Actuarial Outpost
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Health - Disability
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

Thread Tools Search this Thread Display Modes
Old 11-16-2017, 08:10 PM
doodlebug050 doodlebug050 is offline
Join Date: Nov 2012
Posts: 72
Default Estimating runout

Hi, I have a client who switched providers a couple of years ago. We have paid claims for the new provider. Naturally, these look low for the first few months of the first year as they are missing run-out from the prior provider. What is the best way to estimate the run-out? Thanks so much!

Last edited by doodlebug050; 11-16-2017 at 09:08 PM.. Reason: .
Reply With Quote
Old 11-16-2017, 08:26 PM
Dr T Non-Fan Dr T Non-Fan is offline
Join Date: Sep 2001
Location: Just outside of Nowhere
Posts: 95,022

Here's an idea (not the best, but...)

1. You have completed claims from, say, two years ago?
2. Trend them forward (PMPM).
3. Adjust each month for seasonality (based on prior provider patterns).

OK, now you have what should be decent claims by incurred month estimates.
4. Subtract what has been incurred and paid each month.

5. Voila. Runout.

Now, before showing anyone, look for yourself to see if it looks right. You might have some negative runouts for some months, as the claims have come in hotter than expected. Or the runout for a particular month is positive but looks low. You should have an idea of what it should be (say, $20 PMPM for the fifth month out, or something like that),but if it's $10 PMPM or $40 PMPM, you should think harder about disclosing.
One would hope that the months are systematically hotter or colder, so as to reflect something going on.

To answer your actual question: look at claims from providers separately, cut off from the incurred month when the new provider started to pay claims.

DISCLOSURE/DISCLAIMER ('cause professional area): Not a Valuation Actuary, but I like to dabble. As such, no charge, and you get what you pay for.
"Facebook is a toilet." -- LWTwJO
Reply With Quote
Old 11-16-2017, 08:47 PM
doodlebug050 doodlebug050 is offline
Join Date: Nov 2012
Posts: 72

Thank you! I will try this approach.
Reply With Quote

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

All times are GMT -4. The time now is 08:15 AM.

Powered by vBulletin®
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.17779 seconds with 9 queries