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Actuarial Update Shows Higher Claims; Subcommittee Weighs Captive Insurance Options and Timeline
Summary
An updated actuarial report showed recent quarters' large claims raised projected insurance costs; presenters and legislators discussed using a captive to retain some catastrophe risk, RFPs for captive management and brokerage, statutory changes needed, and an estimated multi-month implementation timeline.
An actuarial update presented to the ALC Executive Subcommittee found that insurance claims for the 2023–24 policy period were higher than previously estimated, driven largely by several large claims reported after the June 30, 2024 dataset, presenters said.
Kyle Hales, a principal and consulting actuary at PerNite, summarized the firm’s updated analysis and told the committee that five late-reported claims increased reported claim values by more than $27 million in a single quarter. “The 07/01/2023 to ’24 insurance costs were higher than expected, based on the updated information as of 09/30,” Hales said.
Catastrophe-modeling output from a vendor called Cadence shows materially higher model estimates for average annual losses for flood and earthquake than the state’s historical experience. Hales and other presenters said Cadence’s modeled average annual loss for earthquake and flood exceeds $35 million, while historical averages over the last 16–23 years were…
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