Top Milliman blog posts in 2014

December 15th, 2014 No comments

Milliman consultants had another prolific publishing year in 2014, with blog topics ranging from healthcare reform to HATFA. As 2014 comes to a close, we’ve highlighted Milliman’s top 20 blogs for 2014 based on total page views.

20. Mike Williams and Stephanie Noonan’s blog, “Four things employers should know when evaluating private health exchanges,” can help employers determine whether a PHE makes sense for them.

19. Kevin Skow discusses savings tools that can help employees prepare for retirement in his blog “Retirement readiness: How long will you live in retirement? Want to bet on it?

18. The Benefits Alert entitled “Revised mortality assumptions issued for pension plans,” published by Milliman’s Employee Benefit Research Group, provides pension plan sponsors actuarial perspective on the Society of Actuaries’ revised mortality tables.

17. In her blog, “PBGC variable rate premium: Should plans make the switch?,” Milliman’s Maria Moliterno provides examples of how consultants can estimate variable rate premiums using either the standard premium funding target or the alternative premium funding target for 2014 and 2015 plan years.

16. Milliman’s infographic “The boomerang generation’s retirement planning” features 12 tips Millennials should consider when developing their retirement strategy.

15. “Young uninsureds ask, ‘Do I feel lucky?’” examines the dilemma young consumers face when deciding to purchase insurance on the health exchange or go uninsured.

14. Last year’s #1 blog, “Retiring early under ACA: An unexpected outcome for employers?,” is still going strong. The blog authored by Jeff Bradley discusses the impact that the Patient Protection and Affordable Care Act could have on early retirees.

13. Genny Sedgwick’s “Fee leveling in DC plans: Disclosure is just the beginning” blog also made our list for the second consecutive year. Genny explains how different fee assessment methodologies, when used with a strategy to normalize revenue sharing among participant accounts, can significantly modify the impact of plan fees in participant accounts.

12. Doug Conkel discusses how the Supreme Court’s decision to rule on Tibble vs. Edison may impact defined contribution plans in his blog “Tibble vs. Edison: What will it mean for plan sponsors and fiduciaries?

11. In her blog “Retirement plan leakage and retirement readiness,” Kara Tedesco discusses some problems created by the outflow of retirement savings. She also provides perspective on how employers can help employees keep money in their plans.

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Predictive analytics in MPL pricing: Finding opportunity in challenges

December 18th, 2014 No comments

The medical professional liability (MPL) industry has been slow to adopt predictive analytics in their ratemaking process. This article authored by Milliman consultant Eric Krafcheck identifies challenges which may deter MPL carriers from building predictive models to price policies and offers solutions to these challenges.

Here is an excerpt:

In addition to the lack of available data, MPL writers face challenges related to immature and undeveloped loss data. Because MPL claim amounts can drastically change over time, it is exceptionally difficult to estimate ultimate claim settlement costs, especially when a claim is newly opened. The modeler should be aware that loss development techniques that may work for personal auto and homeowners may not be appropriate when applied to MPL data.

Additionally, traditional loss development methods used by reserving actuaries rely on the principle that a group of claims in aggregate will develop the way claims historically have developed in the past. But a predictive model is built based on data at the individual risk level, so losses must be developed at the individual claim level. What is the most appropriate way to handle this when the claims department is more confident in its estimate of the case reserves for some claims but less certain in its estimates of others? Should the modeler explicitly account for this? It is important for the modeler to research and understand the company’s reserving practices—how case reserves are established, how the claim settlement process differs by claim type, etc.—in order to apply the most appropriate assumptions when developing claim costs.

A further complicating issue is the treatment of incurred but not reported (IBNR) claims. In contrast to personal auto and homeowners claims, MPL claims may not be reported until well after the policy expires. This is especially true for occurrence policies, where coverage is provided for claims that occur during the policy year, but also can affect claims-made policies (for instance, some insurers may initially record reported claims as “incidents,” which later may convert to claims once they meet the company’s claim definition)…

A potential remedy to this problem would be to exclude the most recent immature accident years from the analysis. However, it may take many years before some claims are reported. Therefore, even if the most recent years of data are removed from the data set, it is still important for the modeler to take into account the IBNR claims and adjust accordingly when developing ultimate claim costs.

