Which actuarial implication is associated with the period before the MSA reporting deadline?

• A. Between 2008 and 2010, before the reporting deadline, increase in claims closing and lump-sum payments => distort paid and reported losses.
• B. Slowdown in claim settlement rates since then.
• C. A portion of the increasing WC medical trends may be due to the new MSA requirements.
• D. A rise in the number of MSAs submitted.

Answer: (A)

Timing and reporting deadlines can change how claims are settled and paid, especially right before the deadline. In the period leading up to the MSA reporting deadline, there’s a strong incentive to finalize settlements and push larger payments, often via lump sums, to avoid ongoing reporting or regulatory concerns. This behavior accelerates cash outflows and reduces open reserves, which distorts the observed pattern of both paid losses and reported losses for that time frame. The data may show a spike in paid losses from lump-sum settlements and a drop in outstanding reserves, making the period look atypical compared with other times. That one-time shift is the actuarial implication the question targets. The other options describe broader trends that aren’t directly tied to the pre-deadline timing effect.