Verisk Analytics, Inc. · NASDAQ:VRSK
Verisk Analytics — Technical Presentation (September 2017)
42 slides from Verisk Analytics's technical presentation, September 2017
Slide 1: Profitability and Company Loss Development Speed
Profitability and Company Loss Development Speed September 2017 Monday Web Seminar Presented by: ISO - Excess & Reinsurance Division MWS Series © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 2: Today's Presenters
Today’s Presenters John Buchanan Managing Principal Excess and Reinsurance Division ISO Solutions Marni Wasserman Actuarial Analyst Excess and Reinsurance Division ISO Solutions MWS Series 2 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 3: Topic
Topic • It has long been observed that profitability varies significantly by company, line of business and market • Over the last year, ISO has been analyzing the top 500 reporting companies, including investigating the results by company size, class of business, reinsurance buying patterns, and los
Slide 4: Agenda
Agenda • Investigating Profit Differences by Company – Ranked Loss Ratios by Company – Sample Lines (All year and 5-year) – Review by Size of Company – Regional, Super-Regional, National – Other Tests such as Reinsurance Buying Patterns • Company Profitability and Development Speed – Loss Developmen
Slide 5: Company Profitability Investigation
Company Profitability Investigation © 2017 Insurance Services Office, Inc. All rights reserved. MWS Series © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 6: Why Are Company Results so Different From Each Other? Manufacturing
Why Are Company Results so Different From Each Other? Investigating Manufacturing Classes Note: Total loss ratios (2001-2016) use 20 year loss triangles and all-year LDFs; each individual company uses credibility weighted all-year industry factors, split between Fast and Slow for apriori; see Append
Slide 7: Why Are Company Results so Different From Each Other? Premises Operations
Why Are Company Results so Different From Each Other? Premises Operations Note: Total loss ratios (2001-2016) use 20 year loss triangles and all-year LDFs; each individual company uses credibility weighted all-year industry factors, split between Fast and Slow for apriori; see Appendix for sample Pr
Slide 8: Why Are Company Results so Different From Each Other? Products
Why Are Company Results so Different From Each Other? Products Class Group C Note: Total loss ratios (2001-2016) use 20 year loss triangles and all-year LDFs; each individual company uses credibility weighted all-year industry factors, split between Fast and Slow for apriori; see Appendix for sample
Slide 9: Profitability and Company Capital Size: All Years
Is There a Connection between Profitability and Company Capital Size? Ground-up Losses – All Years – Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile. MWS Series
Slide 10: Profitability and Company Capital Size: 5 Years
Is There a Connection between Profitability and Company Capital Size? Ground-up Losses – 5 Years – Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile. MWS Series 10
Slide 11: Profitability and Reinsurance Purchasing: All Years
Is There a Connection between Profitability and Reinsurance Purchasing? Ground-up Losses – All Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile. MWS Serie
Slide 12: Profitability and Reinsurance Purchasing: 5 Years
Is There a Connection between Profitability and Reinsurance Purchasing? Ground-up Losses – 5 Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile. MWS Series
Slide 13: Company Profitability and Loss Development Speed
Company Profitability and Loss Development Speed © 2017 Insurance Services Office, Inc. All rights reserved. MWS Series © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 14: We Noticed that Company Speeds Vary Dramatically: Premises Operations
We Noticed that Company Speeds Vary Dramatically Premises Operations MWS Series 14 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 15: We Noticed that Company Speeds Vary Dramatically: Products
We Noticed that Company Speeds Vary Dramatically Products MWS Series 15 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 16: We Noticed that Company Speeds Vary Dramatically: UXS Products
We Noticed that Company Speeds Vary Dramatically UXS Products MWS Series 16 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 17: Profitability and Speed: Ground-up Losses, All Years
Is There a Connection between Profitability and Speed? Ground-up Losses – All Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile; losses and premiums develo
Slide 18: Profitability and Speed: Ground-up Losses, 5 Years
Is There a Connection between Profitability and Speed? Ground-up Losses – 5 Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile. MWS Series 18 © 2017 Insuran
Slide 19: Profitability and Speed: Ground-up Frequency, All Years
Is There a Connection between Profitability and Speed? Ground-up Frequency – All Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile. MWS Series 19 © 2017 In
Slide 20: Profitability and Speed: Excess Losses, All Years
Is There a Connection between Profitability and Speed? Excess Losses – All Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile; Losses are 4.9M xs 100k (detr
