© 2006 zurich american insurance company state of the market the key challenges for today's...

© 2006 Zurich American Insurance Company

State of the Market

The key challenges for today's workers’ compensation underwriters

Jennifer L. TomilinSr. Vice President, Zurich North America Commercial Markets

2006 CAS Seminar on Ratemaking


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)


What do the results mean to an underwriter?


YOY increase in medical severity:The most frustrating and uncontrollable issue to an underwriter


Prescription drugs driving up claim costs


Medical losses dominate WC claim picture


The best message YOY since 1997 but what is it doing to my average claim cost?


The cycle changes; softening market returns

• The challenge: “underwriting through the cycle successfully” – the key tactics

Understanding and managing the key differences in what It takes to be a market leader during this market.

Pro-actively promote positive legislative changes and an industry solution for Terrorism

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

The cheapest price is NOT the answerThe RIGHT price for the exposure and the BEST customer service practices ARE!

HOLD ON!


The workers’ compensation underwriters favorite game:

Name that Emerging Issue


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


Beryllium


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


Silica


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


Terrorism


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.


Manganese


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.


Obesity


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


Bed Bugs


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


6-7 Fluffy Pillows

12-15 Inch Mattress Dust Ruffle

Hotel Housekeeping's worst nightmare


On the Horizon

• Bird Flu or Avian Influenza

• Reintegration of Military Veterans

• Nanotech-could this be the next asbestos thing?


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


For a copy of this presentation, please e-mail me at:

[email protected]

© 2006 zurich american insurance company state of the market the key challenges for today's...

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