MIRA an individual case reserving system used for workerscompensation - PDF document

1 MIRA, an individual case reserving syste
MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closely Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Understanding MIRA Reserves MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closelymatches the claims management and legislative environment.Using these models, MIRA will predict the future costs ofBWCÕs claims on an individual basis. MIRA has the ability toconsider individual claim facts, such as age, gender andgeographical location when forecasting a reserve. BWCÕs currenttabular reserving system only calculates an average reservefor claims with the same indemnity type.What is a reserve?A reserve is the estimated remaining cost of a claim at apoint in time. Reserves ensure that BWC accurately calculatesthe premiums necessary each year to make future claimpayments to injured workers. ThatÕs why BWC includes reservesin premium rate calculations.The overall level of premiums to fund claim costs will not beaffected by this change in reserve systems. However, individualexperience rated employers may be affected as more accuratereserves are calculated and used in experience rating.The Ohio Bureau of WorkersÕ Compensation (BWC) always looks for ways to improve itsbusiness operations. Better business practices improve customer satisfaction and reducecosts. ThatÕs why beginning July 1, 2002, BWC is phasing in a new reserving systemÑ Micro Insurance Reserving Analysis (MIRA) Ñ to calculate state-fund employerrates. BWC will use MIRA reserves to calculate public employer taxing districts ratesbeginning Jan. 1, 2003. During this transition period, BWC will continue to provideupdated information to employers using both MIRA and the tabular reserving system.Beginning in January 2002, private, state-fund employers and public employers canview both reserves on BWCÕs Web site atwww.ohiobwc.comHow does MIRA work?BWC feeds all existing claims in its master claim file into theMIRA computer system. Each week, MIRA collects data onindividual claims that had activity or data changes.MIRA, which has identified 20 of these claim characteristicsas primary cost indicators, then calculates the total incurredcost of the claim. The reserve is the figure remaining afterthe system subtracts the total amount paid to date from thetotal incurred claim cost. MIRA also predicts the duration ofDoes BWC have a schedule to implement MIRA?Private, state-fund employers will not see rates based onMIRA reserves until the December 2002 payroll report withpremiums due Feb. 28, 2003. MIRA reserves will be used tocalculate public employersÕ rates beginning with the Jan. 1,2003, to Dec. 31, 2003, policy year with premiums due MayHowever, during this transition the lower of the MIRA andtabular reserves will be used to calculate employersÕ individualpremiums. The transition to MIRA will be implemented on ayear-by-year basis and will be evaluated after its first year. For more informationCall BWCÕs actuarial department at (614) 752-8318.Visit us on the Internet at:www.ohiobwc.com Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Governor Bob TafAdministrator/CEO Understanding MIRA Reserves MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closelymatches the claims management and legislative environment.Using these models, MIRA will predict the future costs ofBWCÕs claims on an individual basis. MIRA has the ability toconsider individual claim facts, such as age, gender andgeographical location when forecasting a reserve. BWCÕs currenttabular reserving system only calculates an average reservefor claims with the same indemnity type.What is a reserve?A reserve is the estimated remaining cost of a claim at apoint in time. Reserves ensure that BWC accurately calculatesthe premiums necessary each year to make future claimpayments to injured workers. ThatÕs why BWC includes reservesin premium rate calculations.The overall level of premiums to fund claim costs will not beaffected by this change in reserve systems. However, individualexperience rated employers may be affected as more accuratereserves are calculated and used in experience rating.The Ohio Bureau of WorkersÕ Compensation (BWC) always looks for ways to improve itsbusiness operations. Better business practices improve customer satisfaction and reducecosts. ThatÕs why beginning July 1, 2002, BWC is phasing in a new reserving systemÑ Micro Insurance Reserving Analysis (MIRA) Ñ to calculate state-fund employerrates. BWC will use MIRA reserves to calculate public employer taxing districts ratesbeginning Jan. 1, 2003. During this transition period, BWC