method for health claims. That was a fun discussion that I lost.
__________________
Spoiler:
Quote:
Originally Posted by Loner View Post
Despite his name, LTI is squeaky clean and not harboring any diseases. Physical ones at least.
Quote:
Originally Posted by OddSox View Post
this might be my favorite thread on the AO
Reply With Quote
  #9  
Old 08-20-2019, 07:09 PM
katiefricker katiefricker is offline
CAS
 
Join Date: Oct 2017
College: Arizona State Alumni
Posts: 5
Default

Quote:
Originally Posted by LICENSED TO ILL View Post
One of my clients insisted I use the B-F reserve method for health claims. That was a fun discussion that I lost.
Do you mind explaining why it's a bad method to use?
Reply With Quote
  #10  
Old 08-20-2019, 07:59 PM
Pamela Wells Pamela Wells is offline
Member
SOA AAA
 
Join Date: May 2019
Location: Phoenix, Arizona
Posts: 69
Default

Quote:
Originally Posted by katiefricker View Post
Hi friends,

I'm trying to set reserves (short-term) for a new startup client. With only three in-force groups and three total months of experience, their claims triangle is very very sad.
Quote:
Originally Posted by katiefricker View Post
Specifically major-medical health insurance (~2.5 month payment lag)...
For major medical, I would generally expect pharmacy claims to be complete within 3 months, professional and outpatient claims to be mostly complete within about 4 months... but inpatient claims can take much longer than that. Historically, I've seen about 80% to 90% completion at 3 months, and 97% to 99% completion around 8 months... with that last 1% straggling in over about another 12 months or so.

It's probably worth referencing the ASOP for this:
ASOP No. 5 INCURRED HEALTH AND DISABILITY CLAIMS

I'd also suggest that ASOP No. 23 DATA QUALITY and ASOP No. 25 CREDIBILITY PROCEDURES might bear on your task as well.

As a final comment... with so few in-force groups and only a few months of experience, it might be worth looking into some broad-scale data sets. It's been a long time, but I believe that there are some sample sets available for sales. I don't recall what they are exactly, but I believe Milliman uses similar sources for the development of their Health Cost Guidelines.

Unless you've already got a set of completion factors from another source that you feel would be reasonable to use in this instance, I'd be very, very leery of trying to extrapolate reserves from three months of data. The amount of variability in those first few months is very large.

Using something like an ultimate expected loss ratio might be a stop-gap approach. In my opinion, however, it's a bit of a crap shoot, and it's not likely to give you any advance indication if the developing claims are far off from expected.
Reply With Quote
Reply

Tags
data, reserves, reserving, short term

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 01:31 AM.


Powered by vBulletin®
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.42936 seconds with 9 queries