Product Update

US Claims Costs Indexes Updated and Summarized in Risk Financing


This release of Risk Financing features updates to the "US Claims Cost Indexes" along with updates to "Basic Loss Forecasting Methods" and "Loss Development and Inflation" discussions including models that provide examples of using these risk quantification factors.

These factors are useful in the analysis and projection of losses. The US claims cost index updates are completed periodically by Jeremy Pecora and Emily Dobring, consulting actuaries with Willis Towers Watson. A general overview of these updates is provided in Risk Financing Perspectives.

Risk Financing Perspectives for this release includes the most recent updates to the Willis Towers Watson Claims Cost Indexes (also known as US claims cost indexes). These are the same family of price indexes for major lines of insurance written by property and casualty insurers originally referred to as the "Masterson Indexes," named after the consulting actuary who developed them in the 1960s, Norton E. "Doc" Masterson. The indexes provide a measurement of inflation specific to the risks contemplated by individual lines of insurance such as workers compensation or automobile liability. They allow users to make adjustments to historical loss data in order to account for inflation. The recent updates indicate that the composite insurance inflation rate again outpaced the general inflation rate. They were published in Willis Towers Watson Insights (September 28, 2021) in a discussion by Jeremy Pecora and Emily Dobring, consulting actuaries with Willis Towers Watson.