uk asbestos working party
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UK asbestos working partyRob Brooks (Chair), Pauline Barthelemy and
Alex Twose
25 September 2019
IMPORTANT
ALL FIGURES PRESENTED IN THIS
WORKSHOP ARE DRAFT
FINAL ESTIMATES WILL BE PUBLISHED IN OUR
PAPER EARLY 2020
25 September 2019
UK asbestos working party
Mesothelioma deathsActual male GB deaths
325 September 2019
4
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
2,400
2,500
2,600
2,700
2,800
2,900
2009 2010 2011 2012 2013 2014 2015 2016 2017
Male
mesoth
elio
ma d
eath
s (
ages 2
0-8
9)
HSE/HSL (2009) Adjusted HSE Latency
Alternative Birth Cohort Birth Cohort Observed Deaths
Mesothelioma deaths (ages 20-89)Recap
25 September 2019
Mesothelioma deathsAge profile of observed and modelled GB male deaths
525 September 2019
331 330 315 253 250 232 207 202 155
292 314 286351 349 314 337 305 270
397 379 363 433 418 418 406403 446
404 407397 435 450 431 479
490 468
315 313 353 404 389 410 389 436 380
175 181 174 195 210 235 232 281 273
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%2009
2010
2011
2012
2013
2014
2015
2016
2017
Pro
po
rtio
n o
f d
ea
ths
Year of death
<65 65-69 70-74 75-79 80-84 85-89 90+
Mesothelioma deathsAverage age: HSE/HSL (2009) vs. experience
625 September 2019
(30%)
(20%)
(10%)
0%
10%
20%
30%
20-6
4
65-6
9
70-7
4
75-7
9
80-8
4
85-8
9
Pe
rce
nta
ge
devia
tion
: (
A-E
)/E
2009 2010 2011 2012 2013 2014 2015 2016 2017
Mesothelioma deaths
Heat map
725 September 2019
UK asbestos working party
Mesothelioma deathsHSE model
825 September 2019
• In July this year, HSE published an updated set of model parameters based on 2017
deaths data (published numbers go up to 2050 vs 2030 previously)
• An HSE paper is expected in late 2019/early 2020 once females model has been
finalised
• Key change is that HSE have adopted a cap on the increase in the exponent of time
from exposure – adopting the main modification made in the AWP 2009 model
• We have replicated the new HSE model and considered alternative scenarios
• Deaths age 20-89 still exhibit similar shape of future curve, rescaled for recent deaths
experience
• We will update our model based on this final parameterisation and publish along with a
full paper
925 September 2019
Mesothelioma deaths: HSEOverview
Mesothelioma deaths (ages 20-89)HSE published curve (July 2019)
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
Ma
le G
B m
eso
the
liom
a d
ea
ths (
ag
es 2
0-8
9)
Adjusted HSE (AWP 2009) Rescaled Adjusted HSE (AWP 2009)
Rescaled HSL 2009 HSE 2019
Observed deaths
1025 September 2019
Mesothelioma deaths: HSE
Bridge from 2009 to latest model
11
Impact of change in model
structure
Exposure profile shift
25 September 2019
Mesothelioma deaths: HSE
Bridge from 2009 to latest model – exposure profile
1225 September 2019
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HSL (2009) AWP1 (2009) HSE July 2019 (20 - 89)
Mesothelioma deaths: HSE
HSE model fit by age band (1)
1325 September 2019
0
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6
Num
ber
of
death
s
Year of death
HSE July 2019
20-49 observed 20-49 model fit
50-59 observed 50-59 model fit
0
50
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196
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Num
ber
of
death
s
Year of death
HSE July 2019
60-64 observed 60-64 model fit 65-69 observed
65-69 model fit 70-74 observed 70-74 model fit
Mesothelioma deaths: HSE
HSE model fit by age band (2)
1425 September 2019
0
100
200
300
400
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600
