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2002 NCCI Holdings, Inc Green 2. Red 3. Blue 4. Orange 5. Purple 6. Black
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2002 NCCI Holdings, Inc.
Midwestern Actuarial ForumRon Retterath, FCAS, MAAA
September 26, 2002
2 2002 NCCI Holdings, Inc.
1. Select a number between 1 and 10
2. Multiply this number by 9
3. Add the two digits
4. Subtract 5
5. Correlate this number to a letter of the alphabet (A=1, B=2, etc.)
6. What is the first country that comes to mind that starts with this letter?
7. What is the last letter of the name of this country?
8. What is the first animal that comes to mind that starts with this letter?
9. What is the last letter of the name of this animal?
10. What is the first color that comes to mind that starts with this letter?
3 2002 NCCI Holdings, Inc.
1. Green2. Red3. Blue4. Orange5. Purple6. Black
4 2002 NCCI Holdings, Inc.
2002 NCCI Holdings, Inc.
State of the Market
6 2002 NCCI Holdings, Inc.
State of the Market
• The Economics Underlying P&C Insurance Industry Performance
• The State of the Workers Compensation Industry
• Looking to the Future
7 2002 NCCI Holdings, Inc.
Line of Business 2000 2001 ChangePersonal Auto 119.6 B$ 127.8 B$ 6.9%
Homeowners 32.4 B$ 35.1 B$ 8.4%
Workers Compensation 24.8 B$ 26.0 B$ 4.7%
Other Liability (Incl Product Liability) 19.9 B$ 21.9 B$ 9.9%
Commercial Auto 19.5 B$ 21.7 B$ 11.4%
Commercial Multiple Peril 19.8 B$ 22.2 B$ 12.2%
Fire & Allied Lines (Incl Earthquake) 9.1 B$ 9.5 B$ 3.6%
All Other Lines 54.4 B$ 59.2 B$ 8.8%
Total All Lines 299.6 B$ 323.4 B$ 8.0%
Workers Compensation Remains the Third Largest P&C Line
Net Written Premium Volume by Line—Private Carriers
Source: Best's Aggregates & Averages
•Updated
8 2002 NCCI Holdings, Inc.
Results Deteriorated for Most LinesCombined Ratios by Line—Private Carriers
Line of Business 1999 2000 2001Personal Auto 103% 109% 108%
Homeowners 108% 111% 122%
Workers Compensation 115% 118% 122%
Other Liability (Incl Product Liability) 109% 112% 130%
Commercial Auto 118% 116% 116%
Commercial Multiple Peril 118% 115% 118%
Fire & Allied Lines (Incl Earthquake) 108% 110% 129%
All Other 103% 100% 118%
Reinsurance Companies (2001 prelim) 115% 116% 142%
Total All Lines 108% 110% 116%
Source: Best's Aggregates & Averages
•Updated for actual 2001 Bests
9 2002 NCCI Holdings, Inc.
P&C Industry Calendar Year Combined Ratios
Private Carriers
110 109116
107 109 107 106102
106 108 110116
40
60
80
100
120
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Percent
3.1%Due toSept. 11
Source: Best's Aggregates & Averages
10 2002 NCCI Holdings, Inc.
Impact of 9/11 on the P&C IndustryEstimated Ultimate Cost of September 11 Catastrophe
A.M. Best(Sept 2002 Best's Review) $35 B - $55 B
Fitch(Jan 2002 Review & Outlook) $45 B
Insurance Information Institute(April 2002 Presentation) $40 B
Actual Calendar Year 2001 Combined Ratio(2002 Ed. A.M. Best Aggregates & Averages) 116%
Estimated Cal Yr Combined Ratio Points Due to Sept. 11(Derived from ISO, April 2002 Report)
3.1%( $10B)
11 2002 NCCI Holdings, Inc.
-2.4%-3%
0%
3%
6%
9%
12%
15%
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Return on Surplus for P&C Industry Has Been Volatile—
First Ever Net Loss for 2001Annual After-Tax Return on Surplus
1986–2001 Average: 8.5%
Note: After-tax return on surplus includes realized capital gainsSource: Best’s Aggregates & Averages
12 2002 NCCI Holdings, Inc.
