MIRA II Reserve MIRA II Reserve Preliminary ReportPreliminary Report

MIRA II vs MIRA IMIRA II vs MIRA I

MIRA II Reserve MIRA II Reserve Preliminary ReportPreliminary Report

MIRA II vs MIRA IMIRA II vs MIRA I

Presented to the BWC-Actuarial Committee

July 21, 2008

Presenter: Rex Blateri, MIRA II Project Manager/Business Lead

Presented to the BWC-Actuarial Committee

July 21, 2008

Presenter: Rex Blateri, MIRA II Project Manager/Business Lead

MIRA II Project:MIRA II Project: Major EventsMajor Events

• Online Tutorial to External Customers

• MIRA II Reserve Evaluation

• MIRA II Web Testing

• Preparation for MIRA II Training-Phase II

• MIRA II Reprediction Service

• MIRA II Reserve Sign Off: Prediction as of Aug 17, 2008

• Prepare Staff for Sept 5 Release of Reserves

MIRA II vs. MIRA I Statistics

Report Data: Original File

• Reserves calculated as of June 30, 2008

• 1.7 million claims sent through original prediction process

• Approximately 328,000 claims with MIRA II or MIRA I reserves greater than zero

MIRA II vs. MIRA I Statistics

Report Data: Limited File for Statistical Reporting• Private and Public Employer Claims with date of injury 2000

thru 2008• Claims with either a MIRA II or MIRA I reserve greater than

zero• Not including claims with Injury Type 6 (Medical Only) since

BWC suppresses reserves on Medical Only claim

NOTE:– Reserve amount is the Total Incurred (prediction) – Total Paid (medical and Indemnity)– Claim reserves where both MIRA I and MIRA II is zero (0) are not used in statistical

report

MIRA II vs. MIRA I Statistics

• MIRA II Injury Types:• Type 1-Death• Type 2-PTD• Type 5-Temporary Condition• Type 6-Medical Only (not included in claim

count and averages)• Type 9-Permanent Condition

MIRA II vs. MIRA I Statistics

Lower overallReserve predictions

Improved and quicker

stop logic

Lower avg reserveprediction

More claims withReserve equal to

zero

MIRA II vs. MIRA I Statistics

MIRA II vs. MIRA I Claim Count by Injury Type

Claim Countshift from Permanent

Condition to Temporary

* Includes claims with reserve equal to zero (0)

MIRA II vs. MIRA I Statistics

MIRA II vs. MIRA I Statistics

MIRA II vs MIRA I Average Reserve Breakdown by Injury Type

NOTE: Calculation uses only claims with reserves greater than zero, does not include zero claim reserves

Identified Error in MIRA II Prediction,

Indemnity Prediction Too Low

Improved MedicalCost Predictions

Fewer Claims Reserved as

Type 9

* Claim Count and Averages revised on July 17, 2008 after the publishing of the initial report

MIRA II-Improved AccuracySample PTD Claim

Claim Facts – Claimant Current Age – 26 Remaining Life Years – 48 years ICD-9 – Serious Head Injury Paid to date 2008 - $120,187 Paid 2007 -             $315,959 Paid 2006 -             $282,342 Paid 2005 -             $384,097

Total Medical Paid to date - $2,833,915

Both MIRA I and MIRA II use a method to calculate PTD medical where the first 3 yrs of claim life is consider the ‘critical’ care time period and the years > 3 yrs is consider ‘chronic’ care. 

In MIRA II ‘chronic’ care considers what has been paid in the current year and the prior three years and uses a weighted average of the paid and than calculates for remaining life expectancy years.  MIRA I used a flatter baseline amount for calculating ‘chronic’ care amounts.

Summary: It is obvious the MIRA I incurred is too low based on the claimant age, injury and what is being paid annually.   The claim will be re-predicted on an annual basis and if the medical payments significantly decrease the prediction will trend downward. 

3 + Years ofMedical Payments

MIRA II-Not Always Lower Reserve

Example Claim: Permanent Total Disability (PTD)

MIRA II vs. MIRA I Statistics

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2008 2007 2006 2005 2004 2003 2002 2001 2000

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MIRA II vs. MIRA I -Aggregate Reserves by Injury Year

MIRA II MIRA I

28,485

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MIRA II & MIRA I Reserve Distribution by Amount (Claims with Date of Injury 2000-08)

MIRA II 28,485 1,105 4,852 5,625 6,799 4,349 5,636 3,294 3,864 3,974 2,025 523 321 195 100 63 30 14 11 54

MIRA I 837 482 8,008 8,055 11,174 8,315 10,822 6,107 5,834 4,766 2,221 2,570 1,176 473 281 108 26 13 11 44

0 1-999 1k-5k 5k-10k10k-20k

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200k-300k

300k-400k

400k-500k

500-600k

600k-700k

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800k-900k

900k-1,000,000

Over 1 Million

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