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2010 IBNR Model and Assistance

Axene Health Partners, LLC has many years of IBNR experience and expertise.  Through a collaborative effort of our consultants we have combined all the best practices of IBNR work into one easy to use model (AHP CPS).

We not only use the CPS model for IBNR work that we do, but we also license it out to our clients that are in need of a model.  Contact us today for assistance with your IBNR's or  for a web-based tour of our model.    

IBNR Model   (AHP CPSTM)

The Claims Projection System (i.e., CPS) is a user-friendly     program for valuing incurred but not reported claim liabilities (i.e., IBNR).  CPS bases its estimates on historical claims lag patterns as well as historical trends.  CPS is a combination of both Microsoft Excel and Visual Basic for Applications (i.e., VBA).  The program operates using dialog boxes and macros written in VBA. 

In order to run CPS you are required to have:

  • A license for AHP CPSTM from Axene Health Partners, LLC

  • A computer with Microsoft Excel and VBA  (VBA is accessed and available inside Excel)

  • Paid Claims Data and Exposure / Membership information

To make AHP CPSTM easy to use and navigate through it has been designed around a menu called the AHP Menu.  The AHP Menu is where the entire program is controlled from.  It takes you step by step from entering data, all the way to saving and printing.   

The initial data is arranged using claim triangles, incurred months are on the vertical axis and the paid months on the horizontal.  This data is later manipulated in order to more easily view the outcomes.

 

AHP CPSTM calculates completion ratios in 8 different ways and allows the user to decide what way is best.  If the user is not satisfied with the factor construction they are able to weight up to eight different factors into a combined factor.

 

The key to a successful IBNR system is the use of manual adjustments.  In AHP CPSTM manual adjustments are made in many different ways and are easily verified.  The Claims Liability Table is probably the most important worksheet in the entire program.  This is where you review your first run answers and potentially change or adjust the results to get more reasonable answers.  No claims liability methodology works 100% of the time and adjustments are expected based upon professional judgment.  The CPS system is built around the concept of easily adjusting results to provide the best possible answers.  Do not accept your first result.  Check it carefully or your answers may be incorrect.

AHP CPSTM allows changes to be easily done to the Completion Factors, Estimated Incurred Claims, Monthly PMPM’s, and the Trend.  The first three are as simple as typing in new values. The trend is done with the use of the trend calculator.  The Trend Calculator has four sections that allow the user to make adjustments by adjusting one, three, six, or twelve month rolling average trend factors.

There are a series of Monitoring Reports and Analysis reports that are used to further analyze the data.  The Monitoring reports are mostly PMPM trend reports that give you a way to validate claims, premiums, other trends.  The next reports are the analysis reports.  The analysis reports have three main objectives: to calculate multipliers, create a restatement of prior reserve report (check how you have done), and finally make a tables and graphs that show the seasonality.

If you are interested in finding out more information about AHP CPSTM or would like learn more about our licensing agreement email david.axene@axenehp.com  or call Dave at 951.294.0841.