A Model for Reserving Workers Compensation High Deductibles

Several approaches for estimating liabilities under a high deductible program are described. Included is a proposal for a more sophisticated approach relying upon a loss distribution model. Additionally, the discussion addresses several related issues dealing with deductible size and mix, absence of long-term histories, as well as the determination of consistent loss development factors among deductible limits. Lastly, approaches are proposed for estimating aggregate loss limit charges, if any, and the asset value for associated servicing revenue.