Managing Cost of Risk

Transcription

1 Managing Cost of Risk Presented by: Vikas Shah of DMC Insurance 10/23/2017 1

2 DISCLAIMER: The views expressed in this presentation are those of the presenter and do not necessarily reflect the views of his employer or any industry group. This presentation is not meant to suggest a definitive action plan for any individual circumstance. 2

3 State of the Truck Insurance Market 3

4 75% Initial Commercial Auto Insurance Loss Ratio by Year 70% 69% 65% 65% 66% 66% 66% 65% 66% 62% 62% 63% 60% 55%

5 75% Current Commercial Auto Insurance Loss Ratio by Year 70% 65% 61% 60% 60% 60% Initial Current 55%

6 75% Current Commercial Auto Insurance Loss Ratio by Year 73% 73% 73% 72% 70% 70% 69% 68% 65% 61% 60% 60% 60% Initial Current 55%

7 75% Current Commercial Auto Insurance Loss Ratio* (uncertain) by Year 73% 73% 73% 72% 70% 70% 69% 68% 65% 60% 60% 61% 60% Key Questions Are truckers safer YES! Is the motoring public safer I WISH! Frequency: did claims go up or down Severity: did cost per claim go up or down 55% Initial Current

8 85% Forecast Commercial Auto Insurance Loss Ratio* (uncertain) by Year 80% 75% 73% 73% 73% 72% 70% 70% 69% 65% 60% 60% 61% 60% 68% Key Questions Do we have to charge more everywhere NO Can you prove you re safer/cheaper to insure YES Initial Current 55%

9 The Risk Transfer Component (Insurance Premiums) 9

10 Three Steps to Get to Your Rate (Liability Example) Exposure Rate Experience Rate Underwriter Rate 10

11 Exposure Rate (Sample Industry Rating) The rate charged absent individual experience Territory Territory Origin/Destination/Stops Terminals Where miles are driven (IFTA/telematics) 11

12 Exposure Rate (Sample Industry Rating) The rate charged absent individual experience Territory Driver Driver(s) Age Years of Experience Tenure MVRs Within Guidelines 12

13 Exposure Rate (Sample Industry Rating) The rate charged absent individual experience Territory Driver CSA CSA* Unsafe Driving HOS Crash Rating *Sometimes adjusted, sometimes not 13

14 Exposure Rate (Sample Industry Rating) The rate charged absent individual experience Territory Driver CSA Operations Operations Years in Business Utilization MPG Drivers:Safety Employees vs Owner Operators Dedicated vs Irregular Miles 14

15 Exposure Rate (Sample Industry Rating) The rate charged absent individual experience Territory Driver CSA Operations Average Length of Haul (Radius) Equipment Commodity Credit/Financials 15

16 Experience Rate (Sample Industry Rating) Adjusting rate for loss history Frequency Severity Trend Credibility Losses/Mile (or Unit) Cost/Claim Changes over Time Predictive Power 16

17 Underwriter Rate (Sample Industry Rating) Discretionary adjustments to rate Recent investments in safety Material change in risk Growth Drivers Operations Equipment Management 17

18 The Loss Cost Component 18

19 Reducing Loss Costs People Process Technology 19

20 People Senior Management Operations Consider middle management/driver managers Drivers Others 20

21 People - Example Long-haul specialized operation Great process, technology, and vision Incentives, scorecards, cameras, culture Struggles were with speeding and accident rates Multiple channels of opportunity at the people level Senior management and attitude toward it Drivers and lease agreement 21

22 Processes & Protocols Driver Hiring & Training Documented and Updated Safety Manual Safety Dashboard Scorecard (Driver/Manager/Division/Terminal) Established Escalation Protocols Audit Results Incident Response Including Reporting to Insurer 22

23 Process - Example Regional truckload carrier Heavy investment in technology ELDs, scorecards, cameras +20% increase in cost of risk over two years Process was overwhelmed and not cohesive Significant resource spent on metric review weekly Better calls to action Better data governance 23

24 Technology (ELDs, ADAS, Cameras, Big Data Analytics) Undoubtedly, it should reduce loss costs Not all deployments are equal Partial implementations Not embedded into manuals & processes Operational disruptions Lack of buy-in Inaction could become a problem Strong correlations between telematics result->csa score & accidents 24

25 Getting Comfortable with Data Barclay s Report Level 4/5 autonomous = 100 GB/sec 5.8 zettabytes daily 1.4M mobile data centers 11K miles 25

26 Takeaways 26

27 Consider your ability to retain some risk Push your insurer to help you get better you re on the same side! Invest in safety at a people, process, & technology level Tie safety into operations for all forms of decision making Work with your broker & tell your story 27

28 Vikas Shah 28