0
100
200
300
400
500
0.0
0.5
1.0
1.5
2.0
2.5
NWP Surplus P:S Ratio
P&C Surplus Has Risen Significantly Relative to PremiumP&C Industry—Private Carriers
$ Billions P:S Ratio
Source: Best’s Aggregates & Averages
1985-2001 Average Growth in NWP: +5.1%1985-2001 Average Growth in Surplus: +8.8% High Surplus
$334.3 in 1999
Low P:S Ratio 0.845:1 in 1998
$144.9
$323.4
$75.5
$289.6
Updated
13 2002 NCCI Holdings, Inc.
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Return on Surplus
Underwriting Profit/Loss to Surplus
Net Investment Income (Incl Realized Capital Gains) to Surplus
Return on Surplus Reflects Volatilityof Underwriting Gains
Pre-tax Underwriting & Investment Contributionsto Total Return on Surplus
Source: Best’s Aggregates & Averages
14 2002 NCCI Holdings, Inc.
The State of Workers Compensation:
15 2002 NCCI Holdings, Inc.
Workers Compensation Calendar Year Combined Ratios
Continue Their Upward ClimbPrivate CarriersCombined Ratio
Source: Best’s Aggregates & Averages
1.9%Due toSept. 11
118 123 122109
101 97 100 101108
115 118 122
0
20
40
60
80
100
120
140
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Loss LAE Underw riting Expense Dividends
16 2002 NCCI Holdings, Inc.
Projected Impact of September 11 Catastrophe on Workers Compensation
Initial Workers Compensation Sept. 11 Loss Estimates…Morgan Stanley: $3 billionTillinghast: $3 billion–$5 billion
… these estimates assumed 6,000+ deaths.
Current Workers Compensation Sept. 11 Loss Estimates… Approx. # deaths: 3,015 excl hijackers Approx. # injuries: 5,000
Approx. 15% of losses were self-insured (includes NY Firefighters/PD)Approx. 5% non-workers compensation lossesApprox. 20% of fatalities were single (lump sum $50,000 pmt per
person)NCCI currently estimates ultimate Sept. 11 losses at $1.3 B–$2.0 B
Majority of direct losses were ceded to reinsurers Losses Net of Reinsurance: $0.3 B–$1.2 B
Ultimate Accident Year Combined Ratio Impact of 1%–4%
17 2002 NCCI Holdings, Inc.
2001 Drop in Investment Returns—Will This Level Continue?
Workers Compensation Ratio of Investment Gain and Other Income to Premium Private Carriers
13.715.2
17.6 17.014.3
16.9 17.620.0 19.3 20.2
12.0
19.2
0
5
10
15
20
25
1990* 1991* 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
Source for 1990–2000: NCCI; 2001 Best’s Aggregates & AveragesInvestment gain includes investment income and realized gains* Adjusted to include realized capital gains to be consistent with 1992 and after
18 2002 NCCI Holdings, Inc.
-3.8
-7.9-4.4
8.4
19.8 18.4 19.1
4.20.7
-9.7
13.311.5
-15
-10
-5
0
5
10
15
20
25
1990* 1991* 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
Workers Compensation Pretax Operating Gain Ratio
Private Carriers
Source for 1990–2000: NCCI; 2001 Best’s Aggregates & AveragesInvestment gain includes investment income and realized gains* Adjusted to include realized capital gains to be consistent with 1992 and after
19 2002 NCCI Holdings, Inc.
97 100 101108
115 118 122115
124 127
141 138 136
116
80
100
120
140
160
1995 1996 1997 1998 1999 2000 2001Calendar Year
Private Carriers State Funds
Percent
Source: Best’s Aggregates & Averages and Annual StatementsState Funds—AZ, CA, CO, HI, ID, KY, LA, ME, MN, MO, MT, NM, OK, OR, PA, RI, TX, UT
Workers Compensation Combined RatiosPrivate Carriers vs. State Funds
•Updated
20 2002 NCCI Holdings, Inc.