Slide 21: Profitability and Speed: Excess Losses, 5 Years
Is There a Connection between Profitability and Speed? Excess Losses – 5 Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile ; Losses are 4.9M xs 100k (detre
Slide 22: Profitability and Speed: Excess Frequency, All Years
Is There a Connection between Profitability and Speed? Excess Frequency – All Years - Manufacturing Note: Top error bar is 90th percentile, top of box is 75th percentile, line in box is 50th percentile, bottom of box is 25th percentile, bottom error bar is 10th percentile ; Losses are 4.9M xs 100k (
Slide 23: GL Manufacturers – Fast/Slow Loss Ratio Infographic
GL Manufacturers – Fast/Slow Loss Ratio Infographic 67.9% 58.0% 52.5% MWS Series 23 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 24: Holistic Analysis of Profitability and Speed
Holistic Analysis of Profitability and Speed © 2017 Insurance Services Office, Inc. All rights reserved. MWS Series © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 25: ISO Size-of-Loss Matrix
ISO Size-of-Loss Matrix Peer Group Comparison Company Selection Company ABC Market Selection All Lines of Business Type of Analysis Reported Indemnity & ALAE Layer Selection 4,900,000 xs 100,000 Loss Development Details Trend = 3% Company ABC .30 SOLM LDF Score MWS Series 25 © 2017 Insurance Service
Slide 26: Sample Market – # Incurred/Paid Claims Excess of 25K
Sample Market – # Incurred/Paid Claims – Excess of 25K All Causes of Loss All Companies ABC Insurance Company Incurred Claims – Excess of 25k Incurred Claims – Excess of 25k All Companies ABC Insurance Company Paid Claims – Excess of 25k Paid Claims – Excess of 25k Source: ISO SOLM 2016 v4 7-yr VWA;
Slide 27: GL Manufacturers – Loss Ratio Infographic
GL Manufacturers – Loss Ratio Infographic MWS Series 27 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 28: SOLM – Faster/Slower LR Analysis
SOLM – Faster/Slower LR Analysis Using MarketWatch Manufacturers Rate changes – 6/30/2016 MWS Series 28 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 29: Source: CLRS – September 12, 2017
Source: CLRS – September 12, 2017 (Phila – Concurrent Session LOB3: Wheels Down) MWS Series 29 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 30: Average Outstanding Test – GL OL&T
Average Outstanding Test – GL OL&T Source: ISO SOLM 2017 v2 MWS Series 30 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 31: Average Outstanding Test By Company LDF Speed
Average Outstanding Test By Company LDF Speed MWS Series 31 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 32: Average Outstanding Test By Company LDF Speed – Multiple Lines
Average Outstanding Test By Company LDF Speed – Multiple Lines MWS Series 32 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 33: Appendix
Appendix © 2017 Insurance Services Office, Inc. All rights reserved. MWS Series © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 34: Data Sources and Further Analysis
Data Sources and Further Analysis © 2017 Insurance Services Office, Inc. All rights reserved. MWS Series © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 35: MWS Series
MWS Series 35 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 36: SOLM 2017 v2: August 2017 – Full Unlimited Version
SOLM 2017 v2: August 2017 – Full Unlimited Version 38 Markets – GL, PL, Comm’l Auto, Comm’l Prop, BOP, UXS Note: Sections in Yellow are new in 2017 v2 MWS Series 36 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 37: GL - Largest Classes
GL - Largest Classes MWS Series 37 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 38: SOLM - Company Bifurcation – Fast / Slow – Hypothesis Testing
SOLM - Company Bifurcation – Fast / Slow – Hypothesis Testing MWS Series 38 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 39: Commercial Auto – PPT – 900x100k Loss – National Carriers
Commercial Auto – PPT – 900x100k Loss – National Carriers Source: Gauge pointer is on the same year scale as the gauge values (1.8 years is near the green endpoint of 2 years) The Infographics Gauge pointers denote the duration from 0-10 years for easier comparison across segments MWS Series 39 © 20
Slide 40: Incremental Rate Changes Through 12/31/2016
Incremental Rate Changes Through 12/31/2016 Commercial Auto Liability & Physical Damage Source: ISO MarketWatch – released 3/27/2017 MWS Series 40 © 2017 Insurance Services Office, Inc. All rights reserved.
Slide 41: Questions and Feedback
Questions and Feedback • Contact – John Buchanan – 201-469-2335 John.Buchanan@verisk.com – Marni Wasserman – 201-469-2276 Marni.Wasserman@verisk.com http://www.verisk.com/iso/excess-reinsurance.html • Send feedback to – mondaywebseminars@verisk.com • Visit www.verisk.com/mws for future events MWS Se
Slide 42: No part of this presentation may be copied or redistributed without the prior written
No part of this presentation may be copied or redistributed without the prior written consent of Insurance Services Office, Inc. This material was used exclusively as an exhibit to an oral presentation. It may not be, nor should it be relied upon as reflecting, a complete record of the discussion. ©
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