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Actuaries and Examiners Talk Numbers:  Go Figure!
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Actuaries and Examiners Talk Numbers: Go Figure!

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When actuaries and claims examiners discuss and compare numbers, the resulting conversation can be fascinating. It is the claims examiner that reviews individual claim files and estimates the ...

When actuaries and claims examiners discuss and compare numbers, the resulting conversation can be fascinating. It is the claims examiner that reviews individual claim files and estimates the ultimate cost or reserve associated with each file. It is then the actuary who takes the aggregate claims data and estimates the cost of losses for the historical policy periods and coming year. The expertise and resulting analyses of both can have a tremendous impact on an employer’s program and the organization’s budgeting process. Learn more about both the reserving and actuarial forecasting process and become better prepared to ask questions and contribute to future financial discussions. Panelists will describe the reserving process from the point of view of the claims examiner, review the data and process used to complete an actuarial loss forecast, and talk about the impact these numbers have on the risk management program.

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  • Between RM and Examiner add claims administrator

Actuaries and Examiners Talk Numbers:  Go Figure! Actuaries and Examiners Talk Numbers: Go Figure! Presentation Transcript

  • Dave ArickAssistant Treasurer, Global Risk Management, International Paper CompanyLoren NickelRegional Director and Actuary, AON Global Risk ConsultingKeith HigdonSenior Vice President, Decision Support Services, SedgwickMonday, April 22, 2013Session Time: 1:30 to 2:45 pm
  • Macro to micro and back again
  • • Historical and prospective• Big picture, details often not considered• Numbers focused• Need to understand impacts of changes onhistorical and prospective basis• Has to “read” the client, since some activities moreimpactful than others
  • • Need to manage micro AND macro issues• Manage financial implications• Communicate key data points• Ensure accurate/consistent processes• Data systems (exposures, org structure, claims data)• Claim handling, reserve, settlement practices
  • • Culmination of examiner activity• Jurisdictional and rating agency requirements• Program consistency• Best practices• Tools and training• Information gathering and dissemination• Client contract or fiscal year experience• Last year to current year is primary focus• Three to five year trend is secondary• Annual intervention focus• Closely aligned with risk management
  • • Experience base• Search for commonalities• Client influence/requirements• Tools to support and to confuse• Individual circumstance• Resolution focus• New information results in new action
  • Claim initiation
  • What is in a reserve?
  • Common toolsDisability duration guidelinesCompany trends - benchmarkingModeling based toolsWorksheets and templates • Calculated and pre-populated fields• Embedded edits
  • • How is this different than current practices?• Do you track the results?• What is the expected outcome?• Do you expect IBNR to drop?• Are there outside parties involved?• How will the lower inventory be managed?• Do you expect to pay more claim $ sooner?• Actuary is looking for quantifiable changes• Closing rates, change in inventory, faster payments
  • • Understand company financial levers - what is goalof project (and potential impacts)?• Income statement, balance sheet, cash flow• Is claim expense allocated to facilities/operations?• Look for opportunities during project to updateclaims handling processes• What’s key to discuss with actuary?
  • • Caseload dilemmas• Balancing the new set of eyes versus outsideinterference• Focus remains individual – what can be done onthis claim?• Activation of different resources or interventions• Closure does not necessarily equate to costreduction on the file – aggregate ramifications
  • Claims closure project• Engage all parties at the beginning of theprocess• Risk manager should drive the process• Outline the expectations and estimatedimpacts• Track on-going progress and communicate toactuary• Work with claim manager on findings fromthe project• At completion, discuss results and impact onactuarial report and claims organization
  • • What is the new claims philosophy?• What are the new claims handling performance metrics?• What is the expected outcome?• Are there dedicated claims adjusters or a pool?• Will adjuster inventory increase or decrease?• How will litigated claims be handled?• What is the on-going strategy to monitor the implementationof the new TPA?• Actuary is looking for quantifiable changes• Payment patterns, change in inventory, reserving changes, timingdifferences
  • • Apply learnings from past claims administratorexperiences as well as your own• Be open to best practices from new firm• Anticipate how changes might impact financials -case reserves, actuarial analysis
  • • It’s my claim now… different approach?• Learning the file• Combination of circumstances come into play• Clients often change service instructions• New interventions• New program goals• Administrator best practice differences• Different toolkit at the examiner’s desk• Focus remains on resolution
  • TPA change-over• Engage all parties at the beginning of theprocess• Risk manager should drive the process• Outline the expectations and estimatedimpacts• Track on-going progress and communicate toactuary and claims professionals• Work with claim manager on findings andon-going modifications to the process• At completion, discuss results and impact onactuarial report and claims organization
  • • Why is this occurring?• What is being done about it?• How will this be monitored in the future?• When did the inventory begin to change?• Is the change isolated to particular adjuster/region/type ofclaim?• How does the current inventory compare to historical?• Actuary is looking for quantifiable changes• Payment patterns, change in duration of activity, historicalcomparison, and reserve strengthening/weakening
  • • Who should notice this first?• Program performance metrics• Regular management reports/reviews• What constitutes a “blip” vs. a structural issue?• How and what to communicate to actuary?• What insight about trends does the actuaryprovide currently? What can be done?
  • • Examiner perspective• Experience may vary by examiner• Caseload impact• Client interaction• Administrator perspective• Contract ramifications• Monthly reporting Trend identification – what are the ramifications? Root cause from a claim experience perspective• Battling complacency
  • Overall communication• Engage all parties at the beginning of theprocess• Risk manager should drive the process• Outline the expectations and estimatedimpacts• Track on-going progress and communicate toactuary and claims professionals• Provide as much numerical support aspossible to the actuary (general actuarialrule is without supporting informationassume the worst)• At completion, discuss results and impact onactuarial report and claims organization
  • Dave ArickAssistant Treasurer, Global Risk Management, International Paper CompanyLoren NickelRegional Director and Actuary, AON Global Risk ConsultingKeith HigdonSenior Vice President, Decision Support Services, SedgwickMonday, April 22, 2013Session Time: 1:30 to 2:45