The State of the Market…
What does the State of the Line Mean?
Jennifer L. Tomilin
Sr. Vice President,
Zurich North America Commercial Markets
2007 CAS Seminar on Ratemaking
March 9, 2007, Atlanta Georgia
© 2003 Zurich American Insurance Company
Disclaimer
The view expressed during this presentation are those of the
Speaker and not necessarily the views of this panel, NCCI,
Zurich, the CAS or any other sponsor of this seminar.
© 2003 Zurich American Insurance Company
The Market Behavior……
•
Higher percentage of risk now
better than average?
•
Claims practices getting
better?
•
Optimism about benefit
reforms?
© 2003 Zurich American Insurance Company
Credibility in the filed loss costs
•2001 a 2pt rate decrease over prior year and 7 pt deterioration in loss ratio from prior year
•2002 and 2003 the spread becomes constant; 2002 4pt rate increase and 7pt improvement in loss ratio2003 2pt increase loss ratio remained flat
•2004 the spread expands again by a 13pt rate decrease and but another 2pts of improvement in loss ratio.
•2005 the rate remained flat, but the loss ratio improved another 2pts.
•2006 rate increase of 2pts, and another 2pt improvement in loss ratio
Data source NCCI Sate of the Line 2005 AIS
© 2003 Zurich American Insurance Company
Is it risk attributes, risk performance or
market behavior?
© 2003 Zurich American Insurance Company
Will the trend continue?
Effect of Discretionary Pricing
100
Percentage
80
60
CY Rate Change
40
CY Loss Ratio
20
PY Discretionary Pricing
0
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
91
19
90
19
-20
-40
Year
Date source NCCI State of the Line 2005 AIS, Market Scout YE2006 report
© 2003 Zurich American Insurance Company
YE 2006 -8%
Underwriters need to spread the
word….
© 2003 Zurich American Insurance Company
Where are the benefit reform
impacts?
© 2003 Zurich American Insurance Company
The new workers’ compensation game:
Name that Emerging Issue
© 2003 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
• The injury rate associated with me climbed to 71% in 2002 up
from 47%
• Each of you benefited from me last night
© 2003 Zurich American Insurance Company
Hotel Housekeeping's worst nightmare
6-7 Fluffy Pillows
Duvet
12-15 Inch Mattress 113 lbs
© 2003 Zurich American Insurance Company
Dust Ruffle
Oh my aching back –Some Facts
•
The king-sized “Serenity Bed” includes 18 components:
– A 113 pound pillow top mattress topper or featherbed over a foot thick
– Three sheets
– A down blanket
– A down duvet insert and cover
– Two standard pillows and cases
– Two king sized pillows and cases
– A decorative “bolster” pillow and case.
•
A Housekeeper who dresses fifteen of these Serenity Beds per day strips over 500 pounds of
soiled linen and replaces it with 500 pounds of clean linen leading to back and shoulder injuries,
bursitis of the knee, carpal tunnel syndrome and persistent pain in the hands, wrists and neck.
•
An ergonomist’s study rated housekeepers’ work at 1.29 on OSHA’s Lifting Index, with 1.0 being
heavier than a healthy worker could be expected to lift over a sustained period of time.
•
As a whole, hotel workers have a 51 percent higher rate of disabling injuries than other service
sector workers.
•
A UCSF study found that 3 out of 4 hotel housekeepers experience “very severe pain”.
•
A UNITE HERE union study revealed that hotel housekeepers had a 10.4% injury rate. That is
more than 85% higher than the 5.6% injury rate of non-housekeepers. .
© 2003 Zurich American Insurance Company
What am I?
• I will bring great promise for occupational safety and heath.
• I am a process used to assimilate existing materials but at a
smaller scale to make them better and stronger
• It is still very questionable what effect I will have on a those
who work with me or are around me.
• I will be used in the development of hundreds of cancercuring drugs and materials 100 times stronger than steel.
© 2003 Zurich American Insurance Company
No I am not a BORG
The relentless cybernetic marauders capable of
scooping up entire colonies for assimilation
© 2003 Zurich American Insurance Company
Nanotechnology
© 2003 Zurich American Insurance Company
Some Nano Facts
•
Nanotechnology involves the manipulation of matter at nanometer length (one-billionth of a meter)
scales to produce new materials, structures and devices.
•
Nanotechnology is the design and building of materials and machines on a molecular scale such as
bertrandite and beryl, coal and oil, soil and volcanic dust.
•
Nanostructured materials do not represent a new phenomenon.
– The red and yellow hues in stained glass dating from medieval times result from the presence of
nanometer-diameter gold and silver particles
– In 1959 Prof: Richard P. Feynman introduced the idea of a new and exciting field of research
based on manipulating matter at the atomic level. At that time these predictions were only
theoretical speculation.
– In1981 the invention of the Scanning Tunneling Microscope made nanoscale sciences a reality.
