Nevada Analysis of Unpaid Loss and ALAE 2022-08.pdf

The State of Nevada

© 2022 WTW. Proprietary and confidential.

For WTW and WTW client use only.

wtwco.com

October 18, 2022

Analysis of Unpaid Loss & ALAE as of August 31, 2022 and Projected Loss & ALAE for 1/1/22-23

Russel L. Sutter, FCAS, MAAA Director

Pierre Laclede Center 7733 Forsyth Boulevard Suite 1350 St. Louis, MO 63105

T +1 314 719 5900 D +1 314 719 5834 F +1 314 719 5853 E russ.sutter@wtwco.com W wtwco.com

Willis Towers Watson US LLC

Mandy Hagler Risk Manager, Risk Management Division Nevada Department of Administration 201 S. Roop Street, Suite 201 Carson City, Nevada 89701

Dear Ms. Hagler:

The enclosed report has been prepared by WTW for the State of Nevada (“the State”). The report contains projections for accident periods 1/1/22-23 through 1/1/25-26 and estimates of the unpaid loss & ALAE as of June 30, 2022 and August 31, 2022 for workers compensation.

This final report replaces and supersedes all draft versions previously provided to you.

Attention is called to the section of the report entitled Distribution, which sets out the limits on distribution of the report.

This report contains work papers, trade secrets, and confidential information of both the State and WTW, and as such, it is not intended to be subject to disclosure requirements under any Freedom of Information Act or similar laws.

I, Russel L. Sutter, is a member of the American Academy of Actuaries and I meet its qualification standards to render the actuarial opinion contained herein.

We have enjoyed working with you in the preparation of this report. Please call if you have any questions.

Sincerely, WTW

Russel L. Sutter, FCAS, MAAA Director cc: Karin Nelson, WTW Annette Teixeira, State of Nevada

The State of Nevada i

Table of Contents

Section 1 : Purpose and Scope

Section 2 : Distribution

Section 3 : Executive Summary

Projected Expected Losses and Claims Counts with Cost

Summary Exhibit I

Summary Exhibit II

Summary Graph

Summary of Estimated Unpaid Loss & ALAE

Summary Exhibit III

Summary Exhibit IV

Section 4 : Analysis

Comparison Exhibit I

Comparison Exhibit II

Section 5 : Description of Methodology

Overview

Loss Development Factors

Severity Trend

Projection of Expected Losses

Projection of Claim Counts with Cost

Average Loss Severities

Unpaid Liability Analysis

Support Exhibits

Appendices C, D, and E

Section 6 : Reliances and Limitations

Inherent Uncertainty

COVID-19

Discounting

Applicability of Industry Data

Data Reliance ii The State of Nevada

Extraordinary Future Emergence

Excess Insurance Collectability

Underlying Assets

Self-Insurance Risk

Risk Margins

Section 7 : Technical Explanation of the Confidence Level Analysis

Tables : Projection of Expected Losses

Appendix A : Estimated Unpaid Loss & ALAE as of August 31, 2022

Appendix B : Estimated Unpaid Loss & ALAE as of June 30, 2022

Appendix C : Heart

Appendix D : Lung

Appendix E : Cancer

Support Exhibits

The State of Nevada 1

Section 1: Purpose and Scope

This actuarial report prepared by WTW provides a projection of losses for the State for the 1/1/22-23 through

1/1/25-26 accident periods, as well as a review of the ultimate losses for periods January 1, 2001 through

August 31, 2022 for the State in order to determine workers compensation liabilities as of August 31, 2022. The unpaid loss & ALAE for workers compensation have also been determined as of June 30, 2022. (Note that periods prior to January 1, 2001 are on retro policies that have been closed out and are no longer analyzed in our studies). This study has been prepared to aid in insurance planning and funding estimates and to assist the State and its broker in the evaluation of premium quotations. Care has been taken to ensure an objective analysis.

This report was prepared for the internal use of the State’s management to present our findings with respect to this analysis. It is our understanding that the State’s management will consider our findings for the purposes of selecting funding and accrual levels for its self-insured liabilities for exposures outlined herein.

Our report is not intended or necessarily suitable for any other purposes.

The exhibits and appendices attached in support of our conclusions are an integral part of this report. These sections have been prepared so that our actuarial assumptions and judgments are documented. Judgments about the analysis and findings presented in this report should be made only after considering the report in its entirety. Our projections are predicated on a number of assumptions as to future conditions and events. These assumptions are documented in subsequent sections of this report and should be understood in order to place the actuarial estimates in their appropriate context. In addition, these projections are subject to a number of reliances and limitations, as described in subsequent sections of this report.

We are available to answer any questions that may arise regarding this report. We assume that the user of this report will seek such explanation on any matter in question.

In this report, we provide a point estimate of the State’s unpaid loss and allocated loss adjustment expense

(ALAE) as of August 31, 2022. This point estimate is intended to represent an expected value over a range of reasonably foreseeable outcomes. The point estimate was arrived at through evaluation of the results of various actuarial methods and models applied to the State’s experience. As such, the derivation of this estimate does not reflect extreme events which are believed to have a remote possibility of occurring. We consider the point estimate suitable for use in financial reporting contexts.

For the purposes of our report, the “accounting dates” of June 30, 2022 and August 31, 2022 are the dates used to separate paid and unpaid claim amounts in the State’s financial statement. Transactions through the “valuation dates” of June 30, 2022 and August 31, 2022 are included in the data used in our analysis. No account has been taken in the projections of developments subsequent to the “review date” of October 10, 2022.

2 The State of Nevada

Section 2: Distribution

Our report is delivered under the following terms and conditions:

• This report is provided to the State solely for the intended purpose, and may not be referenced or distributed to any other party without our prior written consent

• This report has been prepared for use by persons technically competent in the areas covered and with the necessary background information

• Draft versions of this report must not be relied upon by any person for any purpose

• A copy of this report may be shared with your auditors solely in the context of their performing regular audit activities

• You shall not refer to us or include any portion of this report in any shareholder communication or in any offering materials or fairness opinion provided by your professional advisors prepared in connection with the public offering or private placement of any security

• This report may be shared with your affiliates, provided that you ensure that each such affiliate complies with the terms above and the applicable statement of work as if it were a party to them, and you remain responsible for such compliance.

We accept no responsibility for any consequences arising from any third party relying on this report. If we agree to provide this report to a third party, you are responsible for ensuring that the report is provided in its entirety, that the third party is made aware of the fact that they are not entitled to rely upon it, and that they may not distribute the report to any other party.