Workers Compensation Calendar Year Direct Combined Ratios
Countrywide vs. NCCI StatesPrivate Carriers Only
Source: NCCI, NCCI States—Private CarriersIncludes dividends to policyholders
Combined Ratio
104 102
113
121124 127
98 96
111115
118115
80
90
100
110
120
130
1996 1997 1998 1999 2000 2001
Countrywide NCCI States
21 2002 NCCI Holdings, Inc.
Workers Compensation Premium Volume:Have We Shifted to a Period of Growth?Workers Compensation Net Written Premium—Private Carriers
31.0 31.3 29.7 30.3 28.9 26.2 25.1 24.1 23.2 22.2 24.8 26.0
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
0.00.51.01.52.02.53.03.54.04.5
WC Net Written Premium Private Nonfarm Wages and Salaries
Source: Best’s Aggregates & Averages$ Billions $ Trillions
$ Billions $ Trillions
22 2002 NCCI Holdings, Inc.
Workers Compensation Premium Volume:Have We Shifted to a Period of Growth?Workers Compensation Net Written Premium—Private Carriers
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
0.00.51.01.52.02.53.03.54.04.5
WC Net Written Premium Private Nonfarm Wages and Salaries
Source: Best’s Aggregates & Averages$ Billions $ Trillions
$ Billions $ Trillions
23 2002 NCCI Holdings, Inc.
Adjusted Workers CompensationPremium Volume
Workers Compensation Direct Written Premium—Private Carriers1. Direct of Reinsurance$ Billions $ Trillions
$ Billions $ Trillions
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
0.00.51.01.52.02.53.03.54.04.5
WC DWP Private Nonfarm Wages and Salaries
24 2002 NCCI Holdings, Inc.
1. Direct of Reinsurance
2. Grossed-Up for Large Deductible Credits
$ Billions $ Trillions
Adjusted Workers CompensationPremium Volume
Workers Compensation Direct Written Premium—Private Carriers
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
0.00.51.01.52.02.53.03.54.04.5
WC Adjusted DWP Private Nonfarm Wages and Salaries$ Billions $ Trillions
25 2002 NCCI Holdings, Inc.
1. Direct of Reinsurance
2. Grossed-Up for Large Deductible Credits
3. Adjusted to 1990 Rate/Loss Cost Level
$ Billions $ Trillions
$ Billions $ Trillions
Adjusted Workers CompensationPremium Volume
Workers Compensation Direct Written Premium—Private Carriers
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
0.00.51.01.52.02.53.03.54.04.5
WC Adjusted DWP Private Nonfarm Wages and Salaries
26 2002 NCCI Holdings, Inc.
1. Direct of Reinsurance
2. Grossed-Up for Large Deductible Credits
3. Adjusted to 1990 Rate/Loss Cost Level
4. Grossed-Up for Carrier Departure
$ Billions $ Trillions
$ Billions $ Trillions
Adjusted Workers CompensationPremium Volume
Workers Compensation Direct Written Premium—Private Carriers
0
10
20
30
40
50
60
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Calendar Year
0.00.51.01.52.02.53.03.54.04.5
WC Adjusted DWP Private Nonfarm Wages and Salaries
27 2002 NCCI Holdings, Inc.
26.2 25.1 24.1 23.2 22.224.8 26.0
3.73.3
2.9 2.8 2.8
3.7
6.0
0
5
10
15
20
25
30
1995 1996 1997 1998 1999 2000 2001Calendar Year
0
1
2
3
4
5
6
7
Private Carriers State Funds
Workers CompensationNet Written Premium Private Carriers vs. State Funds
Private Carriers WC NWP ($B) State Funds NWP ($B)
Source: Best’s Aggregates & Averages and Annual StatementsState Funds—AZ, CA, CO, HI, ID, KY, LA, ME, MN, MO, MT, NM, OK, OR, PA, RI, TX, UT
•Updated
28 2002 NCCI Holdings, Inc.
Joe
29 2002 NCCI Holdings, Inc.
Joe
30 2002 NCCI Holdings, Inc.
