CAS Exam 5 Fall 2014, Question 4
Study guide: Exam 5
Given the following workers compensation information for an employer:
| Ratio of Wage to the State Average Weekly Wage (SAWW) | Percentage of Workers |
|---|---|
| 0.50 | 6% |
| 0.85 | 18% |
| 1.00 | 31% |
| 1.45 | 26% |
| 1.90 | 17% |
| 2.20 | 2% |
- Minimum benefit = 45% of State Average Weekly Wage (SAWW).
- Current Compensation Rate = 80% of Worker's Pre-Injury Wage.
- Proposed Compensation Rate = 85% of Worker's Pre-Injury Wage.
- Current Maximum Benefit = 130% of SAWW.
- Proposed Maximum Benefit = 115% of SAWW.
Part a (1 point)
Assuming no changes to claim frequency, calculate the combined percent impact of both the compensation rate and maximum benefit changes to the average weekly expected claim benefit.
Part b (0.5 points)
Briefly describe a potential indirect effect of the maximum benefit changes on:
i. Frequency ii. Duration
Answer this question and see the worked solution