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@9 OLIVER WYMAN Workers Compensation Unpaid Losses & ALAE Executive Summary City of Chandler Data evaluated as of June 30, 2022 Ultimate Loss Cost 20.00 15.00 10.00 5.00 0.00 PP WP VP SP 2 gh go DED PD SN Ultimate Severity $14K sik TA $8K 4 S6K $4K $2K oO Ultimate Frequency 2.00 1.50 1.00 i 0.50 0.00 Trend Assumptions * The selected frequency trend is -0.5%. + The selected severity trend is 2.5%. * The selected loss cost trend is 2.0%. * The loss cost and severity trends are adjusted to the current benefit level. * The loss cost and severity trends are shown at a per occurrence retention of $75,000. * The combination of negative frequency trend and rising severity is not uncommon amongst municipalities and WC in general. Key Findings + Frequency has remained relatively stable, decreasing slightly, over the past 10 years, ranging from 0.9 to 1.3 claims per million dollars of payroll. * Severity, with claims limited to $75,000, has ranged from $8,000 to $13,000, and is generally increasing. * The loss cost, with claims limited to $75,000, has ranged from $8 to $17 per thousand dollars of payroll. Reconciliation of Reserves Beginning of Period Unpaid Losses as of 6/30/21 $10,458,761 Plus Estimated Ultimate Losses for (7/1/21-6/30/22) $3,271,000 Plus Change in Ultimate Losses through 6/30/21 ($1,103,100) Less Actual Payments (7/1/21-6/30/22) $2,122,299 End of Period Unpaid Losses as of 6/30/22 $10,504,362 Claim Changes Since Prior Report Current. Curent Incurred Current Claimant Date ofloss Status Incurred Prior Incurred + Change Paid CN-12-0500139 4/19/2012 Cc 149,192 308,184 — -158,992 149,192 CN-13-005252 5/2/2013 0 628,185 1,298,791 —_-670,606 + 577,842 CN-17-005633 4/20/2017 GC 155,289 $33,992 -378,703 155,289 CN-20-005223 1/27/2020 0 665,521 83,395 582,126 103,460 CN-22-005061 9/15/2021 0 137,002 0 137,002 28,603 CN-22-005123 12/3/2021 ie) 1,514,607 0 1,514,607 190,661 CN-22-005129 12/15/2021 Lo} 112,721 0 112,721 5,342 CN-22-005133 1/8/2022 0 145,509 0 145,509 61,623 Your Actuarial Team Adam Hirsch, FCAS, MAAA Senior Principal adam.hirsch@oliverwyman.com 213-346-5352 Los Angeles Office: 633 West Fifth St., Suite 1200 Los Angeles, CA 90071 www.oliverwyman.com Disclosure: Our clients’ industries are extremely competitive. The confidentiality of companies’ plans and data is obviously critical. Oliver Wyman will protect the confidentiality of all such client information. Similarly, management consulting is a competitive business. We view our approaches as proprietary and therefore look to our clients to protect Oliver Wyman’s interests in our proposals, presentations, methodologies and analytical techniques. Under no circumstances should this material be shared with any third party without the written consent of Oliver Wyman. © Oliver Wyman @% OLIVER WYMAN Workers Compensation Unpaid Losses & ALAE Executive Summary City of Chandler Data evaluated as of June 30, 2022 Unpaid Losses & ALAE as of 6/30/22: $10,504,362 Unpaid Losses & ALAE as of 6/30/21: $10,458,761 2021/2022 Ultimate Losses & ALAE as of 6/30/21 $2,700,000 11.9% +5.7% 1.6% 2.0% -7.2% Total Exposure Limit Loss Change in Change Growth Change Trend Selection 2022/2023 Ultimate Losses & ALAE as of 6/30/22 $2,907,000 © Oliver Wyman Scope of Analysis * Estimated unpaid losses and allocated loss adjustment expense (ALAE) as of June 30, 2022 for accidents occurring between January 1, 2003 and June 30, 2022 at an actuarial central estimate and various probability levels * Projected ultimate losses and ALAE for policy period July 1, 2022 — 2023 at an actuarial central estimate and various probability levels Important Assumptions * All estimates are limited to the City’s self-insured retentions, which increased from $500,000 to $600,000 per-occurrence effective 7/1/12, to S1M for police / fire effective 7/1/15, to $1.25M for police / fire effective 7/1/18, to $750,000 / $2.25M effective 7/1/20, $1M / $3M effective 7/1/21 and to $1.5M / $3M effective 7/1/22. Key Findings * The unpaid estimate has increased by approximately $50K due to the addition of the 7/1/21-22 policy year (at an increased retention level, and already with a $1.5M claim), offset by decreases in prior periods * The forecast for 22/23 is up 5.7% from the prior forecast due to increases in payroll and the retained limits offset by a reduction in our estimated base rate per payroll. Actual vs. Expected Results Reported Losses & ALAE 6/30/21 to 6/30/22 Actual Expected AvE $46,113 $795,646 ($749,533) Ultimate Losses & ALAE 6/30/21 to 6/30/22 Prior Current Change $38,294,116 $37,762,016 ($532,100) ™Over Expected =Under Expected OExpected $1.25M $1.00M =~ oon nen ence cnn cece SOT SNA an $0.50M $0.25M 14/15 15/16 16/17 17/18 18/19 19/20 20/21, Accident Year * Actual versus Expected results reflect changes in the claims from 6/30/21 to 6/30/22. The table will not fully display actual incurred of - $165k in 11/12 and -$427k in 16/17.