196
81
97
01
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21
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01
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01
6
Num
ber
of
death
s
Year of death
HSE July 2019
75-79 observed 75-79 model fit 80-84 observed
80-84 model fit 85-89 observed 85-89 model fit
90-94 observed 90-94 model fit
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Num
ber
of
death
s
Year of death
HSE/HSL 2009
75-79 observed 75-79 model fit
80-84 observed 80-84 model fit
85-89 observed 85-89 model fit
90-94 observed 90-94 model fit
Mesothelioma deaths: HSE
Exposure adjustments
1525 September 2019
• Individual practitioners will have the best view of exposure relevant to the
modelled claims
• We have considered example adjustments to the tail of the exposure curve in
the context of the goodness of fit to market claims experience
• Practitioners should determine a suitable end date for the projection based on
the exposures modelled
– Example adjustments shown here are based on a reduction to near zero non-background
deaths in 2060 (HSE 2019 model: 2050 GB deaths = 327)
• We expect to extend the curve in the updated AWP model to
emphasise this point
Mesothelioma deaths: HSE
Exposure sensitivity (1)
• AWP 1 – recreate post 1978 exposure adjustment from 2009 paper. Less
steep exposure decay than updated HSE profile
• AWP 2 and 3 aim to adjust onto deaths driven by insurance exposure. Both
have around 0 exposure by 2018 and 2060 deaths approaching background
deaths only figure
– For reference, background deaths in 2060 = 35
• AWP 2 – 20% exposure decay per year post 1979
2060 modelled deaths including background = 39
• AWP 3 – 30% exposure decay per year post 1989
2060 modelled deaths including background = 40
1625 September 2019
Mesothelioma deaths: HSE
Exposure sensitivity (2)
1725 September 2019
197
8
197
9
198
0
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202
0
HSE July 2019 (20 - 89) AWP 1 (2019) - adjust post 1978 exposure per 2009 paper
AWP 2 (2019) - 20% decay post 1979 AWP 3 (2019) - 30% decay post 1989
Mesothelioma deaths: HSE
Exposure sensitivity (3)
1825 September 2019
Comparison of male aged 20 - 89 death projections (includes background) AWP1 (2009)
HSE July 2019 (20 - 89)
AWP 1 (2019) -adjust post 1978
exposure per 2009 paper
AWP 2 (2019) -20% decay post
1979
AWP 3 (2019) -30% decay post
1989
1968 - 2060 deaths 82,529 86,570 88,481 79,317 81,500
2020 - 2050 deaths 28,181 28,666 29,882 23,240 25,262
2020 - 2060 deaths 28,181 30,899 32,786 23,739 25,859
(2020 - 2050) / 2019 multiplier 15.1 14.8 15.3 12.3 13.1
(2020 - 2060) / 2019 multiplier 15.1 15.9 16.8 12.6 13.4
% change in 2019+ multiplier from AWP1 (2009):
2020 - 2050 -2% 1% -19% -13%
2020 - 2060 5% 11% -17% -11%
Average squared difference projected versus observed deaths (age 20 - 89 and 1968 - 2017 period)
3,774 1,172 1,148 1,411 1,223
-
500
1,000
1,500
2,000
Observed deaths 20 - 89 HSE July 2019 (20 - 89)
AWP 1 (2019) - adjust post 1978 exposure per 2009 paper AWP 2 (2019) - 20% decay post 1979
AWP 3 (2019) - 30% decay post 1989 Background
1,650
1,700
1,750
1,800
1,850
1,900
1,950
2,000
2,050
2,100
2,150
Mesothelioma deaths: HSE
Age 90+ sensitivity (1)• Extension of the model to project deaths age 90+ is a key area
of uncertainty
• We have discussed with the HSE and compared a number of
approaches*:
a. Linear extrapolation of deaths ratio age 90+ to deaths age 20-89
(HSE approach) Y = mX + C. HSE uplift on numbers of deaths
increases from 5% in 2018 linearly to 15% in 2050.
