1 / 17

Whose Line Is It Anyway? Boiler & Machinery

Whose Line Is It Anyway? Boiler & Machinery . Casualty Actuarial Society Seminar on Ratemaking The Tampa Marriott Waterside Tampa, Florida March 7-8, 2002 COM-24 Christine L. Steben, CPCU, ARe Travelers Property & Casualty. Discussion Highlights . 1. Product Overview

indra
Download Presentation

Whose Line Is It Anyway? Boiler & Machinery

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Whose Line Is It Anyway? Boiler & Machinery • Casualty Actuarial Society Seminar on Ratemaking • The Tampa Marriott Waterside • Tampa, Florida • March 7-8, 2002 • COM-24 • Christine L. Steben, CPCU,ARe • Travelers Property & Casualty

  2. Discussion Highlights • 1. Product Overview • 2. Distribution Systems • 3. Ratemaking Considerations • 4. Emerging Coverage Issues • 5. International vs Domestic Ratemaking

  3. Product Overview

  4. Market Evolution • Large Industrial Risks • Steam Boilers - used to heat buildings • Turbines - used to produce power • Manufacturing Risks • Extruders - make shapes out of plastic • Corrugating Machines - used to make boxes • Non-Manufacturing Risks • Air Conditioning Equipment - such as those found at retail stores • Refrigeration Equipment - such as those found at grocery stores

  5. Exposure Rating Base • M&E (Machinery and Equipment)Values • Schedule of Objects would be presented by Agent • Building & Contents Value • Schedule of Locations would be presented by Agent

  6. Coverage • Trigger: Accident to covered equipment • Property Damage - Covered Equipment • Business Interruption • Service Interruption • Perishable Goods • Hazardous Substances • Demolition and Increased Cost of Construction • Data Restoration • Expediting Expense

  7. Distribution Systems

  8. Customer Delivery • Agents (Direct) - Relationship with Customer • Expenses - Primary insurer produces paper • Losses - Primary insurer is first party • Premium Collection - Primary insurer receives payment • Reinsurance (Assumed) - Relationship with Primary Insurer • Expenses - Primary insurer produces paper • Losses - Primary insurer takes 1st notice, contacts reinsurer • Premium Collection - Primary insurer remits payment on borderaux

  9. Rating / Pricing By Distribution System • One By One • Manual Rating (ie Business directed through an Agent) • Program • Many locations of a similar classification / exposure (ie Hotel / Motel Program) • Portfolio • An entire book or segment of a book of business (ie CPP or BOP)

  10. Ratemaking Considerations

  11. Ratemaking Considerations • Jurisdictional Inspections - Impact on Expense Ratio • Varies by classification of business • Requirements vary by state • Loss Adjustment Expense - Impact on Loss Ratio • Varies by classification of business • Varies by state • Delay in remittance of premiums • Varies by distribution system • Loss development tail • Varies by distribution system

  12. Advances in Technologies (Trend) • Replacement Cost of Equipment Increases Comparatively • Medical Equipment (ie MRI) • Repair Cost of Equipment Increases • Level of expertise required may not be readily available • Increased Business Interruption Exposure • Impact on Web Service Provider ability to provide service (ie AOL) • Equipment May Become Obsolete • Cost to replace may be prohibitive

  13. Emerging Coverage Issues

  14. Emerging Coverage Issues • Toxic Mold • Caused by an accident to covered equipment • Example: A machine that controls atmospheric temperature and humidity fails • Terrorism (International and Domestic) • Availability of Reinsurance • Managing Spread of Risk • Example: A power plant that serves 100% of a population in FL

  15. International vs Domestic Ratemaking

  16. International vs Domestic • Cost of equipment will vary • Supply and demand of certain equipment • Cost of inspection will vary • Availability of qualified / responsive personnel • Existence of jurisdictional inspection requirements • Cost of loss adjustment will vary • Availability of qualified / responsive personnel • US Dollar Conversion • Value of a dollar at the time of loss

  17. Boiler & Machinery Ratemaking In Review • Coverage provided can be increased or decreased • Product delivery/distribution impacts Expenses, Losses and Premium • Unique characteristics of Boiler & Machinery impacts Expense Ratio, Loss Ratio and Trend (Premium and Loss) • Jurisdictional Inspection • Loss Adjustment Expense • Changes In Repair/Replacement Costs Over Time • Emerging coverage issues should be identified • International and Domestic exposures should be evaluated

More Related