Components of Bodily Injury Claims * A European Perspective *

Report
Components of Bodily Injury Claims
– A European Perspective –
FIAR – International Insurance-Reinsurance Forum 2012
Ulrich Werwigk, Swiss Re Europe S.A. German Branch;
Munich
Agenda and Topics

Bodily Injury Claims in Europe

Bodily Injury Scenarios in Europe – Sample of Typical Cases

Swiss Re Bodily Injury Landscape – Benchmark Case and Trends

Key Drivers of Bodily Injury Claims

Components of Bodily Injury Claims – Overview

Exemplary Reserve Calculation

Conclusions: "… what is important?"
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
2
Bodily Injury Claims in Europe–
Facts and Developments*)

According to last CEA statistics, published in
2010, Europe is with 315m vehicles the largest
motor market of the world.

Comparing with the increase of vehicles of 1,9%
each year, the growth of bodily injury claims of
2,3% per year is slightly higher.

Total expenditure of bodily injury claims is quoted
with 50% of all MTPL claims expenditure, even
though the share of counted claims is only 14%
(Italy 22% , France, Germany, Austria 10%,
Hungary 2,4% of counted claims).

The share of large personal injury claims (>€
100.000) counts only 1,1% of all personal injury
claims, however they represent 37% of all
personal injury claims expenditure MTPL (roughly
€ 10bn).

Statistics show a large spread between European
States and an West-East divide.
*) Source of data and graphs: CEA Statistics No. 38 – European Motor Insurance Market, publ. February 2010
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
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Bodily Injury Scenarios in Europe –
Sample of Typical Cases
Accident
Loss
Amount*)
Macedonia
(Austria)
British passenger severely injured
(quadriplegia)
€ 17m (€ 8m)
Austria
British tourist bus, 48 passengers,
hereof 35 injured, 5 fatalities
€ 14m (€ 9m)
Ireland
Latvian lady as passenger severely
injured (quadriplegia)
€ 5,4m
Austria / Germany
One person injured, quadriplegia
Multiple injured, one severe
(paraplegia)
Up to € 8m
Poland
Injured (paraplegic)
€ 0,5 – 0,8m
Czech Republic
Injured (paraplegia)
€ 0,8 – 1,2m
Romania
Various losses of injured (severe
bodily injuries) and fatality
€ 125.000 –
750.000
Romania
Pain & Suffering of injured and
of relative
€ 850.000
€ 1,2m
€ 4 – 5m
*) amount in brackets (€ 8m) reflects final settlement by insurer
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
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Swiss Re Bodily Injury Claims Landscape
- Benchmark Case Hypothetical victim – Tetraplegic

30-year-old man

Wife without own income

2 children (aged 2 and 5)

Average income from dependent
employment

Severe spinal or head injury; no
ventilation necessary; remains 100%
disabled; cannot return to work

Highest assistance level

Cost components: loss of earnings,
assistance, pain & suffering, remainder
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
Slide 5
Swiss Re Bodily Injury Claims Landscape
European Comparison 2010
United Kingdom
France
Germany
Austria
Switzerland
Belgium
Finland
Czech Republic
Italy
Spain
Hungary
Slovakia
Poland
0
1
loss of earnings
2
3
assistance
4
5
6
pain and suffering
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
7
8
9
remainder
Slide 6
10
in mn €
Swiss Re Bodily Injury Claims Landscape
European Trends 2012
Czech Republic (EUR)
Poland (EUR)
3,000,000
900,000
2,500,000
800,000
700,000
2,000,000
600,000
500,000
1,500,000
400,000
1,000,000
300,000
200,000
500,000
100,000
0
0
1990 1995 2000 2005 2008 2010 2012 2015
LOE
ASS
PS
REM
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
1990 1995 2000 2005 2008 2010 2012 2015
LOE
ASS
PS
7
REM
Key Drivers in Increase of Severe BI Claims
Legal Systems
 Non-material losses; Pain & Suffering vs.
Different Settlement Methods
Harm of Social Status
 Recourse of social security system
Legal Changes
 Enforcement of victim protection
(EU)
 Annuities vs. Lump Sum (capitalization)
 Settlement periods
 Increasing compensation of nonmaterial losses
 Role of courts – victim friendly /
but also restrictive re claims
Increasing welfare
 Higher living standards
 Increasing wages
 Changes in society /
Capitalization tables

