Presentation on theme: "On-Level ASAP by Actuarial Services and Programs"— Presentation transcript:
1On-Level ASAP by Actuarial Services and Programs Calculates adjustment factors to put premiums and losses on today’s cost level.
2Purpose of ProgramRate and coverage/benefit changes may have occurred between the time coverage was provided and the cost and coverage provided today. Applying adjustment factors to the rates (RLAF), and losses (BLAF) provides a proper comparison of the cost/benefits provided today.
3Designed for Use by: Actuaries Experience Analysts Risk Managers Large Accounts Managers
4Built-in User Conveniences History of changes are table driven, and program provides for creating and editing these tables. Tables include:List of companiesList of programs within each companyList of changes for a programFile with information on each individual company/program/state/line of business change.Table files with individual rates or relativities (these may be referenced numerous individual change files)Types of changes and variety of policy terms sold modify the level of detail produced and available on exhibits.Tab sequenced through program, with current focus highlighted in yellow.Required steps highlighted and cannot be extinguished until executed, such as saving a file that has been modified.
5Program Flexibility includes: User defined companies and programsIndividual Risk or Group of Risks adjusted effective datesAll Lines of Business & Coverages and allows user to redefine coveragesUp to 25 rate or benefit changes over 10 Experience Periods(handles partial or truncated years)Handles a mixture of policy terms of 1, 2, 3, 4, 6, or 12 mos
6Program Flexibility (cont.) Calendar, Accident, Policy, or Underwriting Year Experience PeriodsHandles over lap of a change to all outstanding business on up to 4 prior changes.Handles starting or ceasing to offer a particular policy term during an experience period.
7Program Flexibility (cont.) Rate (RLAF) & Benefit (BLAF) On-Level factors by Company, Program, State, and Line of BusinessUp to 25 revisions applying to eithernew or outstanding businessOn Calendar, Accident, Policy or Underwriting Year Experience Periods (including partial or truncated years)
8Program Flexibility (cont.) User Labels and decides which exhibits to print. Exhibits include:Experience Periods & Policy Terms SoldHistory of ChangesCumulative Change FactorsArea Under Each Rate Level & Policy TermIncludes overlap of change to outstanding by termAverage Rate/Benefit Level in EffectOn-Level Adjustment FactorThe selections, experience, and results of the calculations may be saved to an output file.
9Table Changes On-Level In addition to calculating the macro level change for a state, line of business & coverage level, the program will calculate on-level factors and experience for individual tables changes, such as territory base rates, construction/protection classes, and increased limit factors. Here exhibits are sent to a printer, and the information may also be saved to a data file for retrieval in Excel.
11Premium (or Exposure) Definitions Written Premium (WP)Unearned Premium (UEP)Earned Premium (EP) = WP +UEP at start –UEP at endCurrent Level EP (CLEP) = EP x Rate Level Adjustment Factors (RLAF)Projected EP = CLEP x Trend FactorProgram will handle either written or earned premium.
12When Will RLAFs Be Needed Change in rate level implementedChange in rating modifier on policy (experience, schedule, retro, etc.)Change in increased limits soldChange in Financial Responsibility LimitChange in Tort Law
13Current Level Earned Premium (does not apply to Exposure)
14Loss Definitions Case Losses = Paid Losses + Case Reserves Ultimate Losses = Case Losses + IBNRUltimate L&LAE = Ultimate Losses + Loss Adjustment ExpensesUltimate L&LAE on Level = Ulti. L&LAE x Adjustment to Today’s Benefit LevelProject L&LAE = Ulti. L&LAE on Level x Trend Factor
15When Will BLAFs Be Needed Common for Workers Compensation to have state revise benefit levelsTort law changeChange in limits or deductibles sold under programCoverage expansion for program.Change in Financial Responsibility Limit
18Assumptions Included: Premium/Exposure Losses If Group of policies, then evenly spread throughout the period under each policy term.New and renewal effective dates apply to all policy terms, except for starting or stopping selling a policy term.No SeasonalityEach experience period may be of different size.A change to outstanding loss coverage applies on an incurred rather than paid basis.
19Model Requirements Visual Basic Program for PC use Need Windows 95 or laterCost: $ for unlimited use of a single copy$ for unlimited use of a second copyAnd $ for each additional copy.orAnnual lease of a single copy for $ per year,$ per year for use of a second copyAnd $$ for each additional copy.Shipping and handling fee of $5.00 for each CD.Sales within Texas are subject to Texas sales tax.
20On-Level ASAP On-Level ASAP is designed, produced & marketed by: R. Stephen Pulis, ACAS, MAAAActuarial Services and ProgramsP.O. BoxHouston, TX 77094(281)