b. Exponential fit of the form Y = Exp [ -1 / ( mX + C ) ]
c. Exponential fit of the form Y = C.Exp (bX)
d. Extension of HSE model to fit deaths up to age 94 (based on May
2019 draft parameter set)*All AWP curves have been fit on 2013 – 2017 data points, Y = uplift
• We present a range of sensitivities and consider the impact on
the multiplier of future deaths over 2019 calendar year deaths
• Propensity to claim at these older ages is another key issue
for the market estimate
1925 September 2019
1,250
1,350
1,450
1,550
1,650
1,750
1,850
1,950
2,050
2,150
2,250
200
0
200
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201
6
Male
mesoth
elio
ma d
eath
s
HSE July 2019 (20 - 89)
Observed deaths (Ages 20-89)
Observed deaths (Ages 20-95)
Mesothelioma deaths: HSE
Age 90+ sensitivity (2)
20
0%
2%
4%
6%
8%
10%
12%
Actual AWP - Linear fit
AWP - Exponential decay offset HSE fit
AWP - Exponential fit HSE - May 2019 model 20-94
Uplift to all ages including 90+
HSE July 2019 20 - 89
forecast HSE uplift AWP - Linear fit
AWP - Exponential decay
offset AWP - Exponential fit
HSE - May 2019 model 20-
94
2020 - 2050 deaths 28,666 31,198 31,079 31,296 32,884 32,721
2020 - 2060 deaths 30,899 33,767 33,665 33,947 36,879 35,463
(2020 - 2050) / 2019
multiplier 14.8 15.3 15.2 15.3 16.1 16.1
(2020 - 2060) / 2019
multiplier 15.9 16.5 16.5 16.6 18.0 17.4
HSE uplift(2020 - 2050) / 2019
multiplier0% 3% 3% 4% 9% 9%
(2020 - 2060) / 2019
multiplier0% 4% 4% 4% 13% 9%
0
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Num
ber
of
death
s
Year of death
20-94 HSE model ext 20-89 HSE July 2019 20-94 HSE linear uplift
20-94 AWP linear uplift 20-94 AWP exponential decay offset 20-94 AWP exponential fit
Observed deaths 20-89 Observed deaths 20-95
25 September 2019
Mesothelioma deaths: HSE
Population sensitivity
• HSE projection is based on ONS 2016 population projection and mid-2016
actuals (actuals used up to 2016 year)
• 2009 model was based on ONS 2006 projection and 2006 actuals
• AWP 2019 projection uses consistent assumptions with HSE 2019
• As sensitivities, we have also reviewed the impact of using actual figures up
to 2018 (negligible impact) and the ONS projection with zero net migration
(circa 1% reduction in deaths from 2020)
• ONS will release updated population projection on 21 October 2019 – to be
consider in final published model
2125 September 2019
UK asbestos working party
Mesothelioma deathsAge-Birth GLM model
2225 September 2019
Mesothelioma deaths: Age-Birth GLMOverview
• Updated parameters for 2017 deaths
• Limited impact of re-parameterisation
• Alternative scenarios based parameters based on uncertainty at older ages
(85+) and birth cohorts (1960 and onwards)
– Scenario 1: Deaths at ages 85+ and birth cohorts post 1950 will be lower than currently
reported
– Scenario 3: Deaths at ages 85+ and birth cohorts post 1950 will be higher than currently
reported
• A potential range of outcomes but by no means provide an upper or lower
bound
– Practitioners may wish to consider or use the alternative parameterisations
2325 September 2019
Mesothelioma deaths: Age-Birth GLMParameters
Age parameters
(6)
(5)
(4)
(3)
(2)
(1)
-
1
2
25 30 35 40 45 50 55 60 65 70 75 80 85 90 95
Pure data GLM scenario 1
GLM scenario 2 GLM scenario 3
Birth parameters
24
(1)
1
3
5
7
9
11
13
15
17
19
21
18
74
18
79
18
84
18
89
18
94
18
99
19
04
19
09
19
14
19
19
19
24
19
29
19
34
19
39
19
44
19
49
19
54
19
59
19
64
19
