Transcript Download Handout 2

State of the Market
The key challenges for today's workers’
compensation underwriters
Jennifer L. Tomilin
Sr. Vice President,
Zurich North America Commercial Markets
2006 CAS Seminar on Ratemaking
© 2006 Zurich American Insurance Company
Today’s discussion
• What do the results mean?
• What is it going to take to change this tune?
• There still aren’t as many but why is the average claim cost
rising?
• I’m beginning to have motion sickness again!
• Guess that emerging issue
• Summary (Let’s wrap it up)
© 2006 Zurich American Insurance Company
What do the results mean to an underwriter?
© 2006 Zurich American Insurance Company
YOY increase in medical severity:
The most frustrating and uncontrollable issue to an underwriter
© 2006 Zurich American Insurance Company
Prescription drugs driving up claim costs
© 2006 Zurich American Insurance Company
Medical losses dominate WC claim picture
© 2006 Zurich American Insurance Company
The best message YOY since 1997 but what
is it doing to my average claim cost?
© 2006 Zurich American Insurance Company
The cycle changes; softening market
returns
• The challenge: “underwriting through the cycle successfully” –
the key tactics
The practice of exposure based underwriting is absolutely critical!
Focus on the true cost drivers of a claim and strive to
mitigate those costs through loss control and claim handling
excellence
Pro-actively promote positive legislative changes
and an industry solution for Terrorism
Understanding and managing the key differences in
what It takes to be a market leader during this market.
The cheapest price is NOT the answer
The RIGHT price for the exposure and the
BEST customer service practices ARE!
HOLD ON!
© 2006 Zurich American Insurance Company
The workers’ compensation underwriters favorite
game:
Name that Emerging Issue
© 2006 Zurich American Insurance Company
What Am I?
• I make you feel weak and tired
• I make it hard for you to breath
• I cause acute lung damage
• I can be in an acute or chronic disease depending on the
exposure level
• I can lead to heart enlargement and heart disease
• If I am not controlled I “could” effect 10,000 employer
locations and 48,000 employees
© 2006 Zurich American Insurance Company
Beryllium
© 2006 Zurich American Insurance Company
What am I?
• I am chronic, disabling and can be fatal
• I become chronic after 10 years of exposure
• I become acute after just a few weeks or up to 5 years of
high levels of exposure
• According to NIOSH at least 1.7 million U. S. workers are
potentially exposed to me
• This is what I look like
© 2006 Zurich American Insurance Company
© 2006 Zurich American Insurance Company
Silica
© 2006 Zurich American Insurance Company
What am I?
• I will surprise you when you least expect it
• I can be disabling or fatal
• I cause stress, mental anguish and anxiety
• I’m what you never thought would happen on the job
• I can affect thousands of you at the same time
• This is what I look like
© 2006 Zurich American Insurance Company
© 2006 Zurich American Insurance Company
Terrorism
© 2006 Zurich American Insurance Company
What am I?
• These are my symptoms: slowing of movement, arms that
do not swing when walking, tremors, delays in performing
routine tasks, mumbling speech, lack of energy, difficulty
sleeping, headache, anxiety
• 2% of the working population in industrialized countries is
exposed to me
• I have the same symptoms of another chronic and disabling
disease that affects approximately 1-2% of the population
over age 50.
© 2006 Zurich American Insurance Company
Manganese
© 2006 Zurich American Insurance Company
What am I?
• I have the effect of 20 years of aging on employees’ ability
to work
• I can limit or even restrict the type of work an employee can
do
• An employee affected by me will have four times the
prevalence of hypertension, and a much greater risk of a
heart attack on the job.
© 2006 Zurich American Insurance Company
Obesity
© 2006 Zurich American Insurance Company
What am I?
• I am generally known as a premises or products liability
issue
• I can however can also affect workers in several different
industries
• I produce swellings on the skin that will itch and may
become irritated and infected when scratched.
• I can cause anxiety and mental anguish
• You can’t see me and its very hard to find me
© 2006 Zurich American Insurance Company
Bed Bugs
© 2006 Zurich American Insurance Company
What am I?
• I am not catastrophic but I can cause a lot more frequency
of common injury types
• I will please many, but result in a greater frequency of loss
time claims
• Injuries resulting from me can be controlled with adequate
safety and risk engineering methods, but there is a bigger
risk that the employee will not follow them
© 2006 Zurich American Insurance Company
Hotel Housekeeping's worst nightmare
6-7 Fluffy Pillows
12-15 Inch Mattress
© 2006 Zurich American Insurance Company
Dust Ruffle
On the Horizon
• Bird Flu or Avian Influenza
• Reintegration of Military Veterans
• Nanotech-could this be the next asbestos thing?
© 2006 Zurich American Insurance Company
Today’s WC underwriter is faced with many
challenges
• Improved industry results coinciding with a softening market
• State actions and positive reforms but with the caveat of an
unproven rate reduction
• Medical severity and frequency trends that are not
predictable
• We don’t know what we don’t know-emerging issues
Thank you
© 2006 Zurich American Insurance Company
For a copy of this presentation, please email me at:
[email protected]
© 2006 Zurich American Insurance Company