Claims Analysis From a Financial Perspective

Transcription

1 Certified Public Accountants Accounting, Auditing, Consulting and Tax Claims Analysis From a Financial Perspective Presented by Herb McDuffee Marianne Stuart CPA James Marta CPA, ARPM

2 Why is this important? Critical internal control Knowing your claims Identify what is changing or not (no surprises) 2

3 Critical internal control component This is the largest expense you ve got. Reconciliation change in claims database to the claims detail change in claims detail to the checkbook Identifies the pooled component of the claims Claims expense can be a dumping ground for adjustments or expenses. 3

4 Why What is the Data For Actuary Safety Study (Loss Control) Audits Claims or Financial Financial Budgeting

5 What data Open/Closed? Limited Agreeing the cash to the claim reports Special Considerations Section 4850 benefits 5

6 What What Fields are needed Detail or Summary Data List of required fields Dates Data format

7 When Yesterday Reoccurring or One Time Request

8 Knowing your claims By going through this process you can better understand Payout patterns Reserving Timing Special Program Treatment 8

9 Analysis of claim layers Excess or Reinsurance Layer Pooled Layer to reconcile to financial statements Retention Layer Subrogation Deductible 9

10 Receivables Issues Where do I send the bill?

11 Receivables Issues CIGA vs. Other Carrier CT Claims

12 Receivables Issues Allocation issues Contribution from other carriers

13 Receivables Issues Follow Form vs. Specific Coverage

14 Reserve Issues Open pool reserves or excess reserves on closed claims

15 Reserve Issues Non Covered Issues: Unverified Expenses County Counsel

16 Reserve Issues Subro or Contribution Issues

17 Using the reconciliation for analysis Workers Compensation 2,250,000 2,000,000 1,750,000 1,500,000 1,250,000 1,000, , , ,000 - (250,000) Paid Reserved IBNR 17

18 Property/Liability Claims Losses 700, , , , , , , Policy Year Paid Reserved IBNR 18

19 What do the triangles tell you Accounting loss development triangles: Summarize how paid and incurred has developed over time as compared to the original expectation. What should you be asking? 19

20 20

21 What does this information tell you? What questions should you ask? 21

22 What you should ask? Are there changes in the: Program Members Are the claim reserves sufficient? Do these development patterns tell us to change our estimation assumptions? 22

23 Advanced Issues Which number do you take off of the actuary? Sufficiency Trends Discounting Effect of your special programs Communication with other departments Risk management Program design Risk financing decisions 23

24 Payment and Other Issues Governance Issues: Claims Staff vis a vis Committees

25 Questions and Considerations when reviewing your actuary report Can you agree to the data used? For development of claims Does the actuary use your claims history Other s, Industry What are the development factors used? Other significant assumptions Discount rates Affect of changing; Laws, court rulings, costs 25

26 What claims analysis helps you do Understand where you have been Understand where you are Is it right? Understand where you are going 26

27 Intera-period analysis What do you do if your claims are progressing faster than expected Property Liability Workers compensation Call the Actuary Use projected outstanding to bridge difference Provide for a sufficient IBNR Least squares method 27

28 Why is advanced claims analysis and accounting important? Accountability over what is administered Identification of critical claim financial issues Indication of where you are going Influence rate setting Equity and dividend considerations Project where the actuary estimates may be coming in 28

29 What advanced claims analysis and accounting provides Internal control Accounting Decision making Credibility 29

30 What value do you get gets us to where we want to go without surprises along the way Instead of waiting for the actuary to tell us where we were; now we can assess were we are and use it to confirm to the actuary. 30

31 Questions? 31