Motor Claims A challenge for the industry. Dr. Nicola Rautmann / Stefan Speer, , Reinsurance EMEA

Transcription

1 Motor Claims A challenge for the industry Dr. Nicola Rautmann / Stefan Speer, , Reinsurance EMEA

2 Longevity of Claims Bodily Injuries Claims Heads 2

3 Loss of earnings Assistance Bodily Injury Claim Pain and Suffering 3

4 Inflation Reserving Yield 4

5 Bodily Injury Claims A key driver of Motor Insurance Results 5

6 Started in the late 1990s Swiss Re Benchmarking of Bodily Injury throughout Europe 2015: 16 EU countries covered 2017: extended to 19 countries Standardized comparable approach

7 Italy Past Present Future 7

8 Tetraplegia Claims Scenario - Italy Development from 1990 to: : +168% 2015: +116% 2010: +106% : +51% Loss of Earnings Assistance Pain & Suffering Remainder 8

9 Bodily Injury Landscape Observed developments in the recent years 9

10 The model approach Parameter: 30-year-old man wife without own income, 2 children (aged 2 and 5) average income from dependent employment defined injury: tetraplegic without artificial ventilation defined assistance level: 100% disabled, no return to work, highest level of assistance a hypothetical victim Tetraplegic 10

11 Recent survey & Response rate

12 Total claim costs in Europe as per 2010 Tetraplegia claims scenario, Disability Factor 100 % UK France Germany Austria Switzerland Belgium Finland Czech Republic Italy Spain Poland 0,6m Loss of earnings Assistance Pain and suffering remainder 12

13 Total claim costs in Europe as per 2012 Tetraplegia claims scenario, Disability Factor 100 % UK France Germany Belgium Austria Switzerland Czech Republic Italy Finland Spain Slovakia Poland 0,7m loss of earnings assistance pain and suffering remainder 13

14 Total claim costs in Europe as per 2015 Tetraplegia claims scenario, Disability Factor 100 % UK Switzerland Germany France Belgium Austria Italy Finland Czech Republic Netherlands Spain Poland Sweden Hungary Slovakia Denmark 0,9m from 5,0m to 9,4m in 5 Years Loss of Earnings Assistance / Care, incl. medical treatment costs Pain and Suffering Remainder 14

15 Heads of damage MTPL Non-Moral damages Medical costs (medical treatment, rehabilitation) Loss of earnings Care cost and assistance Additional needs (prosthesis, wheelchair, modifications to housing, housekeeping, etc) Funeral cost, if Alimony to family members (spouse, children, etc) Legal fees (lawyers, court, ) Moral damages Pain & suffering of the injured, incl. compensation for potential disfigurement Non-material compensation paid to relatives 15

16 Case study Poland 16

17 Tetraplegia Claim Scenario - Poland Development from 1990 to: : +3659% : +2265% : +1699% : +530% 0 Loss of Earnings Assistance Pain and Suffering Remainder 17

18 Poland Scenario: Compensation for Paraplegic case; man, 30 years old married, two children average wage income 65% disability, third party assistance 8h/day 18

19 Polish Market Comparison Paraplegic Scenario Average: 0,68m StDev: 0,3m

20 Polish Market Comparison Paraplegic Scenario - Details Average: 0,68m StDev: 0,3m Pain and suffering Hospital Costs Care costs Legal Costs Loss of earnings Others 20

21 Poland Scenario: Compensation for tetraplegic case (brain injury) child, 6 years old disability 80% third party assistance 24h/day 21

22 Polish Market Comparison Tetraplegic Scenario - Detail Average: 1,5m StDev: 0,6m Pain and suffering Hospital Costs Care costs Legal Costs Loss of earnings Others 22

23 Peer Comparison France 23

24 French Market Comparison Average: 2,8m StDev: 0,5m

25 First glance Romania, Bulgaria & Slovenia 25

26 Bodily Injury Landscape Romania, Bulgaria & Slovenia A first glance Romania Tetraplegic - Pain & Suffering Average: 130k StDev: 97k Pain and suffering given range Published mid 2017 Bulgaria cases going to court 100% 50% 0%

27 Inflation & Yields 27

28 Inflation is historically low, except in Russia but inflation has been coming down there also Consumer price inflation yoy in % Sources: Datastream, Economic Research & Consulting

29 Interest rates in CEE have reached an all time low, tracking ECB policy, except for Russia Interest rates Sources: Datastream and Economic Research & Consulting 29

30 Primary MTPL Claim Discounted ultimate losses with EU yields 100,0% 100,0% 99,2% 98,7% 98,2% Discount impact: 98,0% 96,0% 94,0% 92,0% 90,0% 88,0% 86,0% 84,0% 82,0% 80,0% 96,7% 97,5% 96,4% 95,2% 94,4% 94,2% 90,0% 91,2% 92,9% 93,1% : -6% : -2% 30

31 Reinsurance MTPL XoL Claim Discounted ultimate losses with EU yields 100,0% 100,0% 90,0% 80,0% 75,9% Discount impact: 70,0% 60,0% 50,0% 40,0% 68,3% 61,2% 49,2% 54,7% 49,4% 43,2% 38,8% 44,6% 34,4% 39,9% 43,8% 38,0% : -50% : -12% 30,0% 20,0% 31

32 Reserving & Actuarial view 32

33 Selected Scenarios and Impacts Scenario Potential Impact on ultimate Annuities Lump Sum Inflation 3% pa additional inflation on top of expected for three years. Impact before settlement (lump sum and annuity are exposed similarly). creates the biggest impact inflation scenarios will be relatively short in time they will affect both lump sum and annuities they will affect regions rather than single countries Impact Time Impact Time Discount rate shifts decrease of discount rate by 1%.... create regional impacts Discount rate shifts can impact countries/regions UK: shift in discount rate may affect PPO take up ratio Germany: social security system gets more $ from the insurer (recourse component which is lump sum) Impact Time Impact Time Life expectancy mismatch relative to what was expected (eg life expectancy or life impairment mismatch) creates gradual impacts scenarios related to life expectancy will happen gradually they will affect single portfolios or countries rather than regions Impact Time Impact Time Legal changes change of compensation framework lump sum vs annuity regime... bring retroactive impact UK: higher PPO propensity Spain: new Baremo law Czech rep.: new Civil Code Impact Impact Time Time

34 Swiss Re Reserving Approach: Hybrid L&H and P&C approach Observation period P&C tail assumptions L&H tail assumptions L&H Tail factor is based on a special simulations tool and/or based on risk factors, mainly: - Inflation - Discount rate shifts - Life expectancy - Mortality Tables -. Ultimate Losses Standard P&C methods L&H method 34

35 Motor is an important line for all of us it bares challenges we need to anticipate changes to be able to pay claims as an insurer and reinsurer 35

36 Accident GreenCard MTPL Claims Heads Paraplegic Assistance Care Cost Loss of earnings Lawyer Outlook Reserving Tetraplegic Loss Bodily Injury Insurer Discount IBNR Court Model Longevity Motor Insurance P&S Tail Cost Life expectancy Claims handling Injury Reinsurer Peer Comparison Case Reserves Actuarial Yield Curve Development Family Claim Legal changes Future Challenge Study Europe Inflation 36

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