Building Better PPAC Models
Hugh Miller – Taylor Fry
While generalised linear models (GLMs) have achieved some level of acceptance in actuarial work, many reserving problems are still performed using traditional approaches in spreadsheets. A large part of this is that the perceived extra value from using a GLM is low, combined with the uncertainty of how a GLM compares to a traditional approach. This paper argues that the GLM approach is preferable, containing virtually all of the benefits of a traditional model and also permitting powerful extensions and improvements. These improvements to models using GLMs are largely unreported in the academic literature. The discussion is supported with theoretical and simulation results.
The paper focuses primarily on the PPAC model (payments per active claim), a very common valuation technique for long-tailed liabilities. It is directly relevant to many of the schemes represented at the Seminar.
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Challenge ▪ Inflation ▪ Opportunity.
Ash Evans, Hugh Miller – Taylor Fry
Actuaries live and die by the gap between yields and inflation. Commonly-used inflation forecasts pose some challenges when it comes to estimating the gap. Typically, these inflation forecasts are made at different times to yield forecasts, causing an information misalignment – which can lead to volatility in the gap.
The market for index-linked bonds has deepened in recent years so a market-based estimate of future inflation is possible. In the first instance, we test a market-based inflation forecast for pricing longer-tailed insurances where stability of premium is a material consideration. Pushing further, a market-based inflation forecast may have application in long-tail valuation. It can be a legitimate way to determine liability using a market-based “economic gap”, as opposed to other approaches which are heavily reliant on convenient assumptions.
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Fighting “Fight or Flight”
Robert Aurbach, Uncommon Approach
To help claims managers and claims system designers understand the “fight or flight” response and use a proven methodology for quieting the response to improve claims outcomes, reduce secondary psychological overlay and assist in personnel management.
Read paper The Future of Workers' Compensation
Lisa Simpson – PwC
The paper explores the impact of three key trends on workers compensation:
1) The nature of work and the composition of the workforce are changing. More people work casually or in flexible arrangements, are self-employed and work in a range of different work places. The workforce is also aging, and the mix of future industries and skills is changing.
2) There is pressure on our health care system, due to our aging population. Transformation in the commissioning of health services towards more outcomes based approaches is gaining speed.
3) Digital transformation in claims processes is also accelerating, and schemes are focusing on the client experience.
In light of these trends, what does the future look like for workers compensation? How will the product change in terms of who is covered, and what they are covered for? How will this interact with social welfare? How will we fund the cost? What role with treatment providers play? How will digital transformation impact workers compensation?
Read paper How to make Workers Compensation Fit-For-Growth?
Ashish Sharma, Anders Jensen-Waud, Chris Manning - Strategy& PwC
This paper explores customer experience, efficiency and effectiveness improvement opportunities in Workers Compensation Insurance
- Workers Compensation Insurance remains a key pillar enabling sustainable growth, and efficient & effective workforce participation in Australian economy. However, a number of factors – demographics, low economic growth, rising customer experience expectations, traditional under-investment in technology systems, cross-over of issues from Life Insurance, lack of cultural agility, etc. are driving performance for private & public insurers alike
- It’s also becoming increasingly evident that insurers need to explore strategic, non-traditional ways to improve top-line & bottom-line performance to get the business back in shape for sustainable growth.
In this context, this paper presents how a proven, practical approach – Fit-For-Growth (FFG) – can be applied to transform Workers Compensation business.
Read paper Insights for Success Regulating and Insuring Work Injury Insurance
Greg McCarthy
To provide Insights into both regulating and insuring workplace injury (workers’ compensation) insurance based on real life experience not theory primarily from experience South Australia.
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Public vs Private Underwriting and Administration of Personal Injury Statutory Insurance Schemes
Dr Andrew Fronsko, Mr Alan Woodroffe - ADIIS Group
Purpose of the paper: Explain the genesis and structure of Australian Personal Injury Statutory insurance schemes, exploring key issues and policy rationale for transition between public and private underwriting and relative merits of each model to better inform future debate.
Read paper Recalibrating Resilience
Robert Aurbach, Uncommon Approach
An understanding of how “resilience” works discloses that it is not a single attribute, but a cluster of skills that can be learned. Testing of different skills set preferences allows the development of individualized training and higher acceptance.
Read paper Return to work Coordinators: Two Pathways for Improved Return to Work Outcomes in a Workplace Intervention
Tyler Lane, Rebbecca Lilley, Sheilah Hogg-Johnson, Anthony LaMontagne, Malcolm Sim, & Peter Smith
We evaluated the impact of RTW Coordinators on RTW outcomes via two pathways: good interactions and RTW plans. We found planning benefitted shorter-duration claims, while good interactions benefitted longer-duration claims.
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Risk Profiles of Workers Compensation Claimants: the PACE Protocol
Ross Iles, Karen Munk, Cameron Gosling
Early intervention is acknowledged as best practice in management of complex claims. The PACE tool designed to assist case managers to address risks in the first two weeks of a workers compensation claim.
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Scheme Exit and Transition: An International Review
Ross Iles, Francesca Stewart, Simon Bailey, Karen Munk
In response to legislative reforms and emerging demand across social and personal insurance schemes for new ways to achieve genuine and sustainable life outcomes for clients, an international review was performed service model options to support clients leaving schemes..
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Unlocking the Possibilities: The Productivity Commission’s inquiry into ‘data availability and use’ and the implications for injury and disability schemes
Anjali Napoli, Sylvia Wong - PwC
Purpose: To raise awareness of the new reforms to data collection, storage, use and sharing recommended by the Productivity Commission’s report on ‘Data Availability and Use’ and to invite the reader to explore the opportunities that this new data framework provides to improve outcomes and costs for injury/disability schemes.
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