MASBO Presentation.pptx (Read-Only)...5/13/15 2 12/01/09 - 9pm 4 eSlide – P6466 – The Financial...

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Current Liability Trends And Why Are Concussions A Trend?

Jill McQuellon Senior Underwriter May 13, 2015

Iden%fying Trends for Insurers and Reinsurers

2 MASBO 5/14/2015 Presentation Proprietary and Confidential. © Genesis Management and Insurance Services Corporation

Trends

•  Economic (how are we doing?) •  Catastrophe Claims •  Investment Environment •  Underwri%ng “Smarter”

MASBO 5/14/2015 Presentation Proprietary and Confidential. © Genesis Management and Insurance Services Corporation 3

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12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C 4

-5%

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71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Net Premium Growth: Annual Change, 1971—2014F

(Percent) 1975-78 1984-87 2000-03

Shaded areas denote “hard market” periods Sources: A.M. Best (historical and forecast), ISO, Insurance Information Institute.

Net Written Premiums Fell 0.7% in 2007 (First Decline Since 1943)

by 2.0% in 2008, and 4.2% in 2009, the First 3-Year Decline

Since 1930-33.

2014F: 4.0% 2013: 4.6%

2012: +4.3%

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US Real GDP Growth*

* Estimates/Forecasts from Blue Chip Economic Indicators. Source: US Department of Commerce, Blue Economic Indicators 10/14; Insurance Information Institute.

2.7%

0.5%

3.6%

3.0%

1.7%

-1.8%

1.3%

-3.7%

-5.3%

-0.3%

1.4%

5.0%

2.3%

2.2% 2.6%

2.4%

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2.5%

1.3%

4.1%

2.0%

1.3%3.1%

2.7%

1.8%

4.5%

3.5%

-2.1%

4.6%

3.5%

3.0%

2.9%

2.9%

2.9%

2.9%

0.4%

-8.9%

4.1%

1.1% 1.8% 2.5% 3.6%

3.1%

-9%

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Demand for Insurance Should Increase in 2014/15 as GDP Growth Accelerates Modestly and Gradually Benefits the Economy Broadly

Real GDP Growth (%)

Recession began in Dec. 2007. Economic toll of credit crunch, housing slump, labor market contraction

was severe

The Q4:2008 decline was the steepest since the Q1:1982 drop of 6.8%

Q1 2014 GDP data were hit hard by this year’s “Polar Vortex”

and harsh winter

State-‐by-‐State Leading Indicators through 2014 Q4

6 MASBO 5/14/2015 Presentation Proprietary and Confidential. © Genesis Management and Insurance Services Corporation

The economic outlook for most of the US is generally

positive, though flat-to-negative for

4 states

Sources: Federal Reserve Bank of Philadelphia at http://www.philadelphiafed.org/index.cfm ;Insurance Information Institute.

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75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

Profitability Peaks & Troughs in the P/C Insurance Industry 1975 – 2014:H1*

*Profitability = P/C insurer ROEs. 2011-14 figures are estimates based on ROAS data. Note: Data for 2008-2014 exclude mortgage and financial guaranty insurers. Source: Insurance Information Institute; NAIC, ISO, A.M. Best.

1977:19.0% 1987:17.3%

1997:11.6% 2006:12.7%

1984: 1.8% 1992: 4.5% 2001: -1.2%

10 Years

10 Years 9 Years

History suggests next ROE peak will be in 2016-2017

ROE

1975: 2.4%

2013 10.4%

2014:H1 7.7%


ROE: Property/Casualty Insurance by Major Event, 1987–2014:H1

* Excludes Mortgage & Financial Guarantee in 2008 – 2014. 2014 figure is through H1:2014. Sources: ISO, Fortune; Insurance Information Institute.

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87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14*

P/C Profitability Is Both by Cyclicality and Ordinary Volatility

Hugo

Andrew

Northridge

Lowest CAT Losses in 15 Years

Sept. 11

Katrina, Rita, Wilma

4 Hurricanes

Financial Crisis*

(Percent)

Record Tornado Losses

Sandy

Low CATs

Property/Casualty Insurance Industry Investment Income: 2000–20141

$38.9$37.1 $36.7

$38.7

$54.6

$51.2

$47.1 $47.6$49.2

$48.0 $47.4$45.9

$39.6

$49.5$52.3

$30

$40

$50

$60

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14*

Due to persistently low interest rates, investment income fell in 2012 and in 2013

and is falling again in 2014.