69
19
74
19
79
19
84
19
89
19
94
19
99
20
04
Pure data GLM scenario 1
GLM scenario 2 GLM scenario 3
25 September 2019
Mesothelioma deaths: Age-Birth GLMScenarios
25
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,5001995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
2051
2053
2055
2057
2059M
ale
GB
mesoth
elio
ma d
eath
s (
ages 2
5-9
5+
)
Observed deaths GLM scenario 1 GLM scenario 2 GLM scenario 3
25 September 2019
Mesothelioma deathsComparisons
26
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,5001995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
2031
2033
2035
2037
2039
2041
2043
2045
2047
2049
2051
2053
2055
2057
2059M
ale
GB
mesoth
elio
ma d
eath
s (
ages 2
5-8
9)
GLM scenario 2 HSE 2019 GLM (GIRO 2016)
Scenario 23 (AWP 2009) Observed deaths
25 September 2019
UK asbestos working party
Mesothelioma average cost
2725 September 2019
Mesothelioma average costOverview
Model based on 2008 detailed data
Key changes:
• General Damages (new guidelines and
reduced court inflation)
• Ogden multipliers and discount rate
• Proportion living at settlement from market
survey
• Settlement pattern
Using Ogden discount rate at -0.25%, but
showing scenarios at 2.5% and 0.5%
Model allows for a different Ogden discount
rates
Three cost scenarios by considering the
future inflation by each type
28
Inflation type Scenario A Scenario B Scenario C
RPI 1.5% 2.5% 3.5%
Wage 2.5% 4.0% 5.5%
Court 1.5% 3.5% 5.5%
Ogden uplift % 2.0% 4.0% 6.0%
Ogden uplift every 6 years 5 years 4 years
Implied p.a. inflation 2.2% 4.1% 6.0%
25 September 2019
Mesothelioma average costImpact on 2009 Scenario 23 (years 2019 to 2050)
29
£7.6bn
£8.1bn
£7.5bn
£7.0bn
£7.2bn
£7.4bn
£7.6bn
£7.8bn
£8.0bn
£8.2bn
Scenario 23(2009)
Individualages
CRUcorrection
7th Ogden(SY2011 &onwards)
Actual RPI &Court
inflation
Livingproportion to
63%(SY2017 &onwards)
Settlementpattern
Court = RPI+1%
(SY2018 &onwards)
4% increasein Ogden(every 5
years fromSY2020)
Ogdendiscount rate
changes
AdjustedScenario 23
(2009)
Insura
nce c
ost of
mesoth
elio
ma c
laim
s
25 September 2019
Mesothelioma average costFurther developments
Considering changes based on:
• qualitative views from claims handers; and
• quantitative analysis from CRU and survey data
– Increasing the payment pattern (also evidence by survey data)
– Changes to heads of damage by age
– Claims to claimant ratio consistency with propensity to make a claim
• Next steps comparing implied claims to claimant ratio and survey
average costs
3025 September 2019
UK asbestos working party
Mesothelioma claims to deathsPropensity to make a claim and claims per claimant
3125 September 2019
Mesothelioma claims to deathsCRU data – Background• The Compensation Recovery Unit (CRU) is informed of all asbestos-related claims giving rise to compensation, whether from the
insurance industry or the Government, and an insurer must notify CRU of a claim within 14 days, so should be minimal delay in
notification dates compared to insurance notification date
• The last full set of data received from the CRU (under a Freedom of Information (FOI) request) was for notification years 2007 to
2015, received in February 2016
• The FOI for 2016 and 2017 data have since been rejected based on the cost to produce the data, however, we managed
to get aggregated data for 2016 (partial), 2017 and 2018 after multiple data requests and attempt to contact the CRU. We
continue to send data requests.
