Accident Year

What it is

Accident year is an insurance accounting convention used to organize claims data. Claims are grouped by the year in which the alleged negligent act or injury occurred, regardless of when the claim was reported, the suit filed, or the payment made. Accident year is distinct from "report year" (the year the claim was first reported to the insurer) and "payment year" (the year the indemnity was paid).

Why it matters in medical malpractice

Medical malpractice is a long-tail line: the gap between accident year and final payment can stretch five to ten years. Symptoms appear, diagnoses lag, suits are filed, discovery proceeds, and settlement or verdict closes the file. As a result, accident-year severity figures for recent years are immature: they include only the subset of claims that have already been resolved, which tend to be the smaller and faster-resolving cases. The catastrophic claims that drive long-run severity have not yet shown up in the data.

The misleading recent-years effect

Industry severity reports often appear to show "moderation" in the most recent accident years. This is almost always an artifact of immaturity, not a real softening trend. Mature accident years (typically 7+ years out) provide the truest picture of long-run severity.

In settlement strategy

When benchmarking case value against industry data, weight mature accident years more heavily and treat recent-year figures as floors rather than central estimates. The Hooper Engine accounts for this directly when adjusting comparables.