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Long Tail Experience Mods From 20 Year Business Cycles A Good Idea

20 Year Business Cycles Show Need For Long Tail Experience Mods Would long tail Experience Mods benefit employers and insurance carriers?  Let us first look at the definitions of the two terms.  Hang in there – this concept has to build up for a few paragraphs. Long Tail Statistics When

Workers Comp Algorithms – Who Is Pushing the Model Buttons?

Workers Comp Algorithms – How Far Have They Progressed? The panel discussion yesterday with Frank Pennachio covered one hot topic – Workers Comp Algorithms. I do agree that almost everything in existence today has an algorithm attached to it. All one has to do is pick up their smartphone.  You

Workers Comp Predictive Analytics Changed Loss Run Reviews Forever

Workers Comp Predictive Analytics – Do Not Ignore Old Open Claims One of the big changes with loss run reviews started with the carriers and now the whole insurance industry not ignoring the old open claims. Workers Comp predictive analytics has changed how old open claims are evaluated in underwriting.

COVID-19 Pandemic Statistical Madness Rears Its Ugly Head

COVID-19 Pandemic Statistical Madness – Whose Numbers Are Correct? The COVID-19 Pandemic statistical madness has reached epic proportions.   I usually do not stray from Workers Comp articles.  That is why you read this blog and the newsletter.   However, the recent numbers flashed on screens across the world gave me pause.

Workers Comp Statistical Significance Is Still Statistically Significant

Workers Comp Statistical Significance Better Known As The Benchmark Most discussions and articles concerning Workers Comp Statistical Significance center on the Experience Modification Factor and Loss Development Factors.   Benchmarks also come from tests for statistical significance. The article that generated this article can be found here.  I find it amazing

Workers Comp Combined Ratio Means Market Extremely Healthy

Workers Comp Combined Ratio Questions Asked By Readers Over The Last Week Workers Comp Combined Ratio remained a hot topic from last year.   Last week, at the NCCI Virginia State Advisory Conference, the Workers Comp Combined Ratio stunned the audience, and even the NCCI presenters. Last year, the level was

Workers Compensation Numbers Employers Must Have At Their Fingertips

Keep These Workers Compensation Numbers Close For Quick Access The first two main workers compensation numbers involve knowing where your worker’s compensation program is currently. If you do not know where you are, the task of knowing what to do to improve your numbers becomes extremely difficult.  Use Your CompCompass(c). 

Workers Comp Data Carveouts Move Data To Dangerous Ground

Workers Comp Data Carveouts – Are You Guilty of  Sampling Errors? The concept of Workers Comp data carveouts surfaces more now that employers look to enhance their workers’ compensation saving programs. Workers comp data carveouts start when a company, organization, consultant, etc. decide to use oversampling of a small set

Workers Comp Claim Analytics – Looking For Miracles Under Every Rock

Workers Comp Claim Analytics – Hot Subject Leaves Me Cold Most workers comp claim analytics posts I have written was in search of a good claim analytics package.   Unfortunately,  my search ended up like my search for workers comp apps – disappointed with still a hope for the future. Company

Combined Ratio South Carolina NCCI Advisory Forum Shocker

 US Combined Ratio Falls Even Further to Historic Lows US Combined Ratio Results The US had its best Combined Ratio last year since the 1950s and is improving even more.  The current Combined ratio is .89 nationwide. I first heard about the incredibly low ratio at NCCI’s Virginia Advisory Meeting in

Workers Compensation Accident MVA Spike and Smartphone Use

MVA Workers Compensation Accident Increase Possibly Linked To Smartphones The Workers Compensation accident increase reports are a thing of the past. All of us know that on-the-job accidents have decreased significantly over the last few years.   The one constant in these reports is the lack of a root cause. Why

NCCI Virginia Advisory Forum 2018 – Shocking Nationwide Statistics

Shocking Results at NCCI Virginia Advisory Forum – All Good The NCCI Virginia Advisory Forum showed a strong Workers Comp market.   The strong market is not surprising.   The strength of the nationwide market was astounding. I attended the NCCI Virginia Advisory Forum in Richmond yesterday.  North Carolina has it own

Predictive Analytics Is Now Opioid Buzzword Replacement

Predictive Analytics Replaces Opioid Buzzword Predictive Analytics for workers compensation claims adjusting still has not proven itself as a cost saver.   Please note that I am referring to workers compensation only.    Predictive analytics for other lines of casualty insurance such as auto and property damage has shown some promise

Statistical Proportions – Quick And Dirty Number Powerhouse

Statistical Proportions – A Guide To the Quick and Dirty Estimator I use statistical proportions as a very fast way to make predictions when you have three numbers and need to calculate the fourth one.   My algebra teacher in Junior High School taught me how to apply them to

Accident Curve And Natural Disasters – Spike in Workers Comp Claims

Accident Curve And Natural Disasters The accident curve measures the accident rate lessening per unit of  work time.   The concept has been debated over time.   A search far and wide located a 1916 text that actually addressed this issue very well.  Please see the last two sets of