will continue to provideupdated information to employers using both MIRA and the tabular reserving system.Beginning in January 2002, private, state-fund employers and public employers canview both reserves on BWCÕs Web site awww.ohiobwc.comHow does MIRA work?BWC feeds all existing claims in its master claim file into theMIRA computer system. Each week, MIRA collects data onindividual claims that had activity or data changes.MIRA, which has identified 20 of these claim characteristicsas primary cost indicators, then calculates the total incurredcost of the claim. The reserve is the figure remaining afterthe system subtracts the total amount paid to date from thetotal incurred claim cost. MIRA also predicts the duration ofDoes BWC have a schedule to implement MIRA?Private, state-fund employers will not see rates based onMIRA reserves until the December 2002 payroll report withpremiums due Feb. 28, 2003. MIRA reserves will be used tocalculate public employersÕ rates beginning with the Jan. 1,2003, to Dec. 31, 2003, policy year with premiums due MayHowever, during this transition the lower of the MIRA andtabular reserves will be used to calculate employersÕ individualpremiums. The transition to MIRA will be implemented on ayear-by-year basis and will be evaluated after its first year. For more informationCall BWCÕs actuarial department at (614) 752-8318.Visit us on the Internet at:www.ohiobwc.com Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Governor Bob TafAdministrator/CEO Understanding MIRA Reserves MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closelymatches the claims management and legislative environment.Using these models, MIRA will predict the future costs ofBWCÕs claims on an individual basis. MIRA has the ability toconsider individual claim facts, such as age, gender andgeographical location when forecasting a reserve. BWCÕs currenttabular reserving system only calculates an average reservefor claims with the same indemnity type.What is a reserve?A reserve is the estimated remaining cost of a claim at apoint in time. Reserves ensure that BWC accurately calculatesthe premiums necessary each year to make future claimpayments to injured workers. ThatÕs why BWC includes reservesin premium rate calculations.The overall level of premiums to fund claim costs will not beaffected by this change in reserve systems. However, individualexperience rated employers may be affected as more accuratereserves are calculated and used in experience rating.The Ohio Bureau of WorkersÕ Compensation (BWC) always looks for ways to improve itsbusiness operations. Better business practices improve customer satisfaction and reducecosts. ThatÕs why beginning July 1, 2002, BWC is phasing in a new reserving systemÑ Micro Insurance Reserving Analysis (MIRA) Ñ to calculate state-fund employerrates. BWC will use MIRA reserves to calculate public employer taxing districts ratesbeginning Jan. 1, 2003. During this transition period, BWC will continue to provideupdated information to employers using both MIRA and the tabular reserving system.Beginning in January 2002, private, state-fund employers and public employers canview both reserves on BWCÕs Web site www.ohiobwc.comHow does MIRA work?BWC feeds all existing claims in its master claim file into theMIRA computer system. Each week, MIRA collects data onindividual claims that had activity or data changes.MIRA, which has identified 20 of these claim characteristicsas primary cost indicators, then calculates the total incurredcost of the claim. The reserve is the figure remaining afterthe system subtracts the total amount paid to date from thetotal incurred claim cost. MIRA also predicts the duration ofDoes BWC have a schedule to implement MIRA?Private, state-fund employers will not see rates based onMIRA reserves until the December 2002 payroll report withpremiums due Feb. 28, 2003. MIRA reserves will be used tocalculate public employersÕ rates beginning with the Jan. 1,2003, to Dec. 31, 2003, policy year with premiums due MayHowever, during this transition the lower of the MIRA andtabular reserves will be used to calculate employersÕ individualpremiums. The transition to MIRA will be implemented on ayear-by-year basis and will be evaluated after its first year. For more informationCall BWCÕs actuarial department at (614) 752-8318.Visit us on the Internet at:www.ohiobwc.com Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Governor Bob TafAdministrator/CEO Understanding MIRA Reserves MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closelymatches the claims management and legislative environment.Using these models, MIRA will predict the future costs ofBWCÕs