1 Investment gains consist primarily of interest and stock dividends. *2014 figure is estimated based on annualized H1 data. Sources: ISO; Insurance Information Institute.

($ Billions) Investment earnings are still below their 2007 pre-crisis peak

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A 100 Combined Ra%o Isn’t What It Once Was: Investment Impact on ROEs

Combined Ratio / ROE

* 2008 -2014 figures are return on average surplus and exclude mortgage and financial guaranty insurers. 2014:H1 combined ratio including M&FG insurers is 98.9; 2013 = 96.1; 2012 =103.2, 2011 = 108.1, ROAS = 3.5%.

Source: Insurance Information Institute from A.M. Best and ISO Verisk Analytics data.

97.5100.6 100.1 100.8

92.7

101.299.5

101.0

96.799.0

102.4

106.5

95.7

14.3%15.9%

12.7%10.9%

7.4% 7.9%

4.7%6.2%

7.7%9.6%8.8%

4.3%

9.8%

80

85

90

95

100

105

110

1978 1979 2003 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014:H10%

3%

6%

9%

12%

15%

18%

Combined Ratio ROE*

Combined Ratios Must Be Lower in Today’s Depressed Investment Environment to Generate Risk Appropriate ROEs

A combined ratio of about 100 generates an ROE of ~7.0% in 2012/13, ~7.5% ROE in 2009/10,

10% in 2005 and 16% in 1979

Lower CATs helped ROEs

in 2013

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-1.8%

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-8%-7%-6%-5%-4%-3%-2%-1%0%

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al Lin

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s Auto

Pers Prop

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ial

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as

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/Surety

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WC Reinsu

rance

**

Lower Investment Earnings Place a Greater Burden on Underwriting and Pricing Discipline

*Based on 2008 Invested Assets and Earned Premiums **US domestic reinsurance only Source: A.M. Best; Insurance Information Institute.

Reduction in Combined Ratio Necessary to Offset 1% Decline in Investment Yield to Maintain Constant ROE, by Line*

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49%

37%32% 30%

25%

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PersonalAuto

Home Comm. Auto Comm.Property

BusinessOwners

WorkersComp

GL

Percentage of Carriers Using Predic%ve Analy%cs by Major P/C Line, 2013

Predictive analytics is more like to be used in

personal lines, but commercial lines use

is growing

Source: ISO/Earnix Survey, September 2013; Insurance Information Institute.

82% of insurers report using predicative analytics in at least one

line. 18% do not use it all.

Benefits Cited Drive Profitability: 85%

Reduce Risk: 55% Grow Revenue: 52%

Improve Op. Efficiency: 39%

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Uses of Predic%ve Analy%cs by Func%on

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Pricing and Underwriting are the leading uses for

predictive analytics

Why Are Concussions A Trend?


Evolu%on of Science on Sports-‐Related Brain Injury

•  1928 – Pathologist describes clinical abnormali%es found in nearly 50 percent of boxers

•  1952 –  the Journal of the American Medical Associa%on published study of

encephalopathic changes in professional boxers –  New England Journal of Medicine ar%cle recommends football players re%re

from the game permanently aaer suffering three concussions.

•  1967 – Journal of American Medicine in Sports recommends that any concussive event with transitory loss of consciousness requires removal of football player from play and monitoring


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Evolu%on of Science on Sports-‐Related Brain Injury

•  1991 -‐ Several leagues and organiza%ons develop return-‐to-‐play guidelines or adopt criteria to protect players suspected of having sustained concussions

•  2000 – Study of 1,090 former NFL players documen%ng occurrence of concussions (60%) and certain poten%al long-‐term side effects

•  2005-‐2007 – UNC Center for Study of Re%red Athletes published survey-‐based papers and found strong correla%on between depression, demen%a and other cogni%ve impairment among NFL players and number of concussions received.


State Concussion Laws States with Concussion Statutes (and enacted date) •  Arizona – April 2011 •  Colorado – March 2011 •  Connec%cut – May 2010 •  Idaho – April 2010 •  Iowa – April 2011 •  Massachusehs – July 2010 •  New Jersey – December 2010 •  New Mexico – March 2010 •  North Dakota – April 2011 •  Oklahoma – May 2010 •  Oregon – June 2009 •  Rhode Island – June 2010 •  South Dakota – March 2011 •  Texas – April 2011 •  Utah – March 2011 •  Virginia – April 2010 •  Washington – July 2009


What Injuries Are We Concerned With?

