This release of Oortfolio allows for the modeling of defense costs paid outside the limits of liability. This release also temporarily drops crumb rubber exposures from the Oortfolio event set.
Defense costs outside limits
Prior to this release, Oortfolio assumed defense costs are paid inside the limits of liability, meaning that the insurer’s exposure to defense costs and indemnity is no greater than the policy’s limit, no matter how much the insured pays to defend itself against liability claims. With this release, Oortfolio users can now model defense costs paid outside the limits of liability, meaning that the insurer will pay defense costs, no matter how large, up until the point at which indemnity payments exceed the policy’s limit. Except for some edge cases, the assumption of defense costs outside limits results in higher overall modeled losses than the assumption of defense costs inside limits. The release also allows users to omit defense costs altogether.
The Oortfolio data submission template has been revised so that users can specify whether defense costs are paid inside limits, outside limits, or not at all. The treatment of defense costs can be specified at the individual policy level (Data Template – Policy tab) or at the portfolio level (Data Template – Portfolio tab), with policy-level treatment taking precedence over portfolio-level treatment.
Users can also specify the treatment of defense costs within the Oortfolio application using company or industry underwrite mode.
Crumb rubber events
The March 2019 release of CoMeta included a new crumb rubber profile. Crumb rubber – tiny pieces of recycled rubber – is most commonly used as infill in artificial turf surfaces to make them softer and bouncier. Crumb rubber can also be found in playground surfaces, rubber mulch, rubberized asphalt, and some athletic equipment. Because crumb rubber is manufactured primarily from used tires there is concern that the resulting product exposes consumers and workers to a wide range of potentially toxic substances including heavy metals, polycyclic aromatic hydrocarbons, and volatile organic compounds.
Prior to the March release, crumb rubber exposure settings were incorporated in individual Litagion agent profiles like trichloroethylene and benzene, which reflected the idea that the underlying exposure of concern was not to crumb rubber per se but to the specific chemicals that "contaminate" crumb rubber. Following how science thinks about the risk today, though, we are now treating crumb rubber as a Litagion agent itself.
Reflecting this change of perspective, we have eliminated crumb rubber events from 13 Litagion agent profiles in Oortfolio. Small reductions in ground-up tail losses are evident for these Litagion agