2002 Special Interest Seminar- The Changing Insurance Market Handouts
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The Impact of the World Trade Center Disaster on Insurers
With a view from the reserving and pricing perspective, this session will address the impact of the World Trade Center disaster on insurance companies. Specifically, it will address how one company determined its loss reserves for its exposures (such as business interruption, property, and workers compensation) from this event and what impact it has had on their pricing. In addition, a catastrophe modeling firm will discuss the model it recently developed to help policyyholders and insurers estimate their workers compensation losses from future catastrophic events.
Charles C. Pearl, Consulting Actuary, Milliman USA
Salvatore T. LaDuca, Assistant Vice President and Chief Actuary, Merchants Insurance Group
David A. LaLonde, Senior Vice President, Applied Insurance Research
Workers Compensation Issues
The panel will discuss current and emerging issues that affect the workers compensation line including the impact of September 11 on ratemaking methods, claims coverage issues, hard and soft markets, terrorism, and other catastrophic exposures and the changing economy's influences on costs.
Barry I. Llewellyn, Senior Divisional Executive, National Council on Compensation Insurance
Harry Shuford, Economist, National Council on Compensation Insurance
Reserving for Unusual Catastrophe Events
September 11 created a number of challenges for reserving actuaries. Shortly following the tragic event, insurance and reinsurance companies needed reserve estimates to close third-quarter results. While many of the claims were known by year-end 2001, a number of issues still remained. This panel will discuss how the industry developed its initial estimates of the event, both at a company level and for the industry in general. Other reserving tasks, such as reinsurance collectibility, business interruption claims, multiple events, and IBNR for other types of claims that may not be represented in historical claim data will be presented.
David S. Powell, Consulting Actuary, Tillinghast-Towers Perrin
E. Daniel Thomas, Principal Consultant, PricewaterhouseCoopers LLP
Claire Louis, Principal Claims Consultant, PricewaterhouseCoopers LLP
In the aftermath of September 11, the returns required by reinsurers increased dramatically for January 1, 2002, renewals. It is as if the industry suddenly became aware of the existence of catastrophes other than windstorms and earthquakes. The panel will explore whether extreme events should be considered as catastrophes in the pure premium rates, or as an element of risk that is contemplated in the profit provision. Pricing actuaries will be asked if extreme events can be modeled sufficiently to justify the inclusion of catastrophe loads in ratemaking for lines such as workers compensation. Rate-of-return theorists will be asked if the profit models currently in use are consistent with the profits demanded in the marketplace. Regulator's reactions to requests for catastrophe loadings and/or higher profit targets will affect both rates and the availability of coverage in the voluntary market.
John J. Kollar, Vice President, Insurance Services Office, Inc.
Stephen W. Philbrick, Vice President, Conning Asset Management
Coming so close to the critical date of January 1, 2002, when many reinsurance treaties renew, September 11 threw the reinsurance market into chaos. A renewal period that was expected to bring higher prices and tougher terms due to the hardening of the market suddenly became one in which many reinsurers, as well as ceding companies, were dealing with significant losses and financial difficulties. This panel will look at how reinsurers, brokers, and ceding companies reacted. Panelists will examine the impact on capacity, reinsurer's appetite, and buyer's strategy, and will look at treaty structure, including rates, and terms and conditions, including coverage for terrorism. The panel will also discuss the federal government's role in providing terrorism coverage.
George N. Phillips, Vice President and Associate Actuary, Transatlantic Reinsurance Company
Frank Kehrwald, Vice President and Associate General Counsel, Employers Reinsurance Corporation
Assuming New Risk
The September 11 attacks and subsequent terrorist activity had a significant impact on the insurance markets. Suddenly, many insurers were unwilling or unable to write certain risks. The reduced capacity and increased costs in the reinsurance market caused some insurers to stop writing certain sized accounts and high-risk coverage. Corporations with a large number of employees and those with high property values saw premiums double or "coverage not available" in their renewal quotes.
Corporate risk managers have reacted by increasing company retentions, forming risk retention groups and captive insurers, and employing other securitization techniques to manage this exposure. This session will explore how companies are evaluating their exposure to manage these risks.
Barry A. Franklin, Managing Director and Actuary, Aon Risk Consultants, Inc.
Mark D. Ames, Principal, MMC Enterprise Risk Consulting, Inc.
Insurance E-BusinessSurvival Skills
Although the bubble has burst on Wall Street, many companies have continued quietly to explore the Internet as a means to sell insurance or just increase the efficiency of their business. Our panel will discuss the reality of today's e-commerce environment, describing lessons learned in recent years, the tactics that work and don't work in a virtual insurance world, and the hazards and pitfalls those new to the market should consider. Topics include efforts to sell and service over the Internet, as well as more mundane uses of the Internet as a tool for getting things done faster.
J. Parker Boone, Consultant, Chesapeake Consulting, Inc.
John F. Gibson, Principal, PricewaterhouseCoopers LLP
Chuck Rich, President, ProcessClaims
David L. Roush, President, ComparisonMarket
Enterprise Risk ManagementA Benefit or a Fad?
What are insurance companies actually doing, if anything, to implement enterprise risk management (ERM) for themselves? Do insurance company CEOs support the ERM philosophy? Do they believe it will help them better manage the risks that their company faces, especially in light of September 11? Is ERM a beneficial discipline or is it a fad? Although appealing and gaining acceptance, there are some perceptions in the industry such that purported benefits of ERM are concretely elusive.