Workers Comp Statistic Combined Ratio Best In 50 Years – NCCI

NCCI Workers Comp Statistic Combined Ratio Smoking One workers comp statistic stood out the August 3rd NCCI Virginia State Advisory Forum.  Actually, it exceeded even my positive outlook for the Workers Compensation market health. The Combined Ratio performed even better than last year in the overall market.    Last year

Workers Comp Statistics Madness Shocker Appears Last Week

How Can Workers Comp Statistics Madness Be Cured? One of the supposedly important Workers Comp Statistics based articles appeared  last week.   The study and article compared  (Affordable Care Act) Medicaid expansion states with states which decided not to allow the expansion.   The conclusion drawn was: States that allowed

Insurance Trends vs. Paper Clips – Lets Get Ready To Analyze

Insurance Trends  vs. Paper Clips Analytics The analysis of most insurance trends involves many innocuous spreadsheets that only gives the reader headaches.   I was looking over an old article today concerning a NCPRIMA presentation from 2014. BTW, we are upgrading every article on this website to make it Google

Do Work Comp Claim Analytics Really Work As Promised

Have Work Comp Claim Analytics Arrived? A Work Comp Claim Analytics package is something that I have been in search of for many years.   Can software actually replace the thinking process of an experienced adjuster? Last year at the 2015 WCRI Conference I met a few analysts for one of

Work Comp Predictive Models vs Gut Feelings – The Winner Is(?)

Work Comp Predictive Models There are so many articles on Work Comp predictive models out in the blogosphere.   Many taut their ability to see into the future.   I am not a big fan of predictive models as I have yet to see and am still waiting on one

Workers Comp Accident Rates Affected By Spring Forward

Workers Comp Accident Rates Do Spring Forward Do Workers Comp Accident Rates twice per year?  According to a recent article I came across- not necessarily. The one hour time change in the fall has no effect on accident rates.   The springtime “ides of March” time change does lead to

E-Mods LDFs Are Like Credit Scores From Hell NCPRIMA

E-Mods LDFs Are Like Credit Scores Are E-Mods LDFs  like credit scores from hell?  Over the past few months, I have presented this material at various conferences.   I thought I would attach the PowerPoint that I used at the NCPrima Conference last week. E-Mods and LDFs_NCPRIMA_presentation 2015 I have received

Work Comp Combined Ratio Under 100 – First Time In Eight Years

Work Comp Combined Ratio Under 100 The subject of Work Comp Combined Ratio seems to be appearing more in the insurance press lately.   I was unable to attend the NCCI Annual Issues Symposium.  However, I did make it to their data conference in March of this year. One of the better

Loss Development Factor – Do I Need One – How Do I Get One

Loss Development Factor Critical For Self Insurance Do I need Loss Development Factor? Loss Development Factors (LDFs) are one of the under-the-radar parts of the Workers Compensation system.   This was a question received last week by a reader that found the blog on Google. LDFs can be thought of

CBO Predictions Mean Ouch For Workers Comp

CBO Predictions Bad Sign For Work Comp The CBO predictions mean a big ouch for WC. The recent revision by the Congressional Budget  Office (CBO) in reference to future employment numbers is dire at best.  The CBO Charts are here.   Please note the file is a PDF file and not

Statistical Madness – Another Shining Example From Internet

Statistical Madness – Eating While Driving  More statistical madness was created with another shining example this month. Over time, a few Workers Comp statistics articles are published that basically have no basis in fact.  For example, many pundits said that California SB 863 was going to save employers large amount

Predictive Model For Workers Comp Misunderstanding

Prior WC Predictive Model Article Was Referring To Claim Reserves Last Friday,  I published a blog article on a predictive model in Workers Compensation.  A few emails were received that indicated there were many great software products for predicting E-Mods and other variables in Workers Compensation. In the original article,

Workers Compensation Predictive Modeling Will Never Work

Workers Compensation Predictive Modeling One of the more popular buzz phrases now is Workers Compensation predictive modeling.  If  one looks at any of the WC groups on LinkedIn,  there are many discussions on this very matter. There are many predictive models on WC.  Those models usually leave the observer with

Accident Curve – Upcoming Workers Comp Risk Factor

The Accident Curve Comes From The Learning Curve There has been a large amount of recent traffic and buzz on the articles in the blog that covered the Learning Curve or the Accident Curve.  There was an old adage in Risk Management that said “90% of all accidents happen the first time

National Academy Of Social Insurance – Employer Cost WC +7.1% 2011

National Academy Of Social Insurance  (NASI) The NASI takes on a monstrous task every year of attempting to make sense of Workers Comp data on a national basis.  NASI’s recent report and press release basically had a misleading headline that Workers Comp costs increased due to an economic recovery.   That

Economic Recovery Happens And Learning Curve Kills (Literally)

Economic Recovery Begets The Learning Curve Dark Side The economic recovery may happen soon – or then again possibly not for a long time.  One of the most ignored equations or proved theories is the Learning Curve.  In my actuarial degree, this was one of the glossed over management equations