1% - 4% Due to Sept. 11
123 122
109
10197
100 101
108
115118
112
10095 97
102107
121
129
137133
127
122
90
100
110
120
130
140
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Calendar Year Accident Year
Workers Compensation Calendar Year 2001 Results Deteriorated, While Accident Year Results Improved
Calendar Year vs. Ultimate Accident YearCountrywide—Private Carriers
Best’s Aggregates & Averages (Calendar Year)Includes dividends to policyholdersAccident year data is evaluated as of 12/31/01 and developed to ultimate
Combined Ratio
31 2002 NCCI Holdings, Inc.
0.52.0
4.6
10.0
14.5
20.0 21.018.3
0
5
10
15
20
25
1994 1995 1996 1997 1998 1999 2000 2001Loss & LAE Reserve Deficiency Through Year End
Workers Compensation Reserve Deficiencies Have Grown Larger in
Recent Years
Difference between NCCI estimated ultimate losses and LAE as of 12/31/01 and reported Schedule P incurred losses and LAE
$ Billions Assuming losses are paid out in 30 years, implied discount rate is 4%
Approximately ¼ of reserve deficiencyis due to tabular reserves
2002 NCCI Holdings, Inc.
33 2002 NCCI Holdings, Inc.
Approved Rates/Loss Costs Are Basically Stable
History of Average Bureau Rate/Loss Cost Level Changes
12.1
7.4
10.0
2.9
-6.4
-3.2
-6.0-8.0
-5.4
-2.6
3.51.2
3.7
-10
-5
0
5
10
15
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002pCalendar Year
p PreliminaryCountrywide approved changes in advisory rates, loss costs and assigned risk rates as filed by the applicable rating organization
Cumulative 1990-1993+36.3%
Cumulative 1994-1999-27.8%
Updated
34 2002 NCCI Holdings, Inc.
The Impact of Discounting on PremiumNCCI States—Private Carriers
Based on data through 12/31/01 for the states where NCCI provides ratemaking servicesDividend ratios are based on calendar year statistics
-7.1 -7.5 -7.0 -8.5-10.4
-14.6-17.7
-22.6 -23.2
-19.2
-14.9
-30
-25
-20
-15
-10
-5
0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001Policy Year
Per
cent
Rate/Loss Cost Departure Schedule Rating Dividends
35 2002 NCCI Holdings, Inc.
+1.0% +1.7%+5.4%
+4.3%+5.4%
+5.1%+8.2%
+9.2%
-3.1% -2.8%+6.6%
5
7
9
11
13
15
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001pAccident Year
The Rate of Change in Workers Compensation Indemnity Claim
Costs Has Accelerated Since 1995Indemnity Claim Cost (000s)
p PreliminaryBased on data through 12/31/01, developed to ultimateBased on the states where NCCI provides ratemaking servicesExcludes the effects of deductible policies
Annual Change 1991–1995: +0.6%
Annual Change 1996–2001: +6.3%
36 2002 NCCI Holdings, Inc.
+6.8% +1.3%
+4.6%+6.2%
+5.8%+4.6%
+5.1%+8.1%
+11.5%
-2.1%+10.9%
5
7
9
11
13
15
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001pAccident Year
Workers Compensation Medical Claim Costs Have Also Continued Their
Consistent Upward TrendMedical Claim Cost (000s)
Annual Change 1991–1995: +4.2%
Annual Change 1996–2001: +6.8%
p PreliminaryBased on data through 12/31/01, developed to ultimateBased on the states where NCCI provides ratemaking servicesExcludes the effects of deductible policies
37 2002 NCCI Holdings, Inc.
-4.3%
-6.8%
-4.5%
-3.1%
-5.5%
-1.3%-0.7%
-2.2% -2.5%
-5.8%
-8%
-6%
-4%
-2%
0%
2%
4%
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001pAccident Year
Cha
nge
in F
requ
ency
per 1
00 W
orke
rsThe Frequency of Lost-Time Claims Has
Continued to Fall Through 2001Two-Year Rolling Average
Cumulative Change of–35.7% Since 1990
p PreliminaryBased on data through 12/31/01, developed to ultimateBased on the states where NCCI provides ratemaking servicesExcludes the effects of deductible policies
38 2002 NCCI Holdings, Inc.