In this session a proactive panel and audience discussion will take on the questions above as well as the insurance industry's perception and implementation of ERM in the post-9/11 age. Panelists will share their perspectives on, discuss, and debate the practical benefits of ERM and offer viewpoints and counter-points on the state of ERM for insurers today and into the future.
Robert F. Wolf, Principal, MMC Enterprise Risk Consulting, Inc.
Jerry A. Miccolis, Principal, Tillinghast-Towers Perrin
Peter Nakada, ERisk
New Clash ExposuresA Case Study of Enron
The failure of Enron is of particular interest to actuaries: as a case study of a large financial failure; as a backdrop to explore the emerging risks of the deregulated energy industry; and as an example of a very large and unusual "clash" of exposures. Some estimates of insurance industry losses currently exceed $1 billion, arising from surety, directors and officers liability, errors and omissions liability, weather derivatives, and direct investment. This panel will explore the exposures that are characteristic of the energy industry and the management practices that led to the company's failure.
James Ely, Cedar Hill Insurance Agency
Mark W. Callahan, Senior Vice President, XL Insurance Company, Ltd.
Mold: What's Next?
With the recent multimillion-dollar award against an insurance company on one of the first mold claims of the industry, the looming "mold exposure" has piqued the interest of consumers, attorneys, and the industry at large. Each has their own concernspersonal and public health, individual insurance protection and financial welfare, adequate premiums for exposure, and the financial welfare of insurance industry to provide coverage. This panel will discuss how the various players see the exposure and how they are responding to this emerging issue.
John T. Devereux, Consultant, PricewaterhouseCoopers LLP
J'ne Byckovski, Senior Actuary, Texas Department of Insurance
Jerry F. Johns, President, Southwest Insurance Information Service
Domenick J. Yezzi, Jr., Vice President, Insurance Services Office, Inc.
This session will discuss recent developments in the asbestos litigation arena, including the recent surge in claim filings, increases in settlement amounts, defendant bankruptcies, and expansion of the defendant list. The discussion will include information regarding recent estimates of the ultimate cost relating to U.S. asbestos exposure ($200-$275 billion) and amounts expected to be borne by U.S. insurers and reinsurers on a net basis ($60-$70 billion). Finally, the panelists will discuss activities of The Coalition for Asbestos Justice and the Asbestos Alliance as well as attempts at federal legislation to "solve" the asbestos problem.
Gail M. Ross, Vice President, Am-Re Consultants, Inc.
Jennifer L. Biggs, Consulting Actuary, Tillinghast-Towers Perrin
Raji R. Bhagavatula, Principal, Milliman USA
Current Issues in Medical Malpractice Insurance
The medical malpractice marketplace is changing. St. Paul, one of the largest writers of medical malpractice, is exiting the market. Excess insurance and reinsurance markets are hardening or even disappearing for certain components such as hospital insurance, long-term care, and nursing homes. This session will discuss the changes in the market and discuss how entities are reacting to these changes.
Ronald T. Kozlowski, Consulting Actuary, Tillinghast-Towers Perrin
Carolyn L. Greene, Senior Vice President and Chief Operating Officer, Willis Re Inc.
John H. Mize, Consulting Actuary, Tillinghast-Towers Perrin
Mergers and Acquisitions
Industry experts will explore the current state of mergers and acquisitions in the insurance market. With most mergers having a neutral or negative impact on profitability, panelists will discuss the key success factors and pitfalls in managing a merger or acquisition. Speakers will also discuss optimal pricing methods for valuing insurance entities and the impact of FASB 141 and 142 on future merger and acquisition activity.
John O. Nigh, Principal, Tillinghast-Towers Perrin
Simon Noonan, Chief Executive Officer, Metis Financial LLC
Charles Brophy, Vice President, American Re-Insurance Company
Banking and InsuranceImpact on the Property/Casualty Industry
Following the enactment of federal financial services reform, a variety of business relationships emerged between traditional banking and property/casualty insurance concerns. The speakers will describe the market opportunities and challenges associated with their organizations' management of banking, sales, and insurance talent. They will outline how each of these components contributes to the success of their respective organizations, and touch upon their customers' perceptions and acceptance of their financial services approach.
Kenneth Reynolds, Managing Director, American Bankers Association
James E. Rech, Vice President, GPW & Associates, Inc.
Personal Auto Issues
Recent court cases may have a dramatic impact on pricing automobile insurance. In one court case, the court ruled that insurers are responsible to reimburse their customers for the "diminished value" of cars damaged in a crash. Other court cases have involved the use of replacement parts rather than original manufactured parts. This session will explore these issues in detail. Also, with less capacity in the marketplace there may be implications for residual markets. Our speakers will also address the resurgence in the residual markets.
Robert F. Wolf, Principal, MMC Enterprise Risk Consulting Inc.
Charles T. Goldie, Senior Vice President, Gerling Global Reinsurance Corporation of America
Laura Young, Director of Insurance Policies and Forms, Allstate Insurance Company
Bruce W. Clements, Senior Vice President and General Counsel, United Services Automobile Association
Did the Cost of Risk Change on September 11?
What does this question mean to you? In this session, you will provide the answers. Using your experience and knowledge, together we will articulate questions about the cost of risk, methods to address the questions, and sources of quantitative data. This will be a facilitated discussion, not a panel of presentations, and is appropriate for all levels of experience.
Oakley E. Van Slyke, Consultant, Miller, Herbers, Lehmann & Associates, Inc.