•  Trauma%c Brain Injury (“TBI”) •  Repe%%ve Stress Injuries (Second Impact Syndrome) •  Chronic Trauma%c Encephalopathy (“CTE”)

Defini%on, Please?


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Trauma%c Brain Injury

The Center for Disease Control describes a TBI as follows: …a bump, blow or jolt to the head or a penetra%ng head injury that disrupts the normal func%on of the brain. Not all blows or jolts to the head result in a TBI. The severity of a TBI may range from “mild,” i.e., a brief change in mental status or consciousness to “severe,” i.e., an extended period of unconsciousness or amnesia aaer the injury. The majority of TBIs that occur each year are concussions or other forms of mild TBI. * Source: “Trauma%c Brain Injuries,” hhp://www.cdc.gov/Trauma%cBraininjury/index.html.


Second Impact Syndrome

•  Iden%fied in 1973 •  This occurs when an athlete returns to play too soon aaer

suffering an ini%al concussion and suffers another one, i.e. within days or weeks of the ini%al concussion.

•  What happens: the prior concussion impairs the brain’s ability to self-‐regulate blood flow and the second hit causes rapid brain swelling.

•  This has a high fatality rate among young athletes


Chronic Trauma%c Encephalopathy

•  Results from the cumula%ve effect of repeated concussions. •  Leads to long-‐term abnormali%es, such as decreased cogni%ve

func%on. •  Also known as “demen%a puglis%ca” because it was first

no%ced in brains of young career boxers. •  Symptoms: loss of ahen%on and concentra%on, memory loss,

confusion, depression, impulse control, headaches, dizziness. •  Can only be diagnosed through autopsy.


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CTE…

•  Found in autopsied brains of over 20 former NFL players and at least one college player. •  Owen Thomas, a Penn football player hanged himself aaer suffering a

sudden and uncharacteris%c emo%onal collapse. To the surprise of many, his brain showed signs of early stages of CTE.

•  Found in autopsied brains of several former NHL players.


Awareness •  NFL and NHL Concussion Lawsuits •  FIFA and U.S. Soccer Lawsuits •  NCAA Lawsuit •  IHSA Concussion Lawsuit


Awareness League of Denial: The NFL’s Concussion Crisis

•  Book and subsequent documentary film produced by Frontline and broadcast on PBS •  Focuses on specific former NFL and other professional athletes sport-‐related brain injuries

and the pathologists that examined their brains

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How Does This Translate Into Youth Ac%vi%es?


Know Where Risks Exist

Top Rated Dangerous Sports

Volleyball Baseball Water Polo Pole Vault Skateboarding Wrestling Soccer Lacrosse Hockey Football Cheerleading and Gymnastics


Know Where Risks Exist

Sometimes Overlooked Areas

Gym Classes, Playgrounds,

Classroom Activities, School Plays

+ Intramurals / Club Sports


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Youth Athle%cs -‐ Sta%s%cs

•  More than 3.5 million kids under age 14 receive medical treatment for sports-‐related injuries every year.

•  Typically, the rate and severity of injury increases with a child’s age.

•  According to the CDC, more than ½ of all sports injuries in kids are preventable

*source: www.stopsportsinjuries.org


More Numbers

•  By age 13, 70% of kids stop playing youth sports. The top three reasons: •  Adults •  Coaches •  Parents *Source: www.stopsportsinjuries.org, ci%ng Safe Kids USA Campaign Website, 2009.


Managing the Concussion Risk…

•  Baseline Tes%ng •  Know Your State Law •  Establish a Protocol •  Training in Symptom Recogni%on

–  Coaches, Players, Parents, and Teachers •  Personal Responsibility & Knowledge of the Risks •  Be Aware of the Current Science and Recommenda%ons

Regarding Protec%ve Headgear •  If You Can’t Do It In a Reasonably Safe Manner, Don’t Do It!