Milliman wins Insurance Risk Award for Best Actuarial Modeling Software

December 16th, 2014 No comments

Milliman has announced that the firm’s cloud-based Integrate™ solution has been recognized as “Best Actuarial Modeling Software” in the 2014 Insurance Risk Awards. Integrate is the industry’s first cloud modeling platform and builds off of MG-ALFA®, which has been a market leader in asset liability/modeling for more than 20 years.

“This award validates our unique approach to modeling, which is to empower actuaries with a robust cloud solution that allows them to focus on analyzing results rather than building and maintaining models,” says Pat Renzi, a principal with Milliman’s Life Technology Solutions group. “Clients like Royal London and the Phoenix Group have chosen Integrate because it brings together all of their modeling needs in a nimble platform that lets actuaries focus on actuarial analysis.”

Integrate is a revolutionary financial projection solution for the life insurance industry. Milliman reports its Integrate customers are gaining unprecedented speed and control in financial reporting amidst changing market dynamics and the demand of new regulations.

To see more about Milliman’s award, click here.

Milliman Risk Talks: Planning for NAIC ORSA

December 10th, 2014 No comments

In this Milliman Risk Talk, Mark Stephens and Vikas Shah draw from current and past client engagements to offer insurers advice on getting ready for their NAIC Own Risk Solvency Assessment (ORSA) efforts.

Milliman Risk Talks: Complex risk assessments

December 4th, 2014 No comments

Enterprise risk management (ERM) provides organizations the opportunity to learn how emerging risks affect their business. In this installment of Milliman Risk Talks, Mark Stephens and Vikas Shah talk about some emerging risks of interest to executives. They also discuss ERM steps organizations can take to prepare and measure their unique business exposures.

Considerations for high-performance computing in the cloud

December 3rd, 2014 No comments

Conducting high-performance computing in the cloud increases productivity, but glitches may arise. This Tech Target article features IT administrators offering tips that companies should consider before implementing cloud computing. The article quotes Milliman’s Paul Maher.

Here’s an excerpt:

Partner up. Make sure your HPC cloud provider offers more than just a help desk number, said Paul Maher, CTO at Milliman. A regular contact — someone who acts like a partner — is invaluable. This is especially important, he said, if you’re using the cloud provider’s platform to offer your customers a product. “When things go round — and that’s going to happen — the last thing you want is for your vendor choice to be a problem….”

Build a team. Once you deploy software in the cloud, things will go wrong, so you need to ensure you have an organization in place to deal with problems, warned Milliman’s Maher. “Most organizations probably don’t have a physical team built that is capable of monitoring and maintaining the software and being the point of contact when something goes wrong,” he said. His company had to create a separate group to focus just on the cloud deployment, and in the several years since the launch, the team has grown two to three times in size, underscoring how important that role is.

To learn more about Milliman’s cloud computing solutions, click here.

Milliman helps clients meet investment challenges of retirees with Managed Risk Strategy

December 2nd, 2014 No comments

Maritime Super, Plato Investment Management, and BetaShares have this year employed Milliman’s Managed Risk Strategy (MMRS), which stabilizes investment volatility and reduces the impact of major market declines by dynamically managing market exposure using derivatives.

The potential to hold onto the returns of growth assets while minimizing the downside has quickly found a receptive market among pre-retirees and retirees that understand the benefit of holding growth assets to protect against longevity risk.

The $4.5 billion Maritime Super fund began offering members a version of its popular Balanced and Growth options with the Milliman overlay in July. The Balanced and Growth “Managed Volatility Process (MVP)” options have already received more than $200 million in inflows from members and defined benefit sub-funds.