Fifteen Large Classes
Countrywide Latest Four Years Prior
Class Payroll ($M)
Lost-Time Only
Claims Freq
Lost-Time Only
Claims FreqFreq
ChangeClerical 397,020$ 29,358 0.07 32,267 0.10 -26%Salesperson—Outside 95,602$ 11,051 0.12 11,662 0.14 -19%College Professional 54,507$ 7,298 0.13 7,636 0.16 -16%Retail Store 25,884$ 15,786 0.61 19,257 0.89 -31%Hospital Professional 18,904$ 7,180 0.38 9,960 0.51 -25%Auto Service/Repair 12,884$ 12,118 0.94 14,206 1.24 -24%Store—Meat/Grocery 10,086$ 11,714 1.16 14,542 1.64 -29%Drivers/Chauffers 9,581$ 13,813 1.44 15,016 1.72 -16%Electrical Wiring 9,164$ 9,110 0.99 8,584 1.28 -22%Convalescent/Nursing Home 8,929$ 14,190 1.59 17,610 2.47 -36%Machine Shop 8,212$ 9,291 1.13 9,904 1.47 -23%Plumbing 7,768$ 8,726 1.12 9,190 1.43 -22%Store—Wholesale 7,716$ 11,642 1.51 12,163 2.01 -25%Hotel 6,827$ 8,471 1.24 10,975 1.79 -31%Carpenters 6,570$ 16,248 2.47 18,761 3.22 -23%Total 679,654$ 185,996 0.27 211,733 0.37 -27%All Class Total 1,209,061$ 633,342 0.52 750,801 0.72 -27%
Note: Frequency = Lost-Time Claims/Payroll; prior payroll adjusted for inflationSource: NCCI
BAM!
Let’s Kick It Up A Notch
40 2002 NCCI Holdings, Inc.
The Rate of Work-Related InjuriesHas Decreased Over Time Due to
Improved Working Conditions Trends in Workplace Injuries and Illnesses
0
5
10
15
20
25
1926
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
Year
Rat
e of
Inju
ry p
er 1
00 F
TE W
orke
rs
Injuries per 100 full-time workers in manufacturing Injuries and Illness per 100 full-time workers in all industries Long-Term Trend Line
Trend Line
41 2002 NCCI Holdings, Inc.
Recent Decline in Frequency
This is a long-term trend driven by technology, economic incentives, and employee preferences for a safe workplace,such as…
• Continued Emphasis on Workplace Safety• Robotics• Modular Design and Construction• Power-Assisted Processes• Ergonomic Design• Cordless Tools• Stronger, lighter-weight materials (e.g., fiberglass rather
than wooden ladders)• More and Better Training• Clerical Support Aids• Fraud Initiatives
42 2002 NCCI Holdings, Inc.
Workplace Injury Incidence Rates— Decreases During Recessions and
Increases in Recovery
Countrywide—Six Recessions Since 1960
0
5
10
15
20
25
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
Inci
denc
e R
ates
Per
100
FTE
Wor
kers
RecessionsInjuries and illnesses per 100 full-time workers in manufacturingInjuries and illnesses per 100 full-time workers in private industry
43 2002 NCCI Holdings, Inc.
Impacts of Recessions and Expansions on Frequency
In a recession, frequency generally drops:• Inexperienced workers are laid off, leaving a more
experienced workforce• Minimal new hires• Average workweek is reduced, minimizing fatigue• Laid off workers may be more likely to file claims
In an expansion, frequency generally increases (at least initially):
• New employees are hired• Workweek expands• Inexperienced workers make up higher proportion
of workforce
44 2002 NCCI Holdings, Inc.
1.2
2.12.6 2.8
3.54.0
4.44.8
4.1
3.1
2.0
1.00.6 0.3 0.3
0
1
2
3
4
5
6
Policy Year
$ B
illio
ns
* Excludes Maine Residual Market Pool** Projected to ultimate
Residual Market Premium Volumeas of March 31, 2002
$623m$356m
45 2002 NCCI Holdings, Inc.
