Method A theoretical examination of curves best used to develop workers’ compensation tail factors resulted in a proposed enhancement to this part of the original methodology. Further, a melding of theoretical and practical considerations gave rise to an approach for gradual introduction of mortality to the curve for determination of a more realistic tail. Finally, the determination of a process for updating the proposed model was developed for use by a practicing actuary.
Results The paper presents a new curve for tail fits, the gradual introduction of mortality into the tail calculation and a process for regularly updating the model.
Conclusions The updated approach provides an enhanced way of incorporating mortality into traditional aggregate reserving methods in a manner that can be readily explained to business partners.
Keywords Workers’ Compensation; Reserving Methods; Tail; Mortality; Gamma Curve; Shane-Morelli