claims on an individual basis. MIRA has the ability toconsider individual claim facts, such as age, gender andgeographical location when forecasting a reserve. BWCÕs currenttabular reserving system only calculates an average reservefor claims with the same indemnity type.What is a reserve?A reserve is the estimated remaining cost of a claim at apoint in time. Reserves ensure that BWC accurately calculatesthe premiums necessary each year to make future claimpayments to injured workers. ThatÕs why BWC includes reservesin premium rate calculations.The overall level of premiums to fund claim costs will not beaffected by this change in reserve systems. However, individualexperience rated employers may be affected as more accuratereserves are calculated and used in experience rating.The Ohio Bureau of WorkersÕ Compensation (BWC) always looks for ways to improve itsbusiness operations. Better business practices improve customer satisfaction and reducecosts. ThatÕs why beginning July 1, 2002, BWC is phasing in a new reserving systemÑ Micro Insurance Reserving Analysis (MIRA) Ñ to calculate state-fund employerrates. BWC will use MIRA reserves to calculate public employer taxing districts ratesbeginning Jan. 1, 2003. During this transition period, BWC will continue to provideupdated information to employers using both MIRA and the tabular reserving system.Beginning in January 2002, private, state-fund employers and public employers canview both reserves on BWCÕs Web sitewww.ohiobwc.comHow does MIRA work?BWC feeds all existing claims in its master claim file into theMIRA computer system. Each week, MIRA collects data onindividual claims that had activity or data changes.MIRA, which has identified 20 of these claim characteristicsas primary cost indicators, then calculates the total incurredcost of the claim. The reserve is the figure remaining afterthe system subtracts the total amount paid to date from thetotal incurred claim cost. MIRA also predicts the duration ofDoes BWC have a schedule to implement MIRA?Private, state-fund employers will not see rates based onMIRA reserves until the December 2002 payroll report withpremiums due Feb. 28, 2003. MIRA reserves will be used tocalculate public employersÕ rates beginning with the Jan. 1,2003, to Dec. 31, 2003, policy year with premiums due MayHowever, during this transition the lower of the MIRA andtabular reserves will be used to calculate employersÕ individualpremiums. The transition to MIRA will be implemented on ayear-by-year basis and will be evaluated after its first year. For more informationCall BWCÕs actuarial department at (614) 752-8318.Visit us on the Internet at:www.ohiobwc.com Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Governor Bob TafAdministrator/CEO Understanding MIRA Reserves MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closelymatches the claims management and legislative environment.Using these models, MIRA will predict the future costs ofBWCÕs claims on an individual basis. MIRA has the ability toconsider individual claim facts, such as age, gender andgeographical location when forecasting a reserve. BWCÕs currenttabular reserving system only calculates an average reservefor claims with the same indemnity type.What is a reserve?A reserve is the estimated remaining cost of a claim at apoint in time. Reserves ensure that BWC accurately calculatesthe premiums necessary each year to make future claimpayments to injured workers. ThatÕs why BWC includes reservesin premium rate calculations.The overall level of premiums to fund claim costs will not beaffected by this change in reserve systems. However, individualexperience rated employers may be affected as more accuratereserves are calculated and used in experience rating.The Ohio Bureau of WorkersÕ Compensation (BWC) always looks for ways to improve itsbusiness operations. Better business practices improve customer satisfaction and reducecosts. ThatÕs why beginning July 1, 2002, BWC is phasing in a new reserving systemÑ Micro Insurance Reserving Analysis (MIRA) Ñ to calculate state-fund employerrates. BWC will use MIRA reserves to calculate public employer taxing districts ratesbeginning Jan. 1, 2003. During this transition period, BWC will continue to provideupdated information to employers using both MIRA and the tabular reserving system.Beginning in January 2002, private, state-fund employers and public employers canview both reserves on BWCÕs Web site at ohiobwc.comHow does MIRA work?BWC feeds all existing claims in its master claim file into theMIRA computer system. Each week, MIRA collects data onindividual claims that had activity or data changes.MIRA, which has identified 20 of