Residual Market Policies by Size of Risk
Premium by Size of Risk Total
2000 Risk Count
2001 Risk Count
Percent Change
0$ - 999$ 59,328 66,041 11%
1,000$ - 4,999$ 25,003 33,096 32%
5,000$ - 24,999$ 7,084 12,725 80%
25,000$ - 99,999$ 1,360 3,132 130%
100,000$ AND OVER 249 636 155%
TOTAL 93,024 115,630 24%
46 2002 NCCI Holdings, Inc.
Premium by Size of Risk Total
Jan-Jun 2001 Risk
Count
Jan-Jun 2002 Risk
CountPercent Change
0$ - 999$ 33,505 38,483 15%
1,000$ - 4,999$ 16,210 22,269 37%
5,000$ - 24,999$ 6,142 9,406 53%
25,000$ - 99,999$ 1,419 2,365 67%
100,000$ AND OVER 244 494 102%
TOTAL 57,520 73,017 27%
Residual Market Policies by Size of Risk
47 2002 NCCI Holdings, Inc.
* Excludes Maine Residual Market Pool** Projected to ultimate
Residual Market Combined RatiosContinue to Grow
as of March 31, 2002
116 118 119111
102979396102
110
126
142
159166169164
177
80
100
120
140
160
180
200
85 86 87 88* 89* 90* 91* 92* 93 94 95 96 97 98 99 00** 01**Policy Year
Per
cent
48 2002 NCCI Holdings, Inc.
Residual Market Underwriting Results
as of March 31, 2002
-931
-1,357
-1,791-1,869-2,067
-1,644
-1,120
-500
-95
109 132 26
-65 -118-36-13 -44
-2,500
-2,000
-1,500
-1,000
-500
0
500
Policy Year
$ M
illio
ns
* Excludes Maine Residual Market Pool** Projected to ultimate
49 2002 NCCI Holdings, Inc.
Comparisons of Conditions in the Industry
Late 1980’s• Benefit escalation• Wage inflation• Cost containment coming• Administered pricing• Large residual market share
and large burdens• Some use of deviations,
schedule ratings, dividends
At Present• Benefits relatively stable• Medical inflation• Cost containment in place• Loss cost filings; Loss costs
relatively adequate• Small residual market share
and low burdens• Use of tiers, schedule rating,
dividend• Use of large deductibles• Real exposure to catastrophe
2002 NCCI Holdings, Inc.
Looking to the Future
51 2002 NCCI Holdings, Inc.
The Underwriting of Risk Has Changed• Concentration of Employees• Concentration of Policyholders• Concentration of Lines• Catastrophe Exposures• Large Airports, Bridges, Tunnels, Nuclear Power Plants• Institutions in Major Cities• Water Treatment and Storage Systems• “Trophy” Buildings• High-Rise Buildings
Reinsurance Capacity Restricted (142% Combined Ratio)
• Affordability/Availability Issues
Workers Compensation OutlookFixed
52 2002 NCCI Holdings, Inc.
Unique WC Issues Presented by Terrorism
• No policy limits
• No individual claim limits
• No exclusions or coverage modifications
• Mandatory for most employers
53 2002 NCCI Holdings, Inc.
NCCI’s Response to Terrorism
• Support trades in working towards a federal backstop
• Partnered with EQECAT to develop models to estimate severity of major terrorist attacks
• Analyzed legal issues associated with a WC pool that would coordinate with the federal backstop
• Working with NAIC on terrorism related issues
54 2002 NCCI Holdings, Inc.
71.6%71.7%
86.6%
107.1%
92.2%
77.7%73.4%
67.1%
60%
70%
80%
90%
100%
110%
'98Q1
'98Q2
'98Q3
'98Q4
'98YearEnd
'99Q1
'99Q2
'99Q3
'99Q4
'99YearEnd
'00Q1
'00Q2
'00Q3
'00Q4
'00YearEnd
'01Q1
'01Q2
'01Q3
'01Q4
'01YearEnd
'02Q1
'02Q2
Calendar Quarter
Source: NAIC Quarterly Statement, Annual Statement
Workers Compensation Outlook–Will the Combined Ratio Improve
in 2002-2003?Quarterly WC Direct Loss Ratios
55 2002 NCCI Holdings, Inc.
THEEND
56 2002 NCCI Holdings, Inc.
57 2002 NCCI Holdings, Inc.