Insurers

Asbestos Liabilities

In 2009, Pinnacle provided expert testimony about the evolution of insurance industry asbestos liabilities in an arbitration hearing among several insurance companies and a pool manager. This assignment drew on our knowledge of the history of insurance industry asbestos liabilities, e.g., the evolution of the legal aspects surrounding coverage determinations, the interplay of primary, excess and reinsurance contracts, the history of failed attempts to control the problem and the impact of bankruptcies among other factors. The assignment also drew on our mass tort / latent liability reserving expertise.

Territory / Summit Analysis

The insurer had not reviewed or adjusted their territorial boundaries in several years; and their current territories were not based upon an analysis of their underlying loss experience.

Pinnacle began with an evaluation of available insurer and external industry data at the ZIP code level as well as their current and future policy processing capabilities. After all of the experience data was adjusted to a common base level, we used our Summit® software product to smooth the data to develop an initial adjusted pure premium by ZIP code to reflect both experience in a ZIP code and in neighboring ZIP codes. The number of additional neighboring ZIP codes used was dependent upon attaining a sufficient exposure level.

The smoothed data was then clustered using Summit® on both a contiguous and non-contiguous basis. The insurer needed to decide whether to maintain relatively contiguous definitions or use more granular and theoretically accurate non-contiguous definitions. Using statistical measures, we identified and graphed optimal definition sets. Non-contiguous definitions were selected by the client. To minimize the number of territories with a limited geographic area or only a few ZIP codes, some manual combination of “outlying” ZIP codes with territories (clusters) with similar adjusted pure premiums was performed.

Finally, we assisted the insurer in developing the necessary filing support material to gain approval. The new program is generating new business in areas of historical profitability but previously less than average competiveness. 

Vehicle Rating

Pinnacle was approached by a major national personal lines insurer to develop a vehicle rating program to replace the use of the ISO symbol product. Pinnacle, through the use of predictive modeling, assisted the carrier in designing a new vehicle rating program which made use of the vehicle’s actual physical characteristics for both the liability and physical damage coverages. The data used for the analysis was the company’s VIN data supplemented with industry VIN data and appended for vehicle characteristics from an external third party vendor. The resultant program completely eliminated the need for use of the ISO symbol and exhibited greater predictive power than the prior ISO based system.