State of Florida Division of Workers’ Compensation - Self Insurance Section Checklist to accompany the annual actuarial report for loss reserve calculation INSTRUCTIONS: This form should be completed by the self-insured’s actuary and submitted at the same time as the annual actuarial report. Sections I - IV must always be completed. Appendices A - D are required only as indicated in Section III. Section I. Name of SelfInsurer:___________________________________________________________ Evaluation date: _____ / _____ / _____ Loss Reserve (discounted @ 4%) _______________ Section II. Name of Actuary _______________________________ Phone Number _________________ Company ___________________________________________________________________ Address ____________________________________________________________________ City ________________________________ State __________ Zip Code ___________ __________________________________________________________________________________ Section III. Loss Reserve Development Methods. Which of the following projection methods were used to evaluate the ultimate loss reserves? Paid Loss Development Method ? ____ YES ____NO (Attach Appendix A) Incurred Loss Development Method? ____ YES ____NO (Attach Appendix B) Bornhuetter-Ferguson Paid Method? ____YES ____NO (Attach Appendix C) Bornhuetter-Ferguson Incurred Method? ____YES ____NO (Attach Appendix C) Were other development methods used? ____YES ____NO Method: ______________________________________________ ( Attach a copy of Method: ______________________________________________ Appendix D for Method:______________________________________________ each method) If requested, by the Self-Insurance Unit , could your firm provide the computerized spreadsheets containing the calculations of the loss reserves? _____YES _____NO Form SI-26 (Rev 9/96) American LegalNet, Inc. www.FormsWorkflow.com Page Two __________________________________________________________________________________ Section IV. TEST FOR REASONABLENESS OF SELECTED ULTIMATE LOSSES Explain how weights were assigned to each of the loss reserving methods in order to arrive at the selected ultimate losses. Explain the basis of credibility assumptions. Does the progression of claims frequency across the years support the reasonableness of the selected ultimate losses? ____YES: ____NO, explanation : Does the progression of average claims severity across the years support the reasonableness of the selected ultimate losses? ____YES: ____NO, explanation: Does the progression of loss ratios across the years support the reasonableness of the selected ultimate losses? ____YES: ____NO, explanation: Does the claims payable reserve include an offset for aggregate recoveries allowed on Second Disability Trust Fund (SDTF) recoveries? ____YES: ____NO Does the claim payable reserve include an offset for excess insurance recoveries? ____ YES: ____NO Has a provision for Unallocated Loss Adjustment Expenses (ULAE) been determined for the cost of claims administration in the event of claims run-off? ____YES: ____NO Form SI-26 (Rev 9/96) American LegalNet, Inc. www.FormsWorkflow.com Appendix A: Paid Loss Development Method __________________________________________________________________________________ • Individual Self-Insurer’s data _____, industry sources _____ , or both _____ was (were) considered in selecting a paid loss development pattern . • Are allocated lost adjustment expenses (ALAE) included in the paid loss development triangle? ____ Yes; ____No If not, explain how a provision for ALAE was included in the funding estimate: • Were specific excess insurance recoveries estimated implicitly using net data in the paid loss projections? ____ Yes; ____ No If not, explain what separate analysis was done to estimate these recoveries explicitly: • Were non-contractual recoveries estimated implicitly using net data in the paid loss projections? ____ Yes; ____ No If not, explain what separate analysis was done to estimate these recoveries explicitly: • Did the mix of medical only versus lost time cases remain relatively constant during the history? ____ Yes; ____ No If not, explain how this was considered in the paid loss projections: • Did the settlement patterns remain relatively constant during the experience history? ____ Yes; ____ No If not, explain how this was considered in the paid loss projections: • Loss development patterns have been based on: _____ historical SIRs _____recasted SIRs Form SI-26 (Rev 9/96) American LegalNet, Inc. www.FormsWorkflow.com Appendix B: Incurred Loss Development Method __________________________________________________________________________________ • Individual Self-Insurer’s data _____, industry sources _____, or both _____ was (were) considered in selecting a reported loss development pattern . • Are allocated lost adjustment expenses (ALAE) included in the reported loss development triangle? ____ Yes; ____No If not, explain how a provision for ALAE was included in the funding estimate: • Were specific excess insurance recoveries estimated implicitly using net data in the reported loss projections? ____ Yes; ____ No If not, explain what separate analysis was done to estimate these recoveries explicitly: • Were non-contractual recoveries estimated implicitly using net data in the paid loss projections? ____ Yes; ____ No If not, explain what separate analysis was done to estimate these recoveries explicitly: • Did the mix of medical only versus lost time cases remain relatively constant during the history? ____ Yes; ____ No If not, explain how this was considered in the reported loss projections: • Did the case reserve adequacy remain relatively constant during the experience history? ____ Yes; ____ No If not, explain how this was considered in the reported loss projections: • Loss development patterns have been based on: _____ historical SIRs _____recasted SIRs Form SI-26 (Rev 9/96) American LegalNet, Inc. www.FormsWorkflow.com Appendix C: Bornhuetter-Ferguson Loss Development Method(s) __________________________________________________________________________________ • Explain how the expected loss ratios were determined: • Is the basis of the expected loss ratios used (with respect to experience rating, premium discounts and specific excess insurance recoveries) consistent with the basis of the earned premiums used? ____ Yes; ____ No If not, provide an explanation: Form SI-26 (Rev 9/96) American LegalNet, Inc. www.FormsWorkflow.com Appendix D: _______________________________ Development Method __________________________________________________________________________________ • Describe underlying basis of this method: • Provide a brief explanation of how the estimated loss reserve was calculated: • Was a “trend factor” or “weighted average factor” used to determine the estimated loss reserves? ____YES: ____NO If yes, explain how this factor was developed? Form SI-26 (Rev 9/96) American LegalNet, Inc. www.FormsWorkflow.com