David Sink

About David Sink

RiskMD, LLC | (407)613-5489 | dsink@riskmd.com

History Repeats Itself, Are You Prepared?

The organization of exposure performance for a PEO is found in its ability to predict and benchmark against the historic results of peers and the industry as a whole. Historical performance is a metric a lot of people lose sight of. We tend to look at current, or maybe past year performance most often, but come time to forecast losses, promulgate a mod or re-price our business 3, 5, 7, or even 10-year performance comes into play.

We’ve seen time and time again from PEO’s that come time for actuarial review, they are misunderstand or are even surprised with the numbers they are presented. RiskMD bridges the understanding of potential issues within a given portfolio of business entirely. On the fly, you are able to create an accurate Loss Development Triangle with corresponding link ratios for multiple measures. From total incurred, to ‘Loss Time Only’ incurred claims, you can create an accurate triangulation based off your data, for any development interval you would like!

A loss triangle and its corresponding link ratio are the primary methods in which actuaries organize claim data that will be used in an actuarial study. The reason it is called a loss triangle is that a typical submission of claim data from a client company shows numeric values forming a triangle when viewed. The triangle allows you to track loss data at set valuations (development periods) so you can see development from valuation to valuation. The difference between each valuation is known as the link ratio. True development is represented typically in a pure dollar figure, where as a link ratio is represented as the growth between periods.

Within RiskMD you can view a plethora of Loss Triangles. The first selection you need to make is whether you want to organize your triangulation based on accident or policy year. We have taken into account that not all our clients have the same effective dates, so we give you the option to select your program effective date. The next thing you need to think about is what type of triangulation you would like to look at? Below is what’s available in RiskMD:

Total Incurred – A pretty standard triangulation, a measure of development for total incurred (total paid + total reserved)

Total Paid – Measure of development for total paid

Total Reserve – Measure of development for total reserves

Med Only – Measure of development for total incurred if the claim is marked ‘Medical Only’

Lost Time Only – Measure of development for total incurred if the claim is marked ‘Indemnity’

Medical Paid – Measure of development for all medical paid

Medical Incurred – Measure of development for all medical incurred (medical paid + medical reserved)

Indemnity Paid – Measure of development for all indemnity paid

Indemnity Incurred – Measure of development for all indemnity incurred (indemnity paid + indemnity reserved)

Number of Claims – Measure of development for claim count. Will show outliers for claims reported late

% Closed Claims – Measure of development to show your claims closure rate and number of claims still open in correspondence to the accident or policy year it occurred in

Example dynamic Loss Development Triangle

RiskMD worked with a pricing actuary who has been in the field for the past 20+ years to create this dynamic model. Powering the visualization is YOUR data. No matter if you want to see the development on a month-to-month basis, or on an annual development, as long as RiskMD has the data, the visualization can be rendered.

Knowing that, if you are having issues producing year end reports, or if you want to stay ahead of the game and know where you sit prior to your next actuarial study, contact us today! We will get you squared, or need I say triangled away!!

Are YOUR Client Companies Profitable?

The business model of many PEO’s includes utilizing the resale of workers’ compensation as a profit margin. For this to be successful, the PEO must understand the liabilities and assets affiliated with each of their workers’ compensation policies and price them appropriately. Both guaranteed cost and loss sensitive platforms have many variables which need to be understood over the course of the policy term to do this successfully. Because of this, understanding profitability at a portfolio or even a policy level can sometimes be a challenge. Understanding the profitability of individual client companies within master policies or with exposures spread over multiple policies adds an additional level of complexity.

At RiskMD we are able to seamlessly solve this problem! By tracking assets (premium) and liabilities (claims) of each client company based on their unique FEIN we are able to understand loss ratios and loss/profit margins on each client company within a given book of business. This holds true regardless of how coverage for the client company is structured, i.e. master policies, MCP’s (multiple coordinated policies), client direct policies or a combination thereof. This also holds true year-over-year regardless of changes in carriers or policy structure for any given client company.

This analysis of each client company can be performed using the carrier’s billed premium or the PEO’s charged premium. This allows us to understand performance of clients and policies as the carrier would view them, giving us greater leverage for negotiating pricing at renewals. Additionally, this allows us to understand client and policy profitability to the PEO itself.

To learn more about RiskMD’s patented process and how to understand YOUR data, contact David Sink at (407)613-5489 or by email: dsink@riskmd.com