these claim characteristicsas primary cost indicators, then calculates the total incurredcost of the claim. The reserve is the figure remaining afterthe system subtracts the total amount paid to date from thetotal incurred claim cost. MIRA also predicts the duration ofDoes BWC have a schedule to implement MIRA?Private, state-fund employers will not see rates based onMIRA reserves until the December 2002 payroll report withpremiums due Feb. 28, 2003. MIRA reserves will be used tocalculate public employersÕ rates beginning with the Jan. 1,2003, to Dec. 31, 2003, policy year with premiums due MayHowever, during this transition the lower of the MIRA andtabular reserves will be used to calculate employersÕ individualpremiums. The transition to MIRA will be implemented on ayear-by-year basis and will be evaluated after its first year. For more informationCall BWCÕs actuarial department at (614) 752-8318.Visit us on the Internet at:www.ohiobwc.com Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Governor Bob TafAdministrator/CEO Understanding MIRA Reserves MIRA, an individual case reserving system used for workersÕcompensation claims, provides a more accurate forecast ofclaim costs and duration. More than 36 private insurers,including four of the five largest workersÕ compensationinsurers in the United States and 13 state funds, use MIRAsoftware, developed by HNC Software Inc.The company developed reserving models based exclusivelyon Ohio claims data for the past 10 years. The more recentyearsÕ data is emphasized in the models as it reflects thecurrent operations and claims management improvementsmade by BWC. HNC Software Inc. updates the models eachyear to ensure that the current reserve methodology closelymatches the claims management and legislative environment.Using these models, MIRA will predict the future costs ofBWCÕs claims on an individual basis. MIRA has the ability toconsider individual claim facts, such as age, gender andgeographical location when forecasting a reserve. BWCÕs currenttabular reserving system only calculates an average reservefor claims with the same indemnity type.What is a reserve?A reserve is the estimated remaining cost of a claim at apoint in time. Reserves ensure that BWC accurately calculatesthe premiums necessary each year to make future claimpayments to injured workers. ThatÕs why BWC includes reservesin premium rate calculations.The overall level of premiums to fund claim costs will not beaffected by this change in reserve systems. However, individualexperience rated employers may be affected as more accuratereserves are calculated and used in experience rating.The Ohio Bureau of WorkersÕ Compensation (BWC) always looks for ways to improve itsbusiness operations. Better business practices improve customer satisfaction and reducecosts. ThatÕs why beginning July 1, 2002, BWC is phasing in a new reserving systemÑ Micro Insurance Reserving Analysis (MIRA) Ñ to calculate state-fund employerrates. BWC will use MIRA reserves to calculate public employer taxing districts ratesbeginning Jan. 1, 2003. During this transition period, BWC will continue to provideupdated information to employers using both MIRA and the tabular reserving system.Beginning in January 2002, private, state-fund employers and public employers canview both reserves on BWCÕs Web site at ohiobwc.comHow does MIRA work?BWC feeds all existing claims in its master claim file into theMIRA computer system. Each week, MIRA collects data onindividual claims that had activity or data changes.MIRA, which has identified 20 of these claim characteristicsas primary cost indicators, then calculates the total incurredcost of the claim. The reserve is the figure remaining afterthe system subtracts the total amount paid to date from thetotal incurred claim cost. MIRA also predicts the duration ofDoes BWC have a schedule to implement MIRA?Private, state-fund employers will not see rates based onMIRA reserves until the December 2002 payroll report withpremiums due Feb. 28, 2003. MIRA reserves will be used tocalculate public employersÕ rates beginning with the Jan. 1,2003, to Dec. 31, 2003, policy year with premiums due MayHowever, during this transition the lower of the MIRA andtabular reserves will be used to calculate employersÕ individualpremiums. The transition to MIRA will be implemented on ayear-by-year basis and will be evaluated after its first year. For more informationCall BWCÕs actuarial department at (614) 752-8318.Visit us on the Internet at:ohiobwc.com Fact Sheet: Understanding the Conversion of Reserving SystemThe Ohio Bureau of WorkersÕ Compensationv1.1 WorkersÕ Compensationyou Governor Bob TafAdministrator/CEO