Property and casualty (P&C) insurance headlines these days generally focus on issues relevant to current policies. Although not receiving as much attention, historical accident years have also been experiencing deteriorating trends, both for mature exposures such as asbestos, environmental pollution, and construction defect claims as well as for emerging exposures related to talc, sexual abuse, and opioid litigation.
Understanding the impact of these potential legacy losses is important, not only in the context of establishing an appropriate reserve, but also to form a view of the load for mass torts needed for pricing current policy years. Very often insurance companies segregate these mass tort claims, housing them in discontinued operations, ceding such exposures as part of adverse development covers or simply removing them from actuarial analyses to prevent them from “distorting” the analyses of the “normal” claims.
In this article, Milliman’s Raji Bhagavatula, Mark Goldburd, and Jason Russ discuss a number of these “legacy” topics that affect the general liability books of commercial insurance companies.
COVID-19 requires companies with
self-insured or high-deductible programs to take a new look at their
operations, which may vastly reshape their risk profiles. The degree to which
risk managers can come to new understandings of their changing exposure levels
could have significant effects on current and future liability estimates.
Estimating outstanding claim
liabilities for a self-insured or large deductible program depends heavily on the
exposure levels for the present and recent past. A change in operations alters
a company’s risk profile and can have a significant impact on reserving and
loss projections for the next quarter or year. The larger the change in
operations, the greater the impact on a company’s exposures and claim reserves.
In today’s climate, it is extremely
important to make sure exposure estimates reflect the latest information
available and that any changes in operations have been clearly communicated.
Likewise, when life returns to normal, it will be important to frequently
monitor the resulting increases in exposure levels.
In this article, Milliman’s David Lang explains why estimating the new exposure levels is likely to be difficult for many risk managers.
Dockless electronic scooter (e-scooter) sharing programs are the new era in micromobility. However, scooter-sharing companies are drawing fire from injured pedestrians and a concerned medical community. A recent Consumer Reports investigation documents at least 1,500 injuries and eight deaths related to rented e-scooters in the United States since late 2017. Hundreds of riders have landed in emergency rooms with injuries ranging from cuts, sprains, and bruises to bone fractures and head injuries.
E-scooter sharing also introduces new insurance implications. Traditional policies have not kept up with the micromobility revolution, although most e-scooter riders assume they’re covered for liabilities and personal injuries. With e-scooter accidents on the rise, insurance gaps need immediate attention and innovative solutions for on-demand, usage-based transportation. In this article, Milliman actuaries Abby Sternberg and Anthony Pinello delve into the new world of e-scooters. They examine injuries associated with e-scooters and potential litigation. The authors also compare e-scooters with bicycles and bike shares and talk about what e-scooter companies can do to mitigate risk.
Since the advent of Solvency II, insurers are faced with a number of challenges that can have a potential impact on determining the economic value of their liabilities. These challenges start with an insurer’s modeled uncertainty with respect to the timing and amount of future cash flows, which sets the stage for nearly every other element of the risk margin. Milliman actuary Mark Shapland offers some perspective in this paper.
The Volatility Adjustment (VA) is one of the Long-Term Guarantee (LTG) measures under Solvency II which aims to ensure the appropriate treatment of insurance products with long-term guarantees. However, the VA also affords applicability to other types of products with long-term liability cash flows and one of the aims of a recent paper is to reexamine the potential for companies to use the VA for their businesses. In this paper, Milliman’s Karl Murray and Eamonn Phelan examine the features of ongoing risk management with regards to the application of the VA.
School districts and legislators across the United States are considering how best to protect children and school staff from gun violence at schools. At least 24 states across the country have policies that allow security personnel to carry weapons in schools, and at least nine states have policies that allow other school employees to do the same.
Arming school staff and allowing guns in schools pose challenging risk and liability issues. As with any legislation, the ramifications of a new policy can be complicated, and there are a variety of factors that governments and school boards must weigh as they debate this issue. This paper examines risk and insurance considerations for school districts and legislators tackling this difficult subject across the United States.