Reinsurance Boot Camp on Pricing Techniques Aug 2007. Medical Malpractice Leonard Chung, FCAS Transatlantic Reinsurance Co. Some Unique Issues on Physicians Professional Liability Reinsurance Pricing. Clash Cover XPL Tort Reforms Recent Market Trend. Source of Significant Clash Claims.
Leonard Chung, FCAS
Transatlantic Reinsurance Co
-Development-probably similar to XOL claim development since 2nd claim could be interpreted as xs losses
-Development is unstable: Most recent diagonal of Triangles often get restated due to reassignment of 1st defendant
-may need to make adjustment for change in geographic concentration of the book of business and the percentage of insureds belonging to groups (with separate corporate limits)
A) Interpret 2nd claim as an excess claim when the corporation has a separate limit: using ILF.
B) Interpret multiple claims as random event: use simulation.
2nd claim=1Mxs3M FGU
Clash layer loss/Subj Prem=(1.55-1.45)/1.0xELRx35%
Average claims per Event=3.0
-Poisson distribution with a parameter=3
-Each claim has same size of loss distribution cap at XOL attachment point
-States where most Drs buy low limits and state laws allow collection beyond policy limits: FL, TX
-Primary companies’ strategy in defending claims
-post judgment penalty
-case reserve development not likely
-most development due to IBNR