The State of Nevada 3

Section 3: Executive Summary

The following summary exhibits provide an overview of the loss projections and estimates of unpaid loss & ALAE contained in this analysis.

Projected Expected Losses and Claims Counts with Cost

These loss projections are the product of historical experience, actuarial assumptions, quantitative analysis, and professional judgment. The projections are an objective estimate of the losses the State may expect in the upcoming periods. In this analysis losses have first been limited to $750,000 per occurrence. Once an initial projection has been calculated at a $750,000 limit, losses are simulated at the current limit of $2,000,000.

Summary Exhibit I summarizes the 1/1/22-23 projection at the $2,000,000 limit contained in this report. Note that both the aggregate loss dollars at the $2,000,000 limitation and the number of claims with cost have been projected.

Summary Exhibit II provides additional loss projections for the 1/1/22-23 accident period at various limits

($100,000; $250,000; $500,000; $750,000; $1,000,000; $1,500,000; $2,000,000; $2,500,000; and unlimited) and at various confidence levels. The confidence levels are shown in the leftmost column. For example, “10% Perc” would indicate that there is only 10% confidence that the amount in each column to the right (for the “10% Perc” row) is an adequate loss projection. Technical information regarding the statistical modeling employed in determining the various confidence levels and limitations are presented in the section Technical Explanation of the Confidence Level Analysis. The Summary Graph following Summary Exhibit II illustrates the confidence level distributions.

It is important to note that throughout this study “estimated ultimate losses” are defined as all losses ultimately expected to be paid for occurrences that take place in the accident periods analyzed. Allocated loss adjustment expenses are included within the loss limitation for all lines of coverage analyzed in this report except where indicated. Allocated loss adjustment expenses are those expenses clearly assignable to an individual claim (i.e., legal and expert witness fees) but exclude claim adjusters fees.

Summary Exhibit I

Workers Compensation - Projections for 1/1/23-24

Summary of Results at the $2,000,000 Limitation

Implied Pure Loss Rate Per $100 Payroll $1.89

Projected Payroll $741,116,231

Projected Losses & ALAE $14,008,000

Projected Number of Claims With Cost 815

Projected Average Severity $17,188

Nevada 2022-08

Summ1

10/14/2022

Summary Exhibit II

Workers Compensation - Loss & ALAE Projections for 1/1/23-24

Simulation Results - Various Confidence Levels and Limits

WC WC WC WC WC WC WC WC WC

100,000 250,000 500,000 750,000 1,000,000 1,500,000 2,000,000 2,500,000 Unlimited

ITEM Limit Limit Limit Limit Limit Limit Limit Limit Losses

Mean = $8,849,162 $11,007,913 $12,338,486 $12,970,000 $13,341,165 $13,778,685 $14,008,000 $14,191,849 $14,956,436

5% Perc = $7,173,335 $8,644,547 $9,479,472 $9,770,632 $9,884,307 $10,008,782 $10,019,071 $10,038,723 $10,038,723

10% Perc = 7,523,868 9,130,166 10,019,950 10,407,346 10,588,192 10,768,988 10,843,104 10,882,068 10,904,616

15% Perc = 7,753,541 9,476,648 10,429,754 10,841,402 11,031,698 11,255,633 11,314,674 11,373,155 11,389,369

20% Perc = 7,941,321 9,745,627 10,770,230 11,200,672 11,433,231 11,652,847 11,754,658 11,802,059 11,849,928

25% Perc = 8,127,126 10,008,725 11,076,769 11,522,654 11,775,723 12,025,245 12,130,621 12,191,387 12,249,310

30% Perc = 8,266,647 10,205,839 11,332,897 11,817,464 12,078,126 12,380,001 12,503,700 12,564,660 12,637,756

35% Perc = 8,409,328 10,414,745 11,559,185 12,067,880 12,372,351 12,692,449 12,854,367 12,932,737 13,026,495

40% Perc = 8,547,774 10,600,385 11,771,675 12,325,139 12,653,485 12,990,342 13,186,743 13,267,115 13,364,165

45% Perc = 8,664,699 10,776,308 12,025,088 12,575,258 12,902,264 13,293,276 13,477,468 13,599,591 13,723,028

50% Perc = 8,789,528 10,937,011 12,247,720 12,854,521 13,193,696 13,590,280 13,796,178 13,930,296 14,097,741

55% Perc = 8,921,323 11,113,780 12,477,469 13,109,919 13,474,296 13,902,264 14,133,238 14,248,859 14,518,172

60% Perc = 9,079,495 11,310,281 12,718,958 13,398,840 13,771,497 14,218,853 14,480,995 14,654,770 14,944,836

65% Perc = 9,232,491 11,529,487 12,966,037 13,672,450 14,088,751 14,583,933 14,855,221 15,021,179 15,416,818

70% Perc = 9,376,601 11,736,889 13,225,312 13,964,178 14,422,469 14,949,428 15,277,865 15,466,625 15,940,956

75% Perc = 9,551,402 11,962,178 13,516,700 14,300,592 14,758,455 15,336,110 15,721,641 15,945,504 16,503,001

80% Perc = 9,744,106 12,232,328 13,838,161 14,635,419 15,146,273 15,804,066 16,186,245 16,435,747 17,224,880

85% Perc = 9,955,336 12,554,069 14,248,888 15,073,694 15,637,113 16,317,313 16,759,649 17,052,424 18,186,857

90% Perc = 10,248,601 12,942,497 14,760,298 15,669,432 16,305,479 17,018,979 17,425,061 17,825,328 19,325,444

95% Perc = 10,655,718 13,483,569 15,476,915 16,535,937 17,219,617 18,153,198 18,733,234 19,118,821 21,738,348

Assumptions for Simulation of Confidence Levels and Various Retentions

Frequency Frequency Frequency Severity1 Severity1 Severity1

Coverage Distribution Mean Std. Dev Distribution Mean Std. Dev

WC Negative Binomial 815 45 Lognormal 18,656 177,230

1 Unlimited Severity Assumption.

Nevada 2022-08

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Summary Graph

Workers Compensation - Loss & ALAE Projections for 1/1/23-24

Simulation Results - Various Confidence Levels and Limits

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

C o n fi d e n c e L e v e l

Projected Ultimate Loss & ALAE in Dollars

WC $100K

WC $250K

WC $500K

WC $750K

WC $1MM

WC $1.5MM

WC $2MM

WC $2.5MM

WC Unlimited

Nevada 2022-08

SummGraph

The State of Nevada 7

Summary of Estimated Unpaid Loss & ALAE

These estimates are the product of historical experience, actuarial assumptions, quantitative analysis, and professional judgment. They are an objective estimate of the outstanding losses the State may expect from the accidents occurring January 1, 2001 through August 31, 2022, for all divisions excluding NDOT and for NDOT only.