When Articles Hide Real Study Results – The Read Meat Example

Real Study Results Are Sometimes Hard To Find The real study results are sometimes hidden or not even included in the article itself. Workers Compensation statistics can be used to make an invalid point by massaging the data to make sure the data fits the assertion.  Overall, misleading statistics are

Workers Comp Data Mining From Inside Out – A Look Inward

Workers Comp Data – From The Inside Out  Most Workers Comp Data analysis reeks of being too standard in nature. Workers Comp and general insurance data mining was one of the presentations at the SC PRIMA conference this week.  The presentation was great.  The two Willis Companies presenters covered such

Reinsurance/Excess Insurance Market Hardens

Reinsurance Market No Longer Soft The reinsurance/excess Insurance Market has started to change from a commodity marketplace.  The excess insurance market is usually the bellwether for the rest of  the marketplaces. Reinsurance/Excess Insurance is basically defined as a risk management technique.  The employer will purchase this type of insurance to

Workers Comp Claims Spike – Easy Way To Handle?

Workers Comp Claims Spike May Show Need For More Training Does a Workers Comp Claims spike have an easy solution? In my last post,  the learning curve was what I thought would be the reason for an upcoming  workers comp claims spike or explosion in claims.  Rookies tend to make

Will There Be Spike In Workers Comp Claims Due to Sandy?

Spike In Workers Comp Claims Post Natural Disaster Hurricane Sandy could cause a spike in Workers Comp claims?   New York, New Jersey, and many other states have felt the impact of Superstorm Sandy.  The hidden increase in economic costs will occur when the rebuilding begins.  I had coined the

Workers Comp Claims Explosion If Economy Rebounds Quickly

The Workers Comp Claims Explosion Due To Learning Curve Will a workers comp claims explosion occur in the next few years?  The economy is going to eventually recover from its recent lows.  If there is a very quick rebound, insurance carriers, TPA’s, employers, and any type of insurance personnel must be

Safety and EMods – Highlights From My Presentation From Today

Presentation Highlights – Safety and EMods Are Very Related How Safety and EMods intermingle was the basis for most of the highlights from my presentation. The NC Mid State Safety Council was kind enough to ask me to do a presentation on how safety programs impact an employer’s bottom line from

Possible 75% Savings on Workers Comp Premium From My Studies

Possible 75% Savings – Study Results Below It’s possible to experience a 75% Savings according to the results of my WC studies. Yesterday, I blogged on predictive modeling in Workers Compensation.  I had mentioned there were two studies that I performed in the recent past on a group of 7,000

Predictive Modeling For Workers Compensation – Data On Horizon?

Workers Comp Predictive Modeling – Big Data Is The Key The Workers Comp predictive modeling prognosticators say that predicting workers comp data is on the horizon.  I was just reading over Mark Wall’s Work Comp Analysis Group in LinkedIn. If you are in Workers Comp and you do not follow

Workers Comp Statistics – Are They Believable and Trustworthy?

Workers Comp Statistics Come With Many Caveats The Workers Comp statistics production is one area that I have noted a sharp increase in over the last few months. There are so many statistics out there that make no sense; have (very important) an underlying unreported statistic, or relate the obvious

Self Insured Pools – Are They Really Worth It?

Self Insured Pools Are Really Worth It ? Self Insured pools for Workers Compensation can be a great risk management technique. An employer that is not large enough to be self insured may find that pooling their premiums and risk with homogenous entities to be a great budget saving technique.

Captive Reserve Question From Our Readers – How To Calculate Mod

Captive Reserve Question Concerning LDF’s A good question about Captive reserve from readers. I am responding to a question from Wayne on this post. I will paraphrase the question. How do I calculate the reserves required if I have had a workers comp captive since 2005? This is a very

Workers Comp Self Insureds LDF Is Experience Mod

Workers Comp Self Insureds Have an LDF The LDF (Los Development Factor) equates to the E-Mod for self insureds.  I have posted a few times in the past on Self Insureds thinking they are out of the Workers Comp E-Mod system. Actually, nothing could be further from the truth. I

Regression Analysis

Term Of The Day – Regression Analysis A long standing debate has been occurring between myself and actuaries over whether or not that Regression Analysis is the best predictor for setting future reserves. Actuaries will usually say Regression does not give enough credence to the recent development of claims. I

Is Loss Development Factor LDF Calculation Really Worth It?

Term Of The Day – Loss Development Factor The Loss Development Factor is also known as LDF is an element used to adjust losses to reflect the Incurred But Not Reported losses (IBNR) under the retrospective method of rating. Where I have seen LDFs used the most are for Workers

Claims Data and Payroll – Two Headed Workers Comp Monster

Workers Comp Claims Data and Payroll Workers Comp claims data and payroll must be important. I have received many inquiries about what changes are upcoming on 10/1/09 for E-Mod/X-Mod calculations. There are changes coming and they are not minor. Believe me, they cannot be ignored unless your company has limitless funds.



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