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Baseline Tes%ng

•  One of the most effec%ve means to be prepared for a poten%al TBI is to conduct preseason baseline tes%ng (ideally prior to the first prac%ce)

•  Baseline tes%ng measures cogni%ve func%on (including learning and memory skills,

the ability to pay ahen%on or concentrate and how quickly he or she thinks and solves problems) under normal condi%ons. If an athlete who has been baseline tested suffers a TBI, trea%ng physicians are able to compare the post-‐injury mental func%on with the pre-‐injury func%on, in order to determine whether there has been any loss of cogni%ve func%on or ability.

•  The higher the level of compe%%on, the more important it is to perform baseline tes%ng of athletes involved in sports where there is a risk of TBI.

MASBO 5/14/2015 Presentation Proprietary and Confidential. © Genesis Management and Insurance Services Corporation

Know The Law States with Concussion Statutes (and enacted date) •  Arizona – April 2011 •  Colorado – March 2011 •  Connec%cut – May 2010 •  Idaho – April 2010 •  Iowa – April 2011 •  Massachusehs – July 2010 •  New Jersey – December 2010 •  New Mexico – March 2010 •  North Dakota – April 2011 •  Oklahoma – May 2010 •  Oregon – June 2009 •  Rhode Island – June 2010 •  South Dakota – March 2011 •  Texas – April 2011 •  Utah – March 2011 •  Virginia – April 2010 •  Washington – July 2009


Establish a Protocol •  Every school and athle%c program should have a protocol in place if a head injury is suspected.

•  For example, an athlete displaying any signs of concussion or brain injury, no maher how seemingly mild, should be required to sit out from play immediately, and should not be permihed to return to play without a doctor’s permission.

•  Complies with state law. •  There is tremendous risk to both the athlete and the team/school/organiza%on in allowing an athlete to

return to the field of play too soon following a blow to the head. •  The decision to allow a player to return to ac7on is perhaps the most significant decision made as it

relates to the health of a player. It should never be taken lightly, and protocols must be in place for the organized and reasoned handling of this decision.


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Training in Symptom Recogni%on

•  All coaches, trainers, and athle%c personnel should be trained in how to recognize signs of concussions and other brain injuries

•  Teachers should be trained in the iden%fica%on of possible head injuries

and a protocol established for a teacher who suspects a possible head injury. This acts as a check and balance on poten%ally overly aggressive coaches and/or parents

•  Parents and student athletes need to know the signs of head trauma. Schools should consider holding pre-‐season mee%ngs with athletes and their parents to provide informa%on regarding head injuries and the detec%on of them as well as the risks of other injuries that accompany athle%c par%cipa%on


Stay Current

•  Spor%ng programs should always stay current on the standards, developments and recommenda%ons of equipment/gear used for their respec%ve sport

•  The Na%onal Athle%c Equipment Recondi%oners Associa%on (“NAERA”)

cer%fies equipment for high schools such as face guards and helmets


What Are Underwriters Looking For?

•  Existence of wrihen concussion management protocol –  Preseason baseline assessment and educa%on –  On-‐field sideline screening tools/checklists –  Immediate removal of player with any symptoms

•  Availability of properly trained personnel at prac%ces and games

•  Return to play guidelines –  No return to play same day as any diagnosed concussion –  No return to play un%l player is completely asymptoma%c when off medica%on –  Stepwise return to play strategies


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What Are Underwriters Looking For?

•  Measures to minimize concussion risk –  Limits on contact in prac%ce and/or frequencies of prac%ces with contact –  Rule changes that facilitate concussion assessment –  Repor%ng requirements and collec%on of data (the frequency of concussions) –  Periodic training or cer%fica%on requirements

•  Underwri%ng Approaches –  Treat like other occupa%onal disease –  Athle%c par%cipant exclusions or more narrowly tailored brain injury-‐related exclusion –  Sub-‐limits or higher reten%ons / deduc%bles –  Require specific applica%ons


Ques%ons?

Jill McQuellon Senior Underwriter | Public En%ty Division Genesis -‐ A Berkshire Hathaway Company 1 North Wacker Drive Suite 1750, Chicago, IL 60606 Direct 312-‐207-‐5331 | Cell 312-‐519-‐3524 hhp://www.genesisinsurance.com

Presentation for States 10/11/2013 Proprietary and Confidential. © Genesis Management and Insurance Services Corporation 38

MASBO Presentation.pptx (Read-Only)...5/13/15 2 12/01/09 - 9pm 4 eSlide – P6466 – The Financial...

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