Expected ultimate losses for each period are determined using incurred and paid loss development methods.

Case reserves, IBNR & development, and total unpaid loss & ALAE are calculated based on these estimated ultimate losses and the paid dollars as of August 31, 2022 as shown in Summary Exhibit III. All retro periods are now closed and settled, and therefore retro adjustment calculations are no longer necessary as in prior reports.

The expected payout of the unpaid loss & ALAE for each period in the analysis is calculated using the State’s historical payout pattern. Please refer to Appendix A, Exhibit V (State Excluding NDOT) and Exhibit X (NDOT only) for the expected future payments of unpaid loss & ALAE. Estimated payments of projected losses for half year periods from September 1, 2022 through December 31, 2025 and full year calendar periods from 2026 and subsequent are shown. Summary Exhibit IV summarizes the anticipated payments for accidents occurring

January 1, 2001 through August 31, 2022 as well as anticipated payments for the projections for the remainder of

2022 through 2025, for all of the State (including NDOT).

Summary Exhibit III

Workers Compensation

Estimated Unpaid Loss & ALAE as of 8/31/22 Excluding Unreported Post-Retirement Heart, Lung, and Cancer Claims

Losses & ALAE Limited to Historical Accident Period Retentions

(2) (3) (4) (5) (6) (7) (8) (9) (10)

Estimated Limited Limited Estimated Estimated Open

Ultimate Incurred Paid Case IBNR & Unpaid Claims

Accident Historical Expense Losses Losses & ALAE Losses & ALAE Reserves Development Loss & ALAE with Cost

Period Retention Treatment & ALAE As of 8/31/22 As of 8/31/22 As of 8/31/22 As of 8/31/22 As of 8/31/22 As of 8/31/22

1/1/01-02 $750,000 Excluded $14,740,000 $14,437,505 $13,414,220 $1,023,285 $302,495 $1,325,780 15

1/1/02-03 1,000,000 Excluded 14,050,000 13,897,876 12,522,012 1,375,864 152,124 1,527,988 14

1/1/03-04 2,000,000 Excluded 10,752,000 10,607,371 9,607,650 999,721 144,629 1,144,350 11

1/1/04-05 2,500,000 Excluded 12,561,000 12,249,955 10,565,875 1,684,080 311,045 1,995,125 12

1/1/05-06 2,500,000 Excluded 11,761,000 11,223,839 8,564,525 2,659,314 537,161 3,196,475 9

1/1/06-07 2,500,000 Excluded 10,039,167 9,824,011 8,445,229 1,378,782 215,156 1,593,938 7

1/1/07-08 2,500,000 Excluded 12,846,000 12,791,188 11,708,426 1,082,762 54,812 1,137,574 13

1/1/08-09 1,500,000 Excluded 13,847,170 13,683,981 11,897,838 1,786,143 163,189 1,949,332 16

1/1/09-10 1,500,000 Excluded 10,898,332 10,658,049 9,645,154 1,012,895 240,283 1,253,178 9

1/1/10-11 1,500,000 Included 11,034,000 10,437,351 9,902,337 535,014 596,649 1,131,663 9

1/1/11-12 1,500,000 Included 14,782,000 14,143,258 11,831,094 2,312,164 638,742 2,950,906 14

1/1/12-13 2,000,000 Included 11,989,000 11,468,368 9,547,913 1,920,455 520,632 2,441,087 17

1/1/13-14 2,000,000 Included 14,982,000 14,289,412 10,782,666 3,506,746 692,588 4,199,334 17

1/1/14-15 2,000,000 Included 10,375,000 9,584,592 7,611,123 1,973,469 790,408 2,763,877 10

1/1/15-16 2,000,000 Included 11,336,000 10,102,298 9,632,336 469,962 1,233,702 1,703,664 16

1/1/16-17 2,000,000 Included 10,494,000 9,258,364 8,630,857 627,507 1,235,636 1,863,143 17

1/1/17-18 2,000,000 Included 11,995,000 10,119,322 9,577,419 541,903 1,875,678 2,417,581 15

1/1/18-19 2,000,000 Included 9,999,000 8,701,493 7,968,520 732,973 1,297,507 2,030,480 18

1/1/19-20 2,000,000 Included 11,814,000 9,765,942 8,465,467 1,300,475 2,048,058 3,348,533 14

1/1/20-21 2,000,000 Included 10,567,000 8,331,526 7,041,209 1,290,317 2,235,474 3,525,791 33

1/1/21-22 2,000,000 Included 18,762,000 14,423,952 7,072,210 7,351,742 4,338,048 11,689,790 146

1/1/22-8/31/22 2,000,000 Included 9,267,000 3,795,112 959,789 2,835,323 5,471,888 8,307,211 318

Total $268,890,669 $243,794,765 $205,393,869 $38,400,896 $25,095,904 $63,496,800 750

Notes:

(2), (3), (5), (6), (10) Provided by The State of Nevada.

(4) = (4) from Appendix A, Exhibit IV + (4) from Appendix A, Exhibit IX.

(7) = (5) - (6).

(8) = (4) - (5).

(9) = (7) + (8).

