FCAS, MAAA
Principal and Consulting Actuary

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Derek W. Freihaut

Derek Freihaut is a Principal and Consulting Actuary with Pinnacle Actuarial Resources, Inc. in the Bloomington, Illinois office. He holds a Bachelor’s Degree in Mathematics and Economics from Rose-Hulman Institute of Technology in Terre Haute, Indiana. He has over ten years of actuarial experience in the property/casualty insurance industry.

Mr. Freihaut is a Fellow of the Casualty Actuarial Society (CAS) and a Member of the American Academy of Actuaries. He currently serves on the AAA Committee on Property-Liability Financial Reporting (COPLFR).

Mr. Freihaut has considerable experience in assignments involving loss reserving, funding studies, loss cost projections, captive feasibility studies, risk transfer analyses, and personal and commercial lines ratemaking.

Prior to joining Pinnacle, Mr. Freihaut was employed at a large insurance company where his responsibilities included personal and commercial lines pricing. His pricing duties included private passenger and commercial auto, commercial multi-peril, and rental program lines of business.

Publications and Media

Issues & Answers: Risk Distribution

Authored by Derek W. Freihaut.

March 2018 APEX Webinar
Expected Adverse Development as a Measure of Risk Distribution
Authored by Derek W. Freihaut and Robert J. Walling III.

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Case Studies

Competitive Analysis - Commercial Lines

Competitive Analysis - Commercial Lines

Pinnacle was approached by a major national commercial lines insurer to provide comprehensive competitive analysis of the businessowners policy (BOP) and commercial automobile insurance market places. Pinnacle’s analysis began with a comprehensive review of the products filed by the leading twenty insurers of these products examining coverage features, rating elements, tiering and scoring elements, unique coverage features and several other key product development elements. Following this initial step, Pinnacle performed detailed territory and premium comparisons for several states using a dynamic premium comparison engine that allowed investigation at the class, coverage amount and territory level of detail. The company used a batch rating feature to develop indicated rate level estimates. Mapping features looking at ranking and pricing differences were also produced. All of this information was incorporated into a countrywide overhaul of the company’s products and pricing.

Florida Department of Financial Services

Florida Department of Financial Services

The Florida Department of Financial Services (DOFS) oversees and administers the runoff of domestic Florida insurance companies in rehabilitation. Typically, when a company's financial condition is perilous, the DOFS obtains court orders to oversee the company’s administration and manage the orderly adjudication of all unpaid claims liabilities.

Measuring the extent of those claims liabilities involves uncertainty as to the number and severity of those claims. Further complicating the issue relates to the attitudes of claimants and their attorneys as regards to settlement of such claims knowing the company itself is under regulatory supervision. 

We assisted the DOFS in a formal way with the runoff of three nonstandard auto writers, all part of a company group. The nature of the exposure was such that the unpaid claims were dominated by bodily injury and property damage liability claims. Our modeling of the anticipated future settlements considered input from company claims representatives, the DOFS itself and the company’s auditors.

At the outset of the assignment, the company’s surplus was impaired significantly. During the process, the DOFS was able to achieve significant concessions on the part of claimants given the uncertain financial condition of the carriers involved. The outcome was when the last claim was paid, the company shell that remained had a positive surplus balance. 

Medical Malpractice Damage Caps

Medical Malpractice Damage Caps

A state insurance regulator asked Pinnacle to determine the potential impact of several proposed tort reforms, including a change to non-economic damage caps for medical professional liability claims. Pinnacle worked with medical society to identify the most appropriate claims databases for assessing the potential legislative change. Our detailed analysis not only considered data from that state, but several others to stress test the results and provide a range of reasonable outcomes. In many cases, the specific reform’s effect, for example “I’m Sorry” legislation, was very difficult to isolate. Through this industry analysis, we identified differences well beyond a simple loss limitation to provide a more complete review of potential environmental changes that could be expected in the state.

This comprehensive analysis helped our client identify the effect of various legislative options, which empowered them to be a strong voice in the legislative debate and to influence policymaking in the state.

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