Closed claim count development method. Closed claim counts are projected to ultimate values based on historical development patterns. Historical count development factors are reviewed and forecasted factors are selected. The selected factors are used to project ultimate claim counts. This method is most reliable when claims closing patterns are stable over time. The closed claim [...]
Loss adjustment expenses are a significant part of medical malpractice rates. Direct claim defense costs (attorneys, expert witness and court costs) are called Allocated Loss Adjustment Expenses (ALAE) and exclude insurance company home office claims administration expenses. Because ALAE is not usually subject to policy limits, they are not capped in this analysis. The following [...]
Claim severity is the average settlement value per claim, excluding claims that close without indemnity payment. Because many claims are still open, actuarial loss development methods are applied in order to estimate ultimate settlement values. One problem in measuring severity is that policyholders have varying limits of liability. For this reason losses are adjusted to [...]