Long-Term Disability Losses Under OMPP: A Statistical Treatment

This paper probes and re-analyzes the work of the 1993 paper, “Accident Benefits Long-Term Disability Losses: First Three Years’ OMPP Experience,” by Jason K. Machtinger and Robert L. Brown. The current paper takes a more statistical approach to modeling the first three years of OMPP LTD experience. It was found that the duration of disability for the first three years follows an Inverse Gaussian distribution. For durations beyond three years, a modified Canadian life table was used for hypothetical termination rates. Tables of termination rates (for both the three-year experience period and for later durations) are included. The annuity values in the experience period are slightly lower than the results of the 1993 paper. For the later durations, the annuities are also slightly lower than the 1993 results, converging to the 1993 results at later durations, mostly because of increased machine capabilities. KEYWORDS: Credibility, Duration, Exam Part 7/7C, Loss Distributions, Modeling, Mortality, Reserving, Other Liability, Statistics.