Risk Analysis Services FAQs
These FAQs should help you better understand how Risk Analysis Services (“RAS”) works with its clients:
How do your services work?
Our primary service is to help our clients save money and improve operations. We analyze your historical loss data, which will help you better understand your businesses and better represent your risks to the insurance marketplace. The analysis reports can often lead to lower insurance premiums and can improve claims experience and may suggest ways to improve operations. In addition to the analysis reports, we offer consulting services to help interpret reports (and present to underwriters). Sometimes consulting indicates possible beneficial additional analyses.
How many years of data history do you need for a good loss projection?
You should provide at least 4 or more years of loss data, with at least 10 of the same types of claims per year. The credibility of the loss projections depends upon the quality and nature of your data.
Can you always provide good loss projections with 4 to 6 or more years of data?
We provide good analyses of whatever the data tell us. Whether the loss projections provide credible estimates of expected losses depends entirely on the nature of the data.
Can you estimate my frequency of claims?
Yes. We can estimate your frequency of claims as well as your frequency rate of claims (per appropriate exposure base). The credibility of our estimates depends on the nature of the data. If trends reveals high correlations and low volatility, the projected results can be considered credible estimates of expected losses.
How can you help lower my insurance/reinsurance premiums? By running multiple sets of analyses with varying slices of your data at different loss levels (layers), we can help you present a more comprehensive, nuanced picture to underwriters. In this manner, we have helped clients obtain more advantageous risk transfer pricing, saving 15% or more on their insurance premiums.
How can you more specifically help lower my cost of risk? Three basic ways: 1) Identify sources of frequency and/or severity of losses. These lead to focused loss-control and risk-reduction policies and procedures; 2) Provide a more accurate and enterprise-specific loss trend picture to prospective insurance company underwriters so that they can confidently lower your rates and cost; 3) (related to 2) – Liberate you from the “conspiracy of averages” when your actual empirical risk trend components (including LDF’s) are more favorable than industry averages. You should benefit from reduced rates, based on rigorous systematic analysis we can provide; 4) Helping you focus on your recurring losses may help you reduce them in the future. 5) Working with RAS may lower your risk management administration costs – simplifying your risk evaluation analysis and data management time and expense.
What specifically do I need to provide to you?
- For Incurred Loss Development (ILD): Loss runs (listings of all claims) for successive valuations of a given year’s reported losses on a common anniversary date, for at least 4-years (preferably 6 to 10 years, max 15) of incurred loss data.
- For Paid Loss Development (PLD) – which produces Loss Payout Development (LPD): Loss runs (listings of all claims) for successive valuations of a given year’s reported losses on a common anniversary date, for at least 4-years (preferably 6 to 10 years, max 15) of incurred and paid loss data.
- For Loss Forecasting (LF):at least four successive years (preferably 6 to 10 years, max 15) of total incurred loss amounts and numbers of claims, corresponding annual exposure data plus exposure data for current year and next year(s) for which projections are desired.
- For Risk Financing (RF):organizational effective tax rate, discount rate (cost of capital), loss payout development (for SI, ILR, PLR and other loss-sensitive plans [or approval of standard LPD]), other data elements – cost components where needed for specific RF plans.
Exposure Data Examples:
- For WC: number of employees or payroll;
- For Auto: number of vehicles or vehicle miles [if fleets of trucks and fleets of cars, corresponding data for each].
- For GL: sales [if multiple divisions or business units, data by business units and locations, if available].
- For Healthcare: number of lives. If loss data are broken down by age ranges: Number of lives per Age Range Segment;
- For Aviation: Takeoffs/landings, Seat-miles.
What will I receive back from RAS?
Loss Development: Executive Summaries for each of Multiple Analyses, Detailed Analyses for each of Multiple Analyses, Comparative Analyses for each set of common analyses with the same Self-Insured-Retention (SIR). 1) Incurred Loss Development Factors, 2) Frequency of Loss Development Factors, 3) Paid Loss Development Factors,
Loss Forecasting: Executive Summaries for each of Multiple Analyses, Detailed Analyses for each of Multiple Analyses, Comparative Analyses for each set of common analyses with the same Self-Insured-Retention (SIR). 1) Projected Total Losses, 2) Projected Frequency Rate of Claims, 3) Projected Frequency of Claims, 4) Discounted After Tax Cash Flow. All results include respective graphs and complete audit trail of component analyses and statistics.
Can you explain the results to my insurance broker? Yes. We can work with your broker to support his/her efforts to obtain the best possible outcome for financial management of your risks.
Can you explain the results to my insurance company? Yes. We can walk them through the rationale for our findings and work with Underwriters to convey a deeper understanding of the nature of your risk and expected loss levels.
Can you teach my staff how to get the information I need? Yes. We can also help them develop policies and procedures to make the process as efficient as possible. This may include working with your existing data management and collection tools and systems and/or helping to obtain and implement enhanced and improved systems.
Can you find out trends by location? Yes. Where appropriate and where indicated by the data, we can look at location by location analysis in addition to enterprise-wide analysis.
Do you ever work for other risk analysis organizations? Yes. We have experience working with other risk analysis organizations.
How quickly can you get me the results? From the time we receive the data required for your analysis, depending on your requirements, we typically provide results within 5-7 business days. Depending upon the number of analyses requested and the complexity of the data, it may take longer to process all of your results. If you need speedier service, depending on the analyses required, we may be able to accommodate that for an additional fee.