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.

1. Dave Arick
Assistant Treasurer, Global Risk Management, International Paper Company
Loren Nickel
Regional Director and Actuary, AON Global Risk Consulting
Keith Higdon
Senior Vice President, Decision Support Services, Sedgwick
Monday, April 22, 2013
Session Time: 1:30 to 2:45 pm

2. Macro to micro and back again

4. • Historical and prospective
• Big picture, details often not considered
• Numbers focused
• Need to understand impacts of changes on
historical and prospective basis
• Has to “read” the client, since some activities more
impactful than others

5. • 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

6. • 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

7. • Experience base
• Search for commonalities
• Client influence/requirements
• Tools to support and to confuse
• Individual circumstance
• Resolution focus
• New information results in new action

8. Claim initiation

9. What is in a reserve?

10. Common tools
Disability duration guidelines
Company trends - benchmarking
Modeling based tools
Worksheets and templates • Calculated and pre-populated fields
• Embedded edits

12. • 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

13. • Understand company financial levers - what is goal
of project (and potential impacts)?
• Income statement, balance sheet, cash flow
• Is claim expense allocated to facilities/operations?
• Look for opportunities during project to update
claims handling processes
• What’s key to discuss with actuary?

14. • Caseload dilemmas
• Balancing the new set of eyes versus outside
interference
• Focus remains individual – what can be done on
this claim?
• Activation of different resources or interventions
• Closure does not necessarily equate to cost
reduction on the file – aggregate ramifications

15. Claims closure project
• Engage all parties at the beginning of the
process
• Risk manager should drive the process
• Outline the expectations and estimated
impacts
• Track on-going progress and communicate to
actuary
• Work with claim manager on findings from
the project
• At completion, discuss results and impact on
actuarial report and claims organization

17. • 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 implementation
of the new TPA?
• Actuary is looking for quantifiable changes
• Payment patterns, change in inventory, reserving changes, timing
differences

18. • Apply learnings from past claims administrator
experiences as well as your own
• Be open to best practices from new firm
• Anticipate how changes might impact financials -
case reserves, actuarial analysis

19. • 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

20. TPA change-over
• Engage all parties at the beginning of the
process
• Risk manager should drive the process
• Outline the expectations and estimated
impacts
• Track on-going progress and communicate to
actuary and claims professionals
• Work with claim manager on findings and
on-going modifications to the process
• At completion, discuss results and impact on
actuarial report and claims organization

22. • 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 of
claim?
• How does the current inventory compare to historical?
• Actuary is looking for quantifiable changes
• Payment patterns, change in duration of activity, historical
comparison, and reserve strengthening/weakening

23. • 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 actuary
provide currently? What can be done?

24. • 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

25. Overall communication
• Engage all parties at the beginning of the
process
• Risk manager should drive the process
• Outline the expectations and estimated
impacts
• Track on-going progress and communicate to
actuary and claims professionals
• Provide as much numerical support as
possible to the actuary (general actuarial
rule is without supporting information
assume the worst)
• At completion, discuss results and impact on
actuarial report and claims organization

26. Dave Arick
Assistant Treasurer, Global Risk Management, International Paper Company
Loren Nickel
Regional Director and Actuary, AON Global Risk Consulting
Keith Higdon
Senior Vice President, Decision Support Services, Sedgwick
Monday, April 22, 2013
Session Time: 1:30 to 2:45