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Workers Compensation Reserving Issues

Workers Compensation Reserving Issues. in Texas. 1/1/91 Reform - Overview. Encourage less attorney involvement Promote employer safety Introduce medical fee guidelines Large decreases in indemnity frequency Overall-reduced costs 30-50%. 1/1/91 Reform - O/S Issues.

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Workers Compensation Reserving Issues

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  1. Workers Compensation Reserving Issues in Texas

  2. 1/1/91 Reform - Overview • Encourage less attorney involvement • Promote employer safety • Introduce medical fee guidelines • Large decreases in indemnity frequency • Overall-reduced costs 30-50%

  3. 1/1/91 Reform - O/S Issues • Supplemental Income Benefits (SIBs) • Effect on Loss Development Patterns • Trends since Reform

  4. Supplemental Income Benefits • Add-on to traditional indemnity benefits • 15% impairment rating required • Often disputed • Very few SIBs in loss data currently available

  5. Loss Development Patterns • NCCI data suggests smaller tail, but larger development at earlier ages. • Effect of reform on tail unknown • Effect of SIBs, if any, not in data

  6. Trends Since Reform • Medical frequency lower, but overall costs up • Medical severity higher than other states • Medical severity growing faster than other states • Use of Chiropractors Increasing

  7. WC Medical SeverityTexas vs. Other States 18 Month Valuation

  8. WC Medical SeverityTexas vs. Other States 18 Month Valuation

  9. Texas WC Paymentsto Chiropractors 9.9% 7.3% 6.2% 4.8% 5.1% 5.5%

  10. Conclusions • 1/1/91 Reform effect on tail still unknown • Medical costs increasing

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