The Cumulative Claim Cost (C~3) Index: A Tool for Managing the Book of Long-Tail Casualty Claims

摘要

On-the-job employee accidents create legal and fiduciary obligations on the part of employing organizations: To compensate injured workers, while also to manage the overall injury-related expenditures in a fiscally sound manner. As it regards the latter of the two obligations, active and effective management of the total cost of on-the-job accidents demands informational specificity that very few organizations have, in spite of the requisite detailed accident and injury data being readily available. Especially vexing is the challenge of effective cost management of long-tail casualty claims, which are those that remain open more than 12 months after the initial filing date. The primary problem that impedes effective management of those claims is their inherent age and type heterogeneity, which makes meaningful cross-time comparisons difficult. This paper discusses a simple computational approach - the Cumulative Claim Cost Index, or C~3 Index - designed to help managers make objective and reliable year-over-year long-tail claim cost comparisons, while also being able to "drill down" into the underlying causes of any observed variability.