(1)

Nevada 2022-08

Summ3

Summary Exhibit IV

Workers Compensation

Expected Annual Payments Excluding Unreported Post-Retirement Heart, Lung, and Cancer Claims

Estimated Unpaid Loss & ALAE and Projections as of 8/31/22

(1) (2.1) (2.2) (3) (4.1) (4.2) (5) (6.1) (6.2) (7) (8) (9) (10) (11) (12) (13)

Accident 9/1/22- 1/1/23- FY 9/1/22- 7/1/23- 1/1/24- FY 7/1/23- 7/1/24- 1/1/25- FY 7/1/24- 7/1/25- 2029 &

Period 12/31/22 6/30/23 6/30/23 12/31/23 6/30/24 6/30/24 12/31/24 6/30/25 6/30/25 12/31/25 2026 2027 2028 After Total

2001 $245,126 $354,364 $599,490 $370,858 $355,432 $726,290 $0 $0 $0 $0 $0 $0 $0 $0 $1,325,780

2002 182,555 263,415 445,971 276,250 264,219 540,469 276,546 265,002 541,548 0 0 0 0 0 1,527,988

2003 100,963 145,415 246,379 152,843 145,884 298,727 152,989 146,341 299,331 153,145 146,778 (10) 0 0 1,144,350

2004 238,198 342,582 580,781 180,578 171,941 352,519 180,739 172,500 353,239 180,899 354,135 173,556 (4) 0 1,995,125

2005 381,082 547,205 928,288 386,072 366,987 753,058 193,449 184,211 377,660 193,613 378,588 379,359 185,941 (31) 3,196,475

2006 174,186 249,643 423,828 198,955 188,754 387,709 133,174 126,591 259,764 66,738 130,320 130,591 130,862 64,124 1,593,938

2007 141,948 203,317 345,264 124,120 117,490 241,610 93,633 88,834 182,467 62,670 90,984 61,337 61,461 91,781 1,137,574

2008 229,378 328,190 557,567 247,117 233,744 480,861 142,691 135,069 277,760 107,642 174,192 104,601 70,507 176,200 1,949,332

2009 145,945 208,805 354,750 150,983 142,624 293,607 107,385 101,583 208,967 62,007 105,480 75,692 45,453 107,222 1,253,178

2010 131,726 188,752 320,478 134,998 127,520 262,518 92,212 87,110 179,322 65,590 99,907 64,410 46,218 93,219 1,131,663

2011 343,369 494,040 837,409 351,482 332,596 684,078 237,901 224,710 462,611 162,478 269,064 176,052 113,522 245,691 2,950,906

2012 276,599 400,850 677,449 292,978 278,624 571,602 198,240 187,595 385,835 134,164 218,382 151,740 99,304 202,610 2,441,087

2013 462,465 679,230 1,141,696 494,721 474,604 969,325 346,905 329,909 676,814 234,703 380,959 258,560 179,692 357,585 4,199,334

2014 69,872 97,180 167,052 408,057 397,830 805,887 289,763 277,992 567,755 203,199 330,728 223,153 151,460 314,643 2,763,877

2015 40,253 55,369 95,622 61,146 55,803 116,949 234,300 228,446 462,746 166,402 276,303 189,912 128,131 267,599 1,703,664

2016 49,605 67,506 117,112 62,244 56,050 118,294 61,887 56,484 118,370 237,178 399,659 279,673 192,231 400,625 1,863,143

2017 63,781 85,276 149,056 91,208 81,054 172,262 74,725 67,274 141,999 74,306 352,570 479,846 335,780 711,761 2,417,581

2018 52,443 68,351 120,795 76,365 66,397 142,762 71,048 63,129 134,177 58,218 110,274 274,597 373,735 815,923 2,030,480

2019 90,840 114,122 204,962 123,832 104,347 228,180 116,561 101,397 217,958 108,461 185,237 168,368 419,236 1,816,132 3,348,533

2020 214,435 264,215 478,649 127,095 102,281 229,376 110,996 93,533 204,529 104,496 188,091 166,065 150,904 2,003,681 3,525,791

2021 1,514,891 2,071,325 3,586,216 747,083 586,933 1,334,016 282,365 227,204 509,569 246,549 439,853 417,853 368,975 4,786,758 11,689,790

2022 1,300,557 2,889,256 4,189,813 2,099,972 1,191,089 3,291,061 650,942 356,753 1,007,695 217,433 310,196 287,599 272,947 3,363,467 12,940,211

2023 750,174 750,174 1,416,905 3,684,216 5,101,121 1,513,100 1,352,469 2,865,569 487,824 567,626 309,374 287,249 3,639,064 14,008,000

2024 750,174 750,174 1,416,905 3,684,216 5,101,121 1,513,100 1,840,292 567,626 309,374 3,926,313 14,008,000

2025 750,174 750,174 1,416,905 5,197,316 1,840,292 567,626 4,235,687 14,008,000

Total $6,450,217 $10,868,582 $17,318,800 $8,575,863 $10,276,592 $18,852,455 $6,978,455 $9,308,525 $16,286,981 $6,257,722 $12,546,935 $6,780,248 $4,490,606 $27,620,054 $110,153,800

Notes:

(2), (4), (6) and (8) - (12) the sum of unpaid losses from corresponding periods in Appendix A, Exhibit V and Appendix A, Exhibit X.

(3) = (2.1) + (2.2).

(5) = (4.1) + (4.2).

(7) = (6.1) + (6.2).

(13) = Sum of all fiscal year payments.

The payments summarized in this exhibit are only for the estimated Unpaid Loss & ALAE as of 8/31/22 for Historical periods and the projections for the 2022 through 2025 periods.

It is important to note that payments will be made for Accident years subsequent to 2025 for other future periods not shown here.

(i.e. The total annual payments shown here do not contemplate Accident periods subsequent to the 2025 projected period)

Nevada 2022-08

Summ4

10 The State of Nevada

Section 4: Analysis

The last final actuarial report prepared by WTW actuaries for the State was with loss data valued as of

June 30, 2021 and August 31, 2021. Comparison Exhibits I and II show a comparison of current estimates of ultimate losses to those calculated based on previous data for workers compensation excluding NDOT and NDOT only.

For workers compensation excluding NDOT, the estimated ultimate losses have increased by $6.6 million or 2.8% from August 31, 2021 to June 30, 2022. The estimated ultimate losses have decreased by $1.8 million from June

30, 2022 to August 31, 2022, for a total increase of $4.8 million, or 2.0% in the estimated ultimate losses, from

August 31, 2021 to August 31, 2022.

For workers compensation NDOT only, the estimated ultimate losses have increased by $295,000 or 0.9% from

August 31, 2021 to June 30, 2022. The estimated ultimate losses decreased by $21,000 from June 30, 2022 to

August 31, 2022, for a total increase of $274,000, or 0.9% in the estimated ultimate losses, from August 31, 2021 to August 31, 2022.

The pure loss rate at a $750,000 retention has remained at $1.75. The increased limits factor to project losses from $750,000 to $2,000,000 has remained at 1.080.

