System for funding future workers compensation losses

摘要

A system is disclosed for funding future losses incurred by an insurance carrier on active workers' compensation insurance claims. The system uses statistical models to predict future costs and durations of an insurance carrier's claims. The statistical models are generated by applying statistical analysis techniques to representative historical insurance claim data with the aid of a professional statistician. Forecasting accuracy is improved by generating several models wherein each model represents a predefined type of insurance claim. Each model is applied to the carrier's active claims of the corresponding type to obtain cost and duration predictions for those claims. A total cost prediction for a claim is proportioned among various cost categories to more accurately reflect actual and predicted claim costs. For each claim, a reserve amount is calculated which is the predicted cost minus the amount of money paid to date on the claim. Balancing of the respective reserve amounts computed for active claims is achieved by use of a hypothetical fund which transfers reserve money from overpredicted claims to the reserves of underpredicted claims. A total reserve amount is calculated for each claim, and an aggregate reserve amount is calculated for all the carrier's active claims. The aggregate reserve amount is used to set a loss reserve account maintained by the carrier to fund future losses incurred on those claims. The system includes a system computer and program used for generation of the statistical models, a carrier-accessible computer for housing the models for application to active claims, and a carrier host computer for storing and updating the active claims of the insurance carrier.