Over the past several years, legislation introducing a patient compensation system (PCS) has been proposed in several states. Proponents claim a PCS would eliminate the stigma associated with medical professional liability (MPL) claims for healthcare providers. Without the stigma, they believe physicians would not defend themselves as often, resulting in lower legal defense costs than the current tort system produces.
However, some do not agree that the stigma would be less under the PCS system. Additionally, several factors present under current PCS proposals indicate that there will be more reported and indemnified claims, leading to higher MPL costs. In this article, Milliman consultants Susan Forray and Eric Wunder discuss aspects of some states’ PCS proposals that MPL carriers and healthcare providers need to consider.
In most cases, the current reserving practice consists of using methods based on claim development triangles for point estimate projections and capital requirement calculations. Taking advantage of the information embedded in individual claims data is a promising alternative to address the need for more accurate models within the reserving practice. This white paper by Milliman’s Laurent Devineau, Fabrice Taillieu, and Alexandre Boumezoued examines the innovative opportunities offered by alternative individual reserving models and the main challenges with their implementation.
Increasingly, individuals are having their driving habits and living environments monitored electronically. A recent Insurance Journal article cited Milliman’s Sheri Scott discussing how exposure data tracking is shaping new underwriting practices for personal lines coverage like auto insurance.
Here’s an excerpt from the article:
Exposure tracking and the advent of autonomous vehicles are shifting personal auto insurance risk exposure from dependence on driver skills, estimated distances driven and garage location to the precise determination of vehicle locations, driving habits, driving distances and traffic conditions, all determined through the collection of trip data gathered in real time.
Yet even these underwriting considerations will soon be supplemented, if not supplanted, by the loss experience of automated vehicles and their manufacturers.
This transformation will not be without risks of its own, Scott said. In particular, she cited disruption of networked communications as a hazard, especially as vehicle occupants become dependent on automated control and less practiced at taking control of a vehicle.
“If some kind of communication goes down, there could be a very serious occurrence,” she said.
Part of working with Insurtech companies is understanding and accepting that actuaries are moving beyond their traditional roles. Insurtech companies aren’t asking us to come in and perform traditional actuarial work. There are no set formulas in the Insurtech space. Instead, actuaries must take a forward-thinking approach. We must learn how to use traditional tools in a new, creative way to produce better business solutions.
Milliman recently worked with Hippo Insurance, a revolutionary California-based startup providing home insurance for modern households. We helped Hippo understand how traditional insurance works, which has enabled them to fundamentally challenge the status quo using new systems, technology, and business practices.
Insurance contracts are often delivered through old fashioned processes and contain a great deal of outdated coverage and legalese. What Insurtech companies like Hippo are doing is completely modernizing the sales process, and the underlying coverage being purchased. They’re also helping policyholders understand how to better protect their property by installing cutting edge smart home devices that monitor and detect damage before it occurs.
Milliman enjoys working with these innovators, and is capable of helping traditional insurance companies bridge the gap, too. They can rely on us to be familiar with new technology-based approaches to produce modern products for customers.
The following video features Hippo’s leadership team and its modern approach to homeowners insurance.
This blog is part of the Pillar 3 Reporting series. For more blogs in this series click here.
Further Solvency and Financial Condition Reports (SFCRs) were published in the past week or so.
• The latest SFCRs include AIG Europe Ltd, Blackrock Life, Sun Life Financial and White Horse Insurance Ireland.
• The award for glossiest report to date must surely go AIG Europe, which has presented a streamlined and consistent SFCR. It is perhaps an example of an insurer treating the SFCR as potential marketing or investor information, rather than purely a regulatory reporting requirement.
• UK firms are including the Audit Opinion and Report within the SFCR as they are required by the Prudential Regulatory Authority (PRA). Some of the previous UK SFCRs discussed in this blog series didn’t include the audit opinion as their reporting date predated the audit requirements. However, we haven’t seen this practice in other countries, such as Ireland, where the supervisors do not require publication of the audit opinion.
Links to all SFCRs included in previous blog posts are shown in the table below.