social relationship
Increasing mobility
Exploding Medical and Care
Costs / Healthcare costs
 Superimposed inflation in
welfare states
 Discount rates
 Changes in financial
Life Expectancy
 People live longer
markets
medical and care sector
 Trend to third party assistance in
Increasing claims awareness
 From whom can I get compensation?
 Stronger public awareness
 Contingency fees/victim associations/TV
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
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Components of Bodily Injury Claims Overview

Medical costs (medical treatment in hospital and ambulant, rehabilitation, medical
follow-up treatment)

Loss of Earnings during medical treatment and later

Care costs and assistance (monthly period, calculated on hourly or daily rates)

Pain & suffering of the injured (respectively additional disfigurement)

Non-material compensation for relatives

Additional needs (prosthesis, wheelchair, conversion of flat, additional medical
expenses, housekeeping loss)

Funeral costs

Alimony to family members (spouse, children)

Lawyers- and court costs
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
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Reserve Calculation - Bodily Injury Claim
Motor Accident (Austria) - 2010
Injured
Gender
Date / Year of Birth
Age at DoL
Mortality Table /
Life Expectancy
Profession
/ Current Job:
Injuries/ Disability
Kind of Care
Claims Positions
male
1988
22 years
50,4
cook
paraplegia / 100%
disability / wheelchair
family + resid. home
Key Topics

Life expectancy / mortality tables /
retirement age?

Loss of Earnings / carrier
opportunities?

Alimony of wife and children?

Home care or residential care?

Potential for lump-sum agreement?
Medical Costs:
Pain & Suffering:
Disfigurement
P & S of Relatives
Care Costs:
Family + Residential
Home
Months / Year
Life Expectancy
./ . reduced LE*)
Loss of Earnings:
Months / Year
Retirement Age (65)
Legal Costs:
Others:
Sub-Total:
./ . reduced LE (20%)**)
Public Social Security
and Pension Funds
Add. Injured
Sub-Total:
Claim Notification:
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
Calculation of Cedent
EUR
180.000
150.000
20.000
0
5.000
12
54,46
0
2.000
12
43
3.267.600
0
1.032.000
potential
future
increase of
costs?
what is this
amount in
54 years?
potential wage
increase? carrier
opportunities?
discount
rate?
150.000
4.799.600
-821.600
800.000
230.000
5.008.000
5.000.000
10
justification
for reduction
of LE and
proportion?
why here
and not at
care costs?
"… what is important for Severe Bodily
Injury Claims?"

… one of the most complex topics in claims handling

…consistent strategy and philosophy – what are the key topics for Romanian
insurance industry?

… consider the individual elements of bodily injury claims, the requested medical
treatment, rehabilitation or assistance

… clear principles enable pro-active claims management and reduction costs

Therefore bear in mind
– be prepared for special requirements and individual claims settlement as a
part of a consistent claims strategy

Swiss Re is ready to assist and support developing a strategy for bodily injury
claims and to provide an appropriate forum with experts for the discussion.
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
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Thank you
Ulrich Werwigk, Attorney at Law
Swiss Re Europe S.A., German Branch
Email: [email protected]
Legal notice
©2012 Swiss Re. All rights reserved. You are not permitted to create any
modifications or derivatives of this presentation or to use it for commercial
or other public purposes without the prior written permission of Swiss Re.
Although all the information used was taken from reliable sources, Swiss Re
does not accept any responsibility for the accuracy or comprehensiveness of
the details given. All liability for the accuracy and completeness thereof or
for any damage resulting from the use of the information contained in this
presentation is expressly excluded. Under no circumstances shall Swiss Re
or its Group companies be liable for any financial and/or consequential loss
relating to this presentation.
FIAR - Insurance-Reinsurance Forum 2012 | Ulrich Werwigk | 22. May 2012
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