– But only recently has the ability to probe manipulate, understand and engineer matter at atomic
scales come within our grasp.
•
The magazine SMALL TIMES has reported (based on a 2004 survey) that 24,388 people are
employed in companies engaged only in nanotechnology.
© 2003 Zurich American Insurance Company
What am I?
•
•
•
•
I am a source of addiction
There are more than 1.3 million opportunities for me to surface
I often cause discomfort or pain that is ignored
With proper use of my source I could be mitigated and not become an
emerging issue
© 2003 Zurich American Insurance Company
Blackberryitis
© 2003 Zurich American Insurance Company
Some Blackberry Facts:
Thumbs Away-
– Users are dubbed “crackberries” because they are so addictive
– Users commonly send 500 texts a day with their thumbs doing most
of the work.
– The thumb works differently from the other fingers. It’s designed for
picking up things. There’s a joint at the bottom of the thumb that
allows it to flex and rotate, so when people are bashing away at their
blackberries the thumb is moving in different dimensions.
– There have been no known claims reported yet its all conjuncture.
– You should not be making more than 200 thumb movements a
day…so type fewer words..and use your fingers more.
© 2003 Zurich American Insurance Company
What am I?
•
•
•
•
•
•
I cause a fixed airway obstruction
I cause coughing and shortness of breath on exertion
My systems are gradual in onset and progressive
Severe symptoms can occur suddenly
I cause fever, night seats, and weight loss
I have been misdiagnosed as, asthma, chronic bronchitis, emphysema,
or pneumonia
• Severe cases may not respond to medical treatment and in some cases
are placed on lung transplant waiting lists.
© 2003 Zurich American Insurance Company
Bronchiolities Obliterans
It’s in the flavor
© 2003 Zurich American Insurance Company
Some Facts about Brochiolitis obliterans:
– The NIOSH has found 8 cases of severe lung disease called bronchiolitis obliterans, among
workers at food, snack and flavoring factories who breathed artificial butter flavoring vapors, which
contain the chemical diacetyl.
– Diacetyl is used for aroma and taste in butter, some cheeses and snack and bakery products. In
tests, laboratory rats that breathed high concentrations of vapors containing diacetyl developed
significant lung damage.
– Bronchiolitis objliterans is an obliteration or chronic scarring of the lung’s airways which does not
respond to normal asthma medication. It is a life-threatening disease, and is extremely rare in
young persons..
– Workers at plants that produce a wide variety of products, from candy to snack cakes to potato
chips, could be at risk.
– Health officials are also investigating the safety of workers exposed to other flavoring agents,
including acetaldehyd (used in citrus flavoring) and bensaldehyde (common cherry and fruit
flavors).
– In March 2004 a jury in Joplin, Missouri deliberated a little more than 3 hours before returning a
verdict of $20M against International Flavors and Fragrances, Inc for compensatory personal injury
damages to a former microware popcorn worker whose lungs were permanently injured and who is
now on a lung transplant list.
– Today cases continue to emerge with Lawyers interviewing potential claimants every day.
© 2003 Zurich American Insurance Company
What am I?
•
•
•
•
I am a technique
I come with many pros and cons
I have become a very important piece of recent legislation in California
We just don’t know what will emerge because of me
© 2003 Zurich American Insurance Company
Some Facts about Brochiolitis obliterans:
(I’ve got what in my
system?!!?)
Something on the radar..something to watch
–
Bio-monitoring is the scientific technique used to assess chemicals in the body. Most commonly blood,
urine, breast milk and expelled air are measured.
–
The process of bio-monitoring involves 3 steps:
• Selecting who will be monitored as well as when and where
• Collecting tissue and/or fluid samples and
• Deciding which chemicals to study and analyzing for those chemicals in the samples that are
collected.
–
It is a complex and expensive process, especially if the goal is to obtain results that reflect how body
levels vary by age, sex, ethnic group, geographical location and state of health of the individual.
–
This past September (2006) Gov. Schwarzenegger signed legislation (The Bio-Monitoring bill SB 1379) that
represents the first comprehensive statewide effort to measure and catalogue human exposure to
chemicals.
–
So what could this mean to Workers Compensation or General Liability?
• An emergence of new occupational disease findings….maybe, maybe not
–
–
• An emergence of more class action activities….maybe, maybe not
This is an advancement in technology that allows for the measurement and identification of foreign
substances in the body, food, and the environment at minute levels previously have been undetectable.
Although the existence of such substances may not manifest as an injury or disease, its mere presence
may initiate action from damages and/or relief
© 2003 Zurich American Insurance Company
SOMETHING TO KEEP WATCH OF.
For a copy of this presentation, please e-mail me at:
Jennifer.tomilin@zurichna.com
THANK YOU
ENJOY THE CONFERENCE
© 2003 Zurich American Insurance Company