review of claims trends for liability insuranceclaims – aggregated claims reported and finalised...
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Review of Claims Trends for Liability Insurance in Australia
Maggie Liu, Kundan Misra, Clement Peng
© Australian Prudential Regulation Authority
This presentation has been prepared for the Actuaries Institute 2014 General Insurance Seminar. The Institute Council wishes it to be understood that opinions put forward herein are not necessarily those of the Institute and the Council is not
responsible for those opinions.
Insight into the NCPD
Overview • Current NCPD Publications • What’s new in this report • Some observations
– Exposure – Claims mix – Claim frequency – Average claim size – Claim size distribution
• Focus on breakdown by general nature of loss and by industry divisions
What’s currently being published • Policy
– Aggregated GWP, number of risks – In-force policies from 2003
• Claims – Aggregated claims reported and finalised triangles – Aggregated claims costs triangles – Open/Finalised claims from 2003 (include exposure from early
years) • Limited segmentation to protect the confidentiality of the triangulated
data – No breakdown by general nature of loss – No breakdown by claim size (large vs. non-large)
What’s New in this Report • Number of claims (reported and calculated IBNR)
– By general nature of loss; And – Jurisdiction or industry division
• Number and inflated costs of finalised claims – By general nature of loss; And – Jurisdiction or industry division or cause of loss or claim
size • Claim size distribution
– Large (inflated costs > $500K) vs. non-large – Fitted distribution
Exposure
Exposure and Year on Year Growth – National
• 25% total growth between 2005 and 2013
• 2% total growth between 2010 and 2013
* Exposure measured as number of risks written
Exposure Mix by Industry Division
Largest Industry Exposures as at 2013: • Property and
Business Services (28%)
• Construction (18%)
• Retail (14%)
* Exposure measured as number of risks written
Claims Mixture
Claims Mixture by General Nature of Loss
By number, as at 2013 • 65% are Property
Damage
• 30% are Bodily Injury
• Reduction for Bodily Injury from 2005 to 2007
* Number of claims calculated using Chain Ladder method
Claims Mixture by General Nature of Loss
By cost, as at 2013 • 57% are Bodily
Injury
• 31% are Property Damage
• Reduction for Bodily Injury from 2005 to 2007
* Finalised claims, inflated costs <=$500k
Proportion of Bodily Injury Claims by Number for Industry Division
Accommodation, Café and Restaurants • 60% are Bodily
Injury claims
Construction • 10% are Bodily
Injury claims
* Number of claims calculated using Chain Ladder method
Claim Frequency
Claim Frequency
Claim Frequency
* Frequency based on number of risks written
Claim Frequency – BI/PD/Other
* Frequency based on number of risks written
BI • Downward trend PD • Increase between
2005 and 2009 and decrease after 2009
Claim Frequency – PD, by Industry Division
* Frequency based on number of risks written
Property and Business Services • Stable Construction • 25% increase from
2005 to 2009 • Improving after
2009
Retail • Decreasing until
2010
Claim Frequency – BI, by Industry Division
* Frequency based on number of risks written
Largest industries • Frequency is decreasing
Accommodation, Café and Restaurant • Higher reported claims
compared to other years at the same development period. Many have been finalised as nil-claims
Manufacturing • Higher than usual
reported nil claims in 2011 – 2012; and
• Deterioration in experience
Average Claim Size
Finalised Claims Costs and Average Claim Size – Non-large
* Finalised claims, inflated costs <=$500k
• ACS dropped by 13% from 2005 to 2006
• Upward trend since 2009
Average Claim Size by General Nature of Loss
• Increase in ACS for both BI and PD
• Increase for Other between 2006 and 2008 mainly driven by BI + Financial losses claims.
* Finalised claims, inflated costs <=$500k
Large Claims
Proportion of Large Claims by Cost – BI/PD/Other
• Large claims contribute to about 30% of the total claims costs
• Similar proportions by cost for BI and PD, Slightly higher for Other
* Finalised claims, large defined as inflated costs > $500k
Proportion of Large Claims by Number – BI/PD/Other
• Increase between 2007 and 2008 for BI
* Finalised claims, large defined as inflated costs > $500k
Claim Size Distribution
Claim Size Distribution – Non-large
* Finalised claims, inflated cost <=$500k
• 33% of the claims cost no more than $100
• 72% of the claims cost no more than $5K
• 99% of the claims cost less than $500K
Claim Size Distribution – Large • 1% of the
claims cost more than $500K
• 0.08% of the claims cost more than $2M
• 0.05% of the claims cost more than $2M if exclude claims from older AYs
* Finalised claims, inflated cost >$500k