• Anonymised Customer Number provided to enable us to “group multiple claims for each customer”, i.e. to produce a “claimant”
list rather than “claim” list. Where a claimant has more than one data field classification, we have used the following “priority”
order to map:
– IP’s Sex: Male, Female
– Liability Type: Employer, Public, Other, Clinical Negligence
– Type: Non-State, Local Authority, National Industry, NHS, Government Department
– Country: England, Scotland, Wales, Northern Ireland, Channel Islands, Isle of Man
– Claim Status: Live, Settled, Withdrawn
• Reduces 22,319 claims to 15,023 claimants, which the claim experts agree should represent all claimants
who bring a claim (although the claim data will be inconsistent)
3225 September 2019
Mesothelioma claims to deathsCRU data by notification year & HSE deaths
33
• Male Employer (ex Gov) claims
consistently around 1,330 to
1,420 for 2007-2015
• Female Employer (ex Gov)
claims consistently around 90
to 110 for 2007-2015
• Increase in Government claims
for 2014-2018 due to DMPS,
increase broadly consistent
with claim numbers announced
by DMPS
• HSE Deaths have been
decreasing (latest HSE 2017)
for male, but up for female –
The number is slightly down for
2017 but flat overall
No CRU split available for 2016, 2017 and 2018
2016 is pro-rated as data was only provided for April-December
-
500
1,000
1,500
2,000
2,500
3,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CRU Claimants & HSE deaths - Male & Female combined
"Non-State" Employer Loc Auth, Nat Ind Employer Gov Employer (inc NHS)
Public Other (inc Cln Neg) No. HSE deaths
DMPS applications CRU Claimants less DMPS
25 September 2019
Mesothelioma claims to deathsConflicting trends in deaths, claimants and claims
• Deaths have been decreasing
(latest HSE 2017) for male, but
up for female – The number is
slightly down for 2017 but flat
overall
• BUT notified claims have been
flat then reducing for 2015 to
2017 – then up for 2018
• Previous CRU data suggests
non-government employer
claimants has been flat
• Note that the claims are from
the data collection, so roughly
80% of the market
34
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2,750
3,000
3,250
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Deaths, Claimants and Claims - Male & Female Combined
Claims - Notified (2018 data collection) Claimants (CRU Emp ex Gov - Proj Non-Nil)
Claimants (CRU Emp ex Gov) Claimant (CRU All)
Deaths (HSE)
25 September 2019
Mesothelioma claims to deathsProportion live at notification
• Proportion of Live claimants from the data collection has
increased over time but looked to be stabilising until 2017
– Slightly up in 2018
• Additional background from claims experts
– Historically Scottish claims waited until after death to get higher claim for
multiple dependants, but legislation in 2012 and 2014 changed this
– Diagnosis is earlier, and also people living longer
– Anecdotally, it was felt that the length of time between diagnosis and
notification has shortened over the last five years but has plateaued
around 4-6 months for the last two years
– Potential of data being provided to help us investigate trends in length of
time between notification and death
– One view was that while the live proportion appears to have levelled off,
immunotherapy will give it another boost with people
claiming earlier to secure treatment rather than purely
to support dependents
35
25%
30%
35%
40%
45%
50%
55%
60%
65%
70%
75%
200
7
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
% Alive at Notification
2018 NY Data 2017 NY Data
2016 NY Data 2015 NY Data
25 September 2019
Mesothelioma claims to deathsMoving parts between deaths and claims
36
• Changing claim to claimant:– Claim manager view is that the number of cases with
multiple defendants is reducing in line with the UK exposure
profile, e.g. classic multiple defendant case is a lagger
– Could the number of insurance claims be reducing due to
market consolidation
– Ratio comparing non-nil claims compared
to CRU Employer (ex Government)
claimants pretty stable since 2011
• Notification earlier, more likely when still alive due to:– Diagnosis earlier
– Scotland legislation
– Immunotherapy (and other private medical treatments)
• Potential longer survival– Claimants living longer due to medical advances, not just due
to earlier diagnosis
• Lower propensity to claim from older ages– Propensity stable or slightly increasing for a particular age,
but aging population will reduce the aggregate propensity
5%
15%
25%
35%
45%
55%
65%
75%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Propensity to Claim (Employer ex Government ex Withdrawn)
Combined Male Female
Estimation only
1.0
1.5
2.0
2.5
3.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Implied Claim to Claimant Ratio
Non-Nil / Emp ex Gov (non-nil) Notified / CRU All
Notified / CRU (non-nil) Notified / Emp ex Gov (non-nil)
25 September 2019
Mesothelioma claims to deathsMoving parts underlying the trends
• Implications of these underlying changes:
– Where we previously assumed claim notifications were spread fairly evenly before and after date of death, there seems to be evidence
that the notification date is now (on average) earlier than deaths
– Will impact the propensity to claim assumed over recent years and projected going forward.
