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NCCI ELF’s Considerations for Reinsurers

Explore key considerations for reinsurers in NCCI analysis provided at the Swiss Re America seminar on WC reinsurance in 2005, including loss development, independent analysis, and more.

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NCCI ELF’s Considerations for Reinsurers

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  1. NCCI ELF’sConsiderations for Reinsurers Bob Giambo Swiss Re America Seminar on Reinsurance June 2005

  2. Introduction • Reinsurers need to keep in mind that the NCCI analysis: • is a detailed study of WC size-of-loss distribution; • but that reinsurance pricing is not necessarily the primary driver of the analysis; • the model assumptions and structure needs to be reexamined based on information available to each reinsurer and the business being reinsured. Bob Giambo - Swiss Re America WC ELF's Seminar on Reinsurance 2005

  3. Things to Consider:ELF’s by Class • Derive ELF’s by class rather than hazard group: • ELF’s by class for facultative business may be necessary; • Need to determine injury group weights by class with some kind of credibility procedure. Bob Giambo - Swiss Re America WC ELF's Seminar on Reinsurance 2005

  4. Things to Consider:Loss Development • Different loss development assumptions: • tail factor from last NCCI data point • does the implied excess loss development factor embedded in NCCI workfactor make sense? Bob Giambo - Swiss Re America WC ELF's Seminar on Reinsurance 2005

  5. Things to Consider:Development CV • What is the “correct” loss development CV? • can one test from individual claim development triangles? • how does it compare to CV implied in life-time payment claims? • what is sensitivity to inflation assumptions? • be aware of interaction between CV and excess loss development. Bob Giambo - Swiss Re America WC ELF's Seminar on Reinsurance 2005

  6. Things to Consider:Independent Analysis • Get special data runs from NCCI and perform independent analysis (Schedule Z data). Bob Giambo - Swiss Re America WC ELF's Seminar on Reinsurance 2005

  7. Things to Consider:Other • Alternative credibility procedure by state. • Alternative adjustment for per claimant to per occurrence coverage: • Consider separately models for “industrial catastrophes” • Rember ELF does not include cat load and has .003 load for losses between 10M and 50M. Bob Giambo - Swiss Re America WC ELF's Seminar on Reinsurance 2005

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