Comparison Exhibit I

Workers Compensation

Comparison of Estimated Ultimate Losses

A. Estimated Ultimate Losses & ALAE - Excluding NDOT

(1) (2) (3) (4) (5) (6)

Estimated Estimated Change Estimated Change

Ultimate Ultimate from Ultimate from

Accident Losses & ALAE Losses & ALAE As of 8/31/21 to Losses & ALAE As of 6/30/21 to

Period As of 6/30/22 As of 8/31/21 As of 6/30/22 As of 6/30/21 As of 6/30/22

1/1/01-02 $12,633,000 $12,509,000 $124,000 $12,547,000 $86,000

1/1/02-03 12,314,000 11,990,000 324,000 11,995,000 319,000

1/1/03-04 7,721,000 7,650,000 71,000 7,649,000 72,000

1/1/04-05 11,448,000 11,454,000 (6,000) 11,455,000 (7,000)

1/1/05-06 10,445,000 9,655,000 790,000 9,662,000 783,000

1/1/06-07 9,705,000 9,463,000 242,000 9,464,000 241,000

1/1/07-08 11,893,000 11,082,000 811,000 11,087,000 806,000

1/1/08-09 13,163,000 12,524,000 639,000 12,519,000 644,000

1/1/09-10 9,508,000 9,241,000 267,000 9,248,000 260,000

1/1/10-11 9,411,000 9,286,000 125,000 9,300,000 111,000

1/1/11-12 14,319,000 13,707,000 612,000 13,037,000 1,282,000

1/1/12-13 11,307,000 10,956,000 351,000 10,954,000 353,000

1/1/13-14 13,244,000 12,816,000 428,000 12,946,000 298,000

1/1/14-15 9,627,000 9,928,000 (301,000) 9,911,000 (284,000)

1/1/15-16 9,723,000 10,154,000 (431,000) 10,168,000 (445,000)

1/1/16-17 8,669,000 8,883,000 (214,000) 8,774,000 (105,000)

1/1/17-18 9,742,000 10,543,000 (801,000) 10,557,000 (815,000)

1/1/18-19 8,988,000 9,735,000 (747,000) 9,788,000 (800,000)

1/1/19-20 10,004,000 10,694,000 (690,000) 10,427,000 (423,000)

1/1/20-21 10,240,000 10,257,000 (17,000) 10,381,000 (141,000)

1/1/21-22 16,958,000 11,911,000 5,047,000 12,184,000 4,774,000

1/1/22-23 12,168,000 12,190,000 (22,000)

Total $243,230,000 $236,628,000 $6,602,000 $224,053,000 $7,009,000

B. Estimated Ultimate Losses & ALAE - NDOT Only

(1) (7) (8) (9) (10) (11)

Estimated Estimated Change Estimated Change

Ultimate Ultimate from Ultimate from

Accident Losses & ALAE Losses & ALAE As of 8/31/21 to Losses & ALAE As of 6/30/21 to

Period As of 6/30/22 As of 8/31/21 As of 6/30/22 As of 6/30/21 As of 6/30/22

1/1/01-02 $2,158,000 $2,154,000 $4,000 $2,152,000 $6,000

1/1/02-03 1,981,000 1,990,000 (9,000) 2,295,000 (314,000)

1/1/03-04 3,054,000 3,034,000 20,000 3,035,000 19,000

1/1/04-05 1,032,000 1,035,000 (3,000) 1,035,000 (3,000)

1/1/05-06 1,318,000 1,321,000 (3,000) 1,322,000 (4,000)

1/1/06-07 492,167 492,167 0 492,167 0

1/1/07-08 1,560,000 1,544,000 16,000 1,544,000 16,000

1/1/08-09 1,163,170 1,163,170 0 1,163,170 0

1/1/09-10 1,590,332 1,590,332 0 1,590,332 0

1/1/10-11 1,623,000 1,731,000 (108,000) 1,604,000 19,000

1/1/11-12 633,000 629,000 4,000 630,000 3,000

1/1/12-13 947,000 940,000 7,000 942,000 5,000

1/1/13-14 2,057,000 2,092,000 (35,000) 2,044,000 13,000

1/1/14-15 762,000 760,000 2,000 761,000 1,000

1/1/15-16 1,298,000 1,322,000 (24,000) 1,327,000 (29,000)

1/1/16-17 1,603,000 1,547,000 56,000 1,550,000 53,000

1/1/17-18 1,600,000 1,652,000 (52,000) 1,592,000 8,000

1/1/18-19 1,020,000 1,110,000 (90,000) 1,117,000 (97,000)

1/1/19-20 1,297,000 1,355,000 (58,000) 1,358,000 (61,000)

1/1/20-21 709,000 935,000 (226,000) 1,014,400 (305,400)

1/1/21-22 2,466,000 1,124,000 1,342,000 1,741,000 725,000

1/1/22-23 1,738,000 1,710,000 28,000

Total $32,101,669 $31,230,669 $871,000 $30,309,069 $54,600

Notes:

(2) From Appendix B, Exhibit V, Column (4). From Appendix B, Exhibit IV, Column (4) for 1/1/22-23.

(3) From prior actuarial analysis as of 8/31/21.

(4) = (2) - (3).

(5) From prior actuarial analysis as of 6/30/21.

(6) = (2) - (5).

(7) From Appendix B, Exhibit IX, Column (4). From Appendix B, Exhibit VIII, Column (4) for 1/1/22-23.

(8) From prior actuarial analysis as of 8/31/21.

(9) = (7) - (8).

(10) From prior actuarial analysis as of 6/30/21.

(11) = (7) - (10).

Nevada 2022-08

Comp01

10/3/2022

Comparison Exhibit II

Workers Compensation

Comparison of Estimated Ultimate Losses

A. Estimated Ultimate Losses & ALAE - Excluding NDOT

(1) (2) (3) (4) (5) (6)

Estimated Estimated Change Estimated Change

Ultimate Ultimate from Ultimate from

Accident Losses & ALAE Losses & ALAE As of 8/31/21 to Losses & ALAE As of 6/30/22 to

Period As of 8/31/22 As of 8/31/21 As of 8/31/22 As of 6/30/22 As of 8/31/22

1/1/01-02 $12,584,000 $12,509,000 $75,000 $12,633,000 ($49,000)

1/1/02-03 12,070,000 11,990,000 80,000 12,314,000 (244,000)

1/1/03-04 7,700,000 7,650,000 50,000 7,721,000 (21,000)

1/1/04-05 11,530,000 11,454,000 76,000 11,448,000 82,000

1/1/05-06 10,443,000 9,655,000 788,000 10,445,000 (2,000)

