Definition:
Catastrophic medical claims are few and far between, but their costs can be significant; estimating those costs incorporate many fundamental skill sets of casualty actuaries including inflation, discount, life expectancy/impairment, policy limit constraints, and statutory/regulatory changes.
Important Readings:
There are several good readings on this subject in the CAS website. Good background papers include:
Snader, Richard: Reserving Long Term Medical Claims (1987) - this is a good basis that addresses some of the key components of lifetime medical claims including inflation, discount, life expectancy, etc.
Miller, William: Impact of Catastrophic Cases on WC Medical Loss Reserves (2001). This paper introduces the concept of "Life Care Plans" into the literature; this is a key concept especially for younger claimants.
Sherman, Richard et al: Estimating the Workers' Compensation Tail (2004). Discusses idea that the common actuarial methods and assumptions may be inadequate in assessing the long-term medical tail.