An irritated Roger Hatton finds himself sitting in the St. Louis air-port after hearing that his flight to Chicago has been delayed€”and, if the storm in Chicago continues, possibly cancelled. Because he must get to Chicago if at all possible, Roger is stuck at the air-port. He decides he might as well try to get some work done, so he opens his laptop computer and calls up the Claimnum file.
Roger was recently assigned as an analyst in the worker€™s compensation section of the St. Louis Companies, one of the biggest issuers of worker€™s compensation insurance in the country. Until this year, the revenues and claim costs for all parts of the company were grouped together to determine any yearly profit or loss. Therefore, no one really knew if an individual department was profitable. Now, however, the new president is looking at each part of the company as a profit center. The clear implication is that money-losing departments may not have a future unless they develop a clear plan to become profitable.
When Roger asked the accounting department for a listing, by client, of all policy payments and claims filed and paid, he was told that the information is available but he may have to wait two or three months to get it. He was able to determine, however, that the department has been keeping track of the clients who file frequent (at least one a month) claims and the total number of firms that purchase workers€™ compensation insurance. Using the data from this report, Roger divides the number of clients filing frequent claims by the corresponding number of clients. These ratios, in the file Claimnum, are as follows:

Staring at these figures, Roger feels there should be some way to use them to project what the next several years may hold if the company doesn€™t change its underwriting policies.

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Year Ratio (%) 3.8 3.6 3.5 Year Ratio (%) 12 13 7.8 15 7.6 5.6 4.9 5.6 8.5 7.7 9.6 7.5 7.9 8.3 8.4 18 19 10