“There are some very complex and very expensive ways to minimize volatility and protect members from the severe downturns in equity markets but there aren’t many that can be understood by members, are low-cost, and can be turned on and off by individual members at any time,” Maritime Super chief executive Peter Robertson said.

“A lot of other protection strategies require us to hand over the money to someone else to manage. Milliman’s approach allows us to still invest in the fund managers that we want to use,” Robertson said.

Milliman practice leader Wade Matterson said its overlay is a cost-effective way to manage the risk of a significant market downturn while allowing investors to retain an exposure to growth assets.

“Delivering this process as an overlay allows us to enhance a product that people are already familiar with, and offers a nudge to those that are seeking to manage the risk in their portfolio,” Matterson says. “The power of that structure is that it allows you to combine the best of both worlds: the fund manager’s portfolio construction with Milliman’s specialist risk management expertise and scale.”

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Cancer treatment for firefighters through presumption laws impacting workers’ compensation

November 26th, 2014 No comments

In recent years the expansion of presumption disability laws has shifted significant cancer treatment costs for firefighters and other public safety officials from the healthcare system to the workers’ compensation system. These laws impact the public entity risk-pooling community that insures the workers’ compensation benefits of their municipality members. In her latest article, Milliman’s Chris Kogut discusses the details of these cancer presumption laws and offers a solution to risk pools to quantify the cost implications.

Coverage. The presumption laws that propose to cover all cancer types pose a nearly insurmountable task of quantifying the impact, given the fact that more than 200 different types of cancer can develop in the body. The array of possibilities is exponential considering cancer can develop from almost any type of cell in the 60 different organs in the human body. Listing specific cancers in presumption laws greatly increases the usefulness of medical statistics in estimating claim costs and understanding the underlying incidence and mortality and treatment patterns of the specific illness.

Prior injuries. Some presumption laws are proposing to provide coverage for past incidences of cancer to all firefighters and other public safety officials, either on an unlimited basis or with some specified number of years. These benefits would generally include lost-time pay, death benefits, and reimbursement for medical costs. Public safety officials who have served more than one day (or minimum service) would be entitled to a presumption that their cancer is job-related, regardless of when the cancer was diagnosed or treated within the retroactive period. The introduction of retroactive coverage makes the estimation of the cost impact of the law more difficult to calculate.

Solution. While there are numerous limitations in any forecast of future liabilities, the development of an approach to quantify and understand the potential realm of possibilities on a pool-by-pool basis can be performed. The unknown equations may seem overwhelming, but they are manageable. In fact, determining a pool’s potential liabilities is at its core a frequency and severity problem that actuaries work with on a regular basis. While many assumptions may need to be made, which is due to lack of data, there are a number of approaches that can be used to inform pool managers of a pool’s potential liabilities, given certain parameters.

Providing workers’ compensation benefits to public safety officials with cancer through presumption disability laws is here to stay. Each risk pool needs to quantify the impact of the legislation and recognize the new risks it is assuming to avoid getting burned.

To read the entire article, click here.

Milliman Risk Talks: Milliman Risk Institute Fall Highlights

November 25th, 2014 No comments

The Milliman Risk Institute organizes biannual advisory board meetings where members discuss the enterprise risk management (ERM) landscape, ERM strategies, and other facets of ERM. In this video, Milliman’s Mark Stephens and Vikas Shah discuss the latest perspectives from senior risk executives with Elaine Du.

To learn more about the Milliman Risk Institute, click here.

Creating a virtuous circle with leading-edge risk processes and tools

November 24th, 2014 No comments

Companies today that are most successful in managing enterprise risk are moving faster to adopt best tools and practices. This enables them to better anticipate, analyze, and manage risks and to better navigate a volatile and rapidly changing business environment. The end result, as discussed in this white paper based on a survey of 125 North American companies by the Milliman Risk Institute, is a virtuous circle—the leading firms develop better risk tools, embed them in all levels of the organization, integrate them into strategic and resource-allocation decisions, and regularly update them.

To request a copy of the paper, click here.