– Will also impact the claim to claimant assumption
• How do we plan to model propensity to claim going forward:
– Estimate the future live vs deceased proportion
– Estimate the delay between notification and death or death and notification as appropriate
– Combine to produce a matrix mapping notification year to death year (and visa-versa)
– Use this along with (updated) CRU claimant data (if we ever get it!) and HSE death data to get a better understanding of propensity to
claim when looking at consistent groups of people.
• How do we plan to model claim to claimant going forward:
– Combine the market survey data with the CRU claimant data (for Employer, Non-Government claimants only) to see what trends are
emerging
– Combine with qualitative data from the market to project going forward.
3725 September 2019
UK asbestos working party
Non-mesothelioma insurance cost
3825 September 2019
Non mesothelioma claimsOverview
• Not detailed models for claim numbers or costs
• Numbers judgemental, given epidemiological and non-epidemiological impacts
– 3 scenarios based on scaling Age-Birth GLM mesothelioma patterns:
– 1 scenario based on AWP 2009* number 2 curves
• Costs based on settled (reported and settlement year basis) and incurred,
recent year averages
• Projections include nils – historical trends on nil rates have been reasonably
stable
• Included pleural plaques for Scottish and Northern Irish exposures
39* AWP 2004 for pleural plaques with Scottish and Northern Irish exposures25 September 2019
UK asbestos working party
Legal and Other
4025 September 2019
Legal and Other
Equitas vs MMI
How should insurers allocate mesothelioma claims to reinsurance
contracts
• Court found that "spiking“ of mesothelioma claims settled under
employers' liability insurance policies should not extend to a reinsurance
context
• Insurers not entitled to present their reinsurance claims to any policy year
of their choice and must present the claims on a pro rate time of risk basis
• Court of Appeal granted MMI permission to appeal. Anticipated that the
case will be heard by the Supreme Court in the first half of
next year
25 September 2019 41
Legal and Other
Ogden and Immunotherapy
Ogden
• Lord Chancellor announced 15 July 2019 a change in the Ogden Discount rate which has moved
from -0.75% to -0.25%. This new rate effective in England and Wales as of 5 August 2019.
• This is in line with the discount rate used in Scotland of -0.25%, under the Damages (Investments
Returns and Periodical Payments) (Scotland) Act 2019.
• Left open the possibility of dual rates
• Statute requires that the discount rate be reviewed within 5 years
Immunotherapy
• For mesothelioma claims reported in 2018, 5% have requested immunotherapy treatment for the
sufferer
• Low settled proportion, 0.4% on average of those have settled with an agreed
settlement on immunotherapy treatment
25 September 2019 42
Summary and next steps
Summary
• Not a significant change, but an increase
in the insurance market estimates
• Uncertainty around when mesothelioma
claims peak and how they run-off
– HSE have adopted AWP capping of k
• Extending to 2060, but practitioners
should consider their own exposure
• Looking at impact of 90+ ages given
limited data at these ages
Next Steps
• Assess the model and adjust
parameters
• Finalise mesothelioma and non-
mesothelioma scenarios
• Models and spreadsheets on
website
• Paper outline results and key
sections from previous
papers
25 September 2019 43
25 September 2019 44
The views expressed in this presentation are those of invited contributors and not necessarily those of the IFoA. The IFoA do not endorse any of the views
stated, nor any claims or representations made in this presentation and accept no responsibility or liability to any person for loss or damage suffered as a
consequence of their placing reliance upon any view, claim or representation made in this presentation.
The information and expressions of opinion contained in this publication are not intended to be a comprehensive study, nor to provide actuarial advice or advice
of any nature and should not be treated as a substitute for specific advice concerning individual situations. On no account may any part of this presentation be
reproduced without the written permission of the IFoA.
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