Case Study – Collateral Negotiation
Problem
A defense contractor’s insurance carrier requested more than $1 million in additional collateral to account for worsening workers compensation loss experience. The RCS team’s independent actuarial reserve analysis had previously indicated that loss experience was improving year-over-year instead of worsening.
RCS Action
RCS’s team members reviewed the carrier actuary’s assumptions and created a presentation demonstrating the difference in assumptions used between the two analyses. RCS argued that the client’s own experience was indicating lower loss development patterns and loss cost trends than historical norms.
Outcome
The collateral request was reduced by more than 25% as a result of the discussion with the carrier’s actuary. The client’s risk manager was able to report decreasing insurance costs to its leadership as a result.