ACAS, MAAA, CERA
Managing Principal

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Joseph A. Herbers

Joe Herbers is Pinnacle’s managing principal with more than 35 years of consulting experience. His practice is concentrated in providing loss reserving and funding studies for a wide variety of entities – both traditional insurance companies and alternative market entities. Joe’s areas of focus include policyholder-owned group captives, large deductible and/or self-insured entities and public entity pools.

His skill set includes loss reserving for all lines of business, hands-on interaction with alternative market entities, networking with service providers and traditional ratemaking for all types of property/casualty insurance exposure. Joe serves on the Employers Advisory Committee of the Casualty Actuarial Society (CAS) and was a long-term member and chair on the American Academy of Actuaries (AAA) Committee on Property Liability Financial Reporting (COPLFR). He is a regular speaker at industry events.

 

Publications and Media

September 2020 APEX Webinar
Group Captives 101
Authored by Joseph A. Herbers.

January 2020 APEX
Statements of Actuarial Opinion at Year-End 2019
Authored by Joseph A. Herbers and Aaron N. Hillebrandt.

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Case Studies

Florida Department of Financial Services

Florida Department of Financial Services

The Florida Department of Financial Services (DOFS) oversees and administers the runoff of domestic Florida insurance companies in rehabilitation. Typically, when a company's financial condition is perilous, the DOFS obtains court orders to oversee the company’s administration and manage the orderly adjudication of all unpaid claims liabilities.

Measuring the extent of those claims liabilities involves uncertainty as to the number and severity of those claims. Further complicating the issue relates to the attitudes of claimants and their attorneys as regards to settlement of such claims knowing the company itself is under regulatory supervision. 

We assisted the DOFS in a formal way with the runoff of three nonstandard auto writers, all part of a company group. The nature of the exposure was such that the unpaid claims were dominated by bodily injury and property damage liability claims. Our modeling of the anticipated future settlements considered input from company claims representatives, the DOFS itself and the company’s auditors.

At the outset of the assignment, the company’s surplus was impaired significantly. During the process, the DOFS was able to achieve significant concessions on the part of claimants given the uncertain financial condition of the carriers involved. The outcome was when the last claim was paid, the company shell that remained had a positive surplus balance. 

Formation

Formation

In an effort to attract and retain quality physicians, a large integrated healthcare system operating in the Midwest decided to create a physician’s professional liability insurance (PPLI) alternative to the commercial markets. After a comprehensive feasibility analysis, an offshore captive insurance company (CIC) was capitalized and formed. Pinnacle actuaries were engaged to assist in the feasibility analysis and implementation of this strategy. Pinnacle’s involvement began by assisting the captive manager to develop appropriate assumptions that were incorporated into the CIC’s proposed business plan and filed with regulators. Initially, Pinnacle performed a comprehensive analysis of the current PPLI market to develop base rates, rating factors and underwriting guidelines. On an annual basis, Pinnacle re-evaluates the base rates and rating factors and recommends adjustments to reflect current trends in the market as well as credible indications borne out of the CIC’s experience. In addition to maintaining adequate rates for the program, Pinnacle has also been retained to perform the annual analysis of unpaid loss and expense reserves. The CIC’s annual reserve analysis includes a review of policies written, premium collected and claims incurred by the CIC at the close of each fiscal reporting period. Management relies on Pinnacle’s analyses to ensure the financial health of this strategic venture.

Staffing Self Insured Reserve Analysis

Staffing Self Insured Reserve Analysis

Pinnacle was retained by a group of staffing companies with large self-insured retentions for their workers compensation loss exposures to perform quarterly loss reserve analyses and annual funding studies. Pinnacle initially used customized benchmarks for the staffing as the basis for our analyses. However, it became apparent that the benchmarks were not reflective of the unique characteristics of this program. Pinnacle worked with the third party administrator (TPA) for the program to gather additional historical experience for the program, as well as consolidated experience for several similar programs administered by the TPA. Using the results of our analysis of the TPA’s previous experience for this program and others like it, we were able to develop benchmark loss development assumptions that tracked much more closely with the program’s actual loss emergence.

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