In response to my earlier post, Mary Frances Miller wrote:
> Is switching to all claimant-based reporting the right thing to do?
> Provided coverage is on a split limits basis, claimant-based is mostly
> OK. You lose the ability to put occurrences together to get the total
> occurrence cost. If you're going to make a change, wouldn't it be
> better to try to get both claimant data and occurrence totals?
>
> I encounter this problem all the time with my self-insured clients.
> There are a number of third party administrators that cannot capture
> data on an occurrence basis, but only by claimant. Makes it very hard
> to limit losses to the client's retention, which is almost always on a
> per-occurrence basis (and often crosses LOB lines -- how are you going
> to capture that?).
I posed a question that related to me (as a regulator) getting better
information than I am able to get now and how to be able to do that in
the most cost-efficient fashion. Suppose that a requirement was adopted
in a jurisdiction (e.g. Nebraska) covering a line of insurance (e.g.,
private passenger auto) saying that thou shalt report report claims on a
claimant basis to a statistical agent. I am still interested in whether
this would be the most cost-efficient requirement but, even if it is,
that doesn't mean that merely doing the little bit necessary to meet it
may be the best thing for an insurer to do for its own purposes.
First off, yes, if that was all that was required, and that is all the
stat agent collected, then the stat agent would not be able, with 100%
reliability, to match claimants arising out of the same accident. For
my regulatory purposes, however, that may not be of such importance that
I want to require the additional element of detail (i.e., an "accident
identifier") that would allow this to be done with 100% reliability.
(I say 100%, because this matching probably could be done at a practical
level by matching all the other elements of detail that would be
available.)
If all the insurer collected this data for was to report it to a stat
agent, and it had absolutely no other use for it, then the insurer would
probably collect nothing more than it had to for the stat agent and it
would encounter problems of the nature that you referenced if and when
it tried to use it for internal purposes.
I think that a data manager for an insurer would be silly, however, to
be so shortsighted. Suppose that an insurer had a very bare bones
system and it was hit with this requirement. If I was that data manager,
I would want to look at my current and possible uses for related data, so
that I could consider whether adding just a little bit more or a lot more
detail (as long as I need to make changes, anyway) would be better for my
operation. In doing that, I might decide to have an "accident file" that
ties together a bunch of information related to the accident and then,
for each of my actual claimant records, have a field that allows me to
refer back to that accident file. Of course, setting up something like
this in the "best" fashion is something that a lot of data managers have
worked on in the past and, now that I think of it, might be a better
subject for discussion than my simpler, much more one-dimensional query.
I had some off line discussion on this topic with Rich Nichols. Rich
and I are members of the Insurance Data Management Association, a
professional association focused on the insurance data management area.
He has worked with this problem on a hands-on basis, but I have not.
The topic of the best way to structure insurer databases to keep
track of claim information in order to serve the many users of them
would be a good topic, but I probably can't add much to it. My initial
posting was one-dimensional, dealing with a specific question, but it
probably would be more useful for the actuaries following this thread
if we shifted gears a little to discuss it in a broader fashion.
Having said that, I hope that someone takes it up.
Alan Wickman, ACAS
Administrator, Actuarial Division
Nebraska Department of Insurance Fax: (402) 471-6559
941 "O" Street, Suite 400 Phone: (402) 471-4646
Lincoln, NE 68508 Internet: ins1008@vmhost.cdp.state.ne.us
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