Reinsurance

1
Reinsurance Market Trends

• Texas Chapter PRIMAs Annual Conference
• Francis J. Fey, President
• The JI Companies, Austin
• Moody Gardens, Galveston
• November 11, 2004

2
Market Realities

• Pricing still subject to actual experience
• Employee concentration now mandatory - Reporting
  number of employees per location
• Few/fewer markets active in Texas for public
  entities, particularly WC
• Most quotes not firm earlier than 60 days prior
  to renewal (some 30 days)

3
Pricing Expectations - WC

• Pricing rooted in basicsPricing still driven by
• Exposures (occupation codes)
• Payroll
• Experience
• Medical trend - larger/important component
• Overall pricing moderating
• Critical eye to retention level paired with
  pricing
• Introducing other financial analysis

4
Pricing Expectations

• Property
• Coastal exposures continue to be tough
• Stable and coming down slightly (relative
  movement) - more frequent reductions at renewal
• Liability
• GL/AL moderating - capacity mostly available
• PL/EO/DO
• Fewer players - still unstable - capacity issues
• Rates still climbing
• Retention adjustment substitute for large rate
  increase
• Companies reevaluating pricing actuarial models
  ()

5
Information still gets the best price

• Actuarial projections
• Know your development factors
• Make sure projections reflect your reality
• Be aware of multiplier effect
• Adjust for change in TPAs
• Understand the trends added for medical and
  indemnity separately
• Make sure adjustments are made for payroll
  fluctuations
• Actuary needs Texas experience/knowledge
• Evaluations should consider changes in retention
  levels

6
WC Reform in Texas - Take 2

• Legislative session - Issues to impact costs
• Real networks or variation on a theme
• More aggressive return to work
• Renewed emphasis on fee schedules
• Restrictions on physical medicine (chiropractors)
• Once passed - stress with carriers on renewal

7
Reinsurance Market Trends

• Texas Chapter PRIMAs Annual Conference
• Francis J. Fey, President
• The JI Companies, Austin
• Moody Gardens, Galveston
• November 11, 2004