1/1/06-07 9,547,000 9,463,000 84,000 9,705,000 (158,000)

1/1/07-08 11,286,000 11,082,000 204,000 11,893,000 (607,000)

1/1/08-09 12,684,000 12,524,000 160,000 13,163,000 (479,000)

1/1/09-10 9,308,000 9,241,000 67,000 9,508,000 (200,000)

1/1/10-11 9,316,000 9,286,000 30,000 9,411,000 (95,000)

1/1/11-12 14,150,000 13,707,000 443,000 14,319,000 (169,000)

1/1/12-13 11,044,000 10,956,000 88,000 11,307,000 (263,000)

1/1/13-14 12,883,000 12,816,000 67,000 13,244,000 (361,000)

1/1/14-15 9,613,000 9,928,000 (315,000) 9,627,000 (14,000)

1/1/15-16 10,041,000 10,154,000 (113,000) 9,723,000 318,000

1/1/16-17 8,815,000 8,883,000 (68,000) 8,669,000 146,000

1/1/17-18 10,351,000 10,543,000 (192,000) 9,742,000 609,000

1/1/18-19 8,981,000 9,735,000 (754,000) 8,988,000 (7,000)

1/1/19-20 10,523,000 10,694,000 (171,000) 10,004,000 519,000

1/1/20-21 9,838,000 10,257,000 (419,000) 10,240,000 (402,000)

1/1/21-22 16,504,000 11,911,000 4,593,000 16,958,000 (454,000)

1/1/22-23 12,232,000 12,176,000 56,000 12,168,000 64,000

Total $241,443,000 $236,614,000 $4,829,000 $243,230,000 ($1,787,000)

B. Estimated Ultimate Losses - NDOT Only

(1) (7) (8) (9) (10) (11)

Estimated Estimated Change Estimated Change

Ultimate Ultimate from Ultimate from

Accident Losses & ALAE Losses & ALAE As of 8/31/21 to Losses & ALAE As of 6/30/22 to

Period As of 8/31/22 As of 8/31/21 As of 8/31/22 As of 6/30/22 As of 8/31/22

1/1/01-02 $2,156,000 $2,154,000 $2,000 $2,158,000 ($2,000)

1/1/02-03 1,980,000 1,990,000 (10,000) 1,981,000 (1,000)

1/1/03-04 3,052,000 3,034,000 18,000 3,054,000 (2,000)

1/1/04-05 1,031,000 1,035,000 (4,000) 1,032,000 (1,000)

1/1/05-06 1,318,000 1,321,000 (3,000) 1,318,000 0

1/1/06-07 492,167 492,167 0 492,167 0

1/1/07-08 1,560,000 1,544,000 16,000 1,560,000 0

1/1/08-09 1,163,170 1,163,170 0 1,163,170 0

1/1/09-10 1,590,332 1,590,332 0 1,590,332 0

1/1/10-11 1,718,000 1,731,000 (13,000) 1,623,000 95,000

1/1/11-12 632,000 629,000 3,000 633,000 (1,000)

1/1/12-13 945,000 940,000 5,000 947,000 (2,000)

1/1/13-14 2,099,000 2,092,000 7,000 2,057,000 42,000

1/1/14-15 762,000 760,000 2,000 762,000 0

1/1/15-16 1,295,000 1,322,000 (27,000) 1,298,000 (3,000)

1/1/16-17 1,679,000 1,547,000 132,000 1,603,000 76,000

1/1/17-18 1,644,000 1,652,000 (8,000) 1,600,000 44,000

1/1/18-19 1,018,000 1,110,000 (92,000) 1,020,000 (2,000)

1/1/19-20 1,291,000 1,355,000 (64,000) 1,297,000 (6,000)

1/1/20-21 729,000 935,000 (206,000) 709,000 20,000

1/1/21-22 2,258,000 1,686,000 572,000 2,466,000 (208,000)

1/1/22-23 1,668,000 1,724,000 (56,000) 1,738,000 (70,000)

Total $32,080,669 $31,806,669 $274,000 $32,101,669 ($21,000)

Notes:

(2) From Appendix A, Exhibit III, Column (4).

(3) From prior actuarial analysis as of 8/31/21.

(4) = (2) - (3).

(5) From prior actuarial analysis as of 6/30/22.

(6) = (2) - (5).

(7) From Appendix A, Exhibit VIII, Column (4).

(8) From prior actuarial analysis as of 8/31/21.

(9) = (7) - (8).

(10) From prior actuarial analysis as of 6/30/22.

(11) = (7) - (10).

Nevada 2022-08

Comp02

The State of Nevada 13

Section 5: Description of Methodology Overview

The basic quantitative approach used to project losses and estimated unpaid loss & ALAE is described as follows:

1. A size-of-loss distribution summarizes losses from a detailed loss listing valued as of August 31, 2022.

This distribution format gives a clear picture of the known losses for the last several periods as recently evaluated. These losses serve as the base for the projections. The size-of-loss distribution is shown as

Support Exhibit 3.

2. A loss limitation of $750,000 is applied to limit the known losses for each historical period before taking further steps in making the projections.

3. Loss development factors are selected using the State of Nevada’s historical data. Industry data are also considered for loss development factor selection. The selected factors are applied to the State’s most recently evaluated incurred and paid losses in order to estimate the ultimate value of losses for each of the historical periods.

4. Severity trend factors and benefit level change factors are applied to the estimated ultimate losses.

These factors adjust losses to reflect changes in the level of loss costs or benefits from the time when the losses originally occurred to the time period for the projection.

5. Projection of expected losses then proceeds in three steps:

a. Payroll, which is inflation sensitive, is adjusted (trended) from each of the prior periods to the level of the time period for the projection.

b. The adjusted losses are divided by the adjusted payroll for each prior period to calculate a pure loss rate. Each of these pure loss rates is an estimate of the pure loss rate that may be required to pay losses for the projection period. These estimates are the main input in the selection of the pure loss rate to be used for the projection.

c. The projected losses are calculated by multiplying the selected pure loss rate by the projected exposure, and an increased limits factor is applied to calculate the projected losses at the State’s retention of $2,000,000 per occurrence.

6. Projection of claims with cost counts involves a similar process of developing and trending in order to estimate the ultimate number of claims with cost that will be involved in producing the projected losses.

14 The State of Nevada

7. Average loss severities are calculated as an important test and review of the reasonableness of the projected losses.

8. Loss limitations are applied to limit the known losses to the limit in effect for each historical accident period separately for the State excluding NDOT and NDOT only.

9. Loss development factors are applied to the limited incurred and paid losses in order to estimate the ultimate value of losses for each of the historical accident periods for the State excluding NDOT and NDOT only.

10. Estimated unpaid loss & ALAE are calculated by subtracting payments from estimated ultimate losses for each accident period for the State excluding NDOT and NDOT only.

Historical loss and exposure data provided by the State have been used in calculating the estimated ultimate losses.

Loss Development Factors

The ultimate cost of losses incurred for a specific time period is usually not known until several years after the close of that period. Loss development factors are used to project the additional cost expected on losses associated with current and past accident periods. These factors quantify the late developing aspects of certain losses, such as those involving medical complications not recognized in the early stages of treatment or verdict values for litigated claims which are different than the amount which was reserved to pay the claims. They also account for losses that occurred during the accident period but are not reported until a later date, commonly referred to as incurred but not reported losses, or IBNR.

The State’s database is large enough to permit the calculation of unique loss development factors for workers compensation. These unique factors allow for a more accurate reflection of specific loss development patterns.

Generally speaking, the use of unique factors as opposed to industry averages produces a more accurate estimation of ultimate losses.

The loss development factors are based on the time that has passed between the beginning of the loss period and the evaluation date of the data. In most cases, the closer the evaluation is to the accident period beginning date, the larger the loss development factor needed. The expected ultimate losses for each accident period are estimated by multiplying the currently valued losses for those accident periods by the loss development factors.

The calculation of loss development factors is shown in Support Exhibits 5-9.

Within the Tables, these loss development factors are applied to the actual incurred losses and paid losses limited to the $750,000 limitation. Ultimate loss estimates are then selected by accident period for historical periods in Appendix A and Appendix B.

The State of Nevada 15

Severity Trend

In Table 4, severity trend factors are applied to adjust ultimate losses at historical cost levels to the 1/1/23-24 cost level. For workers compensation this adjustment has two parts: a benefit level change factor and inflation trend factor.

The benefit level change factor for workers’ compensation quantifies increases in benefit levels attributable to changes in state workers’ compensation laws. These factors are developed from data compiled by the National

Council on Compensation Insurance (NCCI).

The inflation trend factor for workers compensation consists of two elements: medical costs and average wages on which indemnity benefits are based. The factor is based 40 percent on actual workers compensation medical cost inflation as measured by NCCI and 60 percent on changes in average wages for the service industry. The calculation of the inflation trend factors is shown in Support Exhibit 1.

Benefit level change factors and inflation trend factors are multiplied by the estimated ultimate losses for each accident period to calculate adjusted losses, as shown in Section A of Table 4. As part of this computation, a detailed analysis by size of loss is completed to assure individual losses are not trended beyond the $750,000 loss limitation used for this analysis.

Having developed the State’s historical workers compensation losses to ultimate and having trended them to reflect projected cost levels, the next step is to trend historical exposure to appropriate expected levels for the projected period. The exposure base selected for the State’s workers compensation losses is payroll. In Section B of Table 4 historical payrolls are trended to anticipated average wage levels for the projected 1/1/23-24 accident period.

Projection of Expected Losses

The next step is to calculate pure loss rates based on the historical experience of the State. The pure loss rate can be defined as the expected dollar loss cost per $100 of payroll. The adjusted losses from Table 4 are divided by the adjusted exposure from Table 4 to yield pure loss rates. A pure loss rate based on experience for each historical accident period included is calculated in Section A of Table 5.

Each of the calculated pure loss rates is an estimate of the pure loss rate which could be charged for the projected accident period. A pure loss rate of $1.75 per $100 of payroll has been selected for the projected accident period 1/1/23-24.

In Section B of Table 5, the pure loss rate of $1.75 per $100 of payroll is multiplied by the 1/1/23-24 projected payroll exposure to forecast $12,870,000 of workers compensation losses for the accident period at a $750,000 limitation. A projection using this method is made for the 1/1/22-23 through 1/1/25-26 accident periods by adjusting the 1/1/23-24 pure loss rate to the appropriate cost level.

16 The State of Nevada

The retained limit for workers compensation for the projected accident periods is $2,000,000. In Section C, an increased limits factor is applied to increase the projected estimate at $750,000 limits to a projection at

$2,000,000 limits. The 1.080 increased limits factor is calculated based on actual loss experience and the aggregate loss statistical analysis completed in this analysis as described in Section 7. The projected losses for

1/1/23-24 accident period at a $2,000,000 retention are $14,008,000.

Projection of Claim Counts with Cost

To forecast the number of workers compensation claims that will close with cost, frequencies are calculated in much the same manner as were pure loss rates in the last section. The first step is to select claim count development factors. Support Exhibit 11 displays the history of the State’s claim count development.

Age-to-age development factors are selected based on unique development patterns. The claim count development factors calculated in Section D of Support Exhibit 11 are then carried forward to Table 6, Section A where reported claims with cost are developed to estimated ultimate levels based on the selected development factors.

Since claim counts are not inflation sensitive, but payroll is, it is necessary to adjust the historical payroll to reflect projected wage levels before calculating the frequencies. This adjustment was made earlier in Table 4, Section B.

In Section B of Table 6, projected claim counts with cost are divided by adjusted payroll in order to calculate estimates of the projected frequency. Based on the calculated values, a projected frequency is selected judgmentally based primarily on the most recent periods.

In Section C, multiplying the projected frequency by the payroll for the projected period yields an estimate of the total number of claims with cost for the projected 1/1/22-23 through 1/1/25-26 accident periods.

The total number of claims with cost is an important piece of information and is used in comparisons of average loss severities in the next exhibit.

Average Loss Severities

The average loss severities calculated in Table 7 provide an important review of severities and a check of the reasonableness of estimated ultimate and projected loss severities. Section A of the table summarizes the data developed in earlier tables. Section B shows three sets of average severities calculated from the data in Section

A.

The first column of average severities is for losses incurred as of August 31, 2022. The middle column shows calculated average severities based on estimated ultimate losses. In most cases, the ultimate average severity would be larger than the reported average because losses usually develop upward over time and late reported losses tend to be more severe than losses reported earlier in the development period. This column allows confirmation of a reasonable pattern of changes in severity over time since all losses are at their estimated ultimate level.

The State of Nevada 17

The third column of average severities shows trended projected ultimate severities. The trend adjustment places severities for all periods on a comparable cost level, allowing for review of the results and effectiveness of the trend procedures employed. It also provides an important check of the appropriateness of the projected losses by verifying that the projected average severity is in the range indicated by trended severities for recent periods.

Unpaid Liability Analysis

Estimated unpaid loss & ALAE are calculated for all State departments excluding NDOT and NDOT separately in

Appendix A. Estimated ultimate losses are calculated for each period in the same manner described above;

however, the losses are first limited to the historic retention levels for each period. Paid losses as of

August 31, 2022 are subtracted from the estimated ultimate losses for accident periods 2001 and forward, leaving the estimated unpaid loss & ALAE for each period.

A payout schedule of unpaid loss & ALAE and projected losses is computed for all State departments excluding

NDOT in Appendix A, Exhibit V and NDOT in Appendix A, Exhibit X. The payout schedule is based on paid loss development factors calculated in the Support Exhibits.

Estimated unpaid loss & ALAE are also calculated as of June 30, 2022 in Appendix B.

Support Exhibits

The Support exhibits contain trend factor calculations, a summary of input data, a size of loss distribution, a listing of large losses, and loss development triangles.

Appendices C, D, and E

Appendices C, D, and E have been included as estimations of the Post-Retirement Occupational Heart Disease

Claims, Lung Disease Claims, and Cancer Claims for the State of Nevada, respectively. Please refer to the text accompanying each Appendix for a description of methodology and qualifying statements related to the high degree of uncertainty related to those claims.

18 The State of Nevada

Section 6: Reliances and Limitations Inherent Uncertainty

It must be understood that projections of loss and allocated loss expense liabilities are subject to large potential errors of estimation, due to the fact that the ultimate disposition of claims incurred prior to the financial statement date, whether reported or not, is subject to the outcome of events that have not yet occurred. Examples of these events include jury decisions, court interpretations, legislative changes, changes in the medical condition of claimants, public attitudes, and social/economic conditions such as inflation. Any estimate of future costs is subject to the inherent limitation on one’s ability to predict the aggregate course of future events. It should therefore be expected that the actual emergence of losses and allocated loss adjustment expenses will vary, perhaps materially, from any estimate. Thus, no assurance can be given that the State’s actual loss and allocated loss adjustment expense liabilities will not ultimately differ from the estimates contained herein. In our judgment, we have employed techniques and assumptions that are appropriate, and the conclusions presented herein are reasonable, given the information currently available.

The inherent uncertainty associated with loss and ALAE liability estimates is magnified in this case due to the following circumstances.

■ The State’s mix of business is weighted toward coverages such as workers compensation for which the estimation of unpaid loss is more uncertain than for shorter-tailed property and casualty lines

■ The State has relatively high per occurrence retentions, which increases the uncertainty associated with our liability estimates

■ The industry concentration could cause adverse results due to legislative or judicial changes or catastrophic events (e.g., hurricanes)

COVID-19

COVID-19 is a continually developing issue which is having significant effects on global economic activity and has created extensive social disruption. Longer term socio-economic implications and the impact on the projected liabilities remains uncertain. Key drivers of uncertainty include:

■ Public, corporate and government responses to COVID-19, and the extent to which these responses impact global supply chains and economic conditions;

■ The extent to which the spread of COVID-19, associated government actions and public behavior may increase or reduce underlying insurance losses;

■ Policy terms and conditions and the extent to which coverage is available for losses identified as being related to COVID-19;

■ The aggregation of COVID-19 related losses for outwards reinsurance purposes;

The State of Nevada 19

■ The impact of restrictions arising from the virus on claim incidence, reporting, investigation and the potential for reporting delays due to operational constraints affecting claims reporting, handling and settlement that may not fully manifest for some time dependent on the post-pandemic reversion to normalized levels of business activity in the affected markets;

■ Changes in behaviors of claimants and plaintiffs’ attorneys due to economic conditions;

■ The impact of delays in medical care on the ultimate value of bodily injury and workers’ compensation claims;

■ The effectiveness, duration and timing of containment measures in reducing future infection and fatality rates of the virus, the speed and effectiveness of vaccines or treatments and the ability of health systems to cope with potentially large numbers of individuals simultaneously requiring treatment; and

■ The impact on assets: our analysis makes no explicit allowance for the expected effects of COVID-19 on assets.

Specific considerations for The State include:

■ For workers’ compensation, uncertainty exists with respect to long term health impacts for survivors and the potential for PTSD claims arising from healthcare workers.

■ Given continued uncertainty over the duration of the pandemic, its economic impacts and the timing of post-pandemic reversion to normalized levels of business activity, projected business volumes remain highly uncertain. We relied on exposure data provided by The State.

■ Assumptions made regarding changes to accident year 2020 claim frequency and severity due to COVID-19 and the associated economic downturn may ultimately prove to be optimistic.

In our opinion, we have applied methods and approaches which are proportionate in the context of the data and information available to us and our understanding of the exposures. The approaches we used could be refined further, but we consider that the scale and underlying uncertainty of the liabilities means that the additional insight from such work would be of limited marginal value because of the uncertain future effect of the pandemic.

Note that a quantification of this uncertainty would likely reflect a range of reasonable favorable and adverse scenarios, but not necessarily a range of all possible outcomes. Further, the proper application of any range is dependent on the context. The State’s financial reports are governed by accounting standards, and such standards vary among jurisdictions. Under current accounting standards, the ends of a range that is illustrative of uncertainty would likely not be suitable for financial reporting purposes.

Discounting

It should be noted that the dollar amounts expressed in this report are full nominal dollar amounts expected for the time at which payments are made. No adjustment has been made for any offsetting potential investment income (amounts are undiscounted).

20 The State of Nevada

Applicability of Industry Data

Our projection of future claim reporting is based upon the State’s historical development data supplemented by industry benchmark professional liability reporting and payment patterns constructed internally by WTW.

Benchmarks are revised periodically as new information and trends emerge. While the State’s own development can be expected to vary from the benchmarks based on individual circumstances, we believe use of these benchmark patterns is appropriate, as they represent our current judgment as to the typical loss reporting and payment patterns that can be expected for the medical professional liability line of business. It is possible that this historical data will not be predictive of future loss development activity for the State.

Data Reliance

In developing this report, WTW has relied, without audit or independent verification, on historical data and other quantitative and qualitative information supplied by the State. WTW did, however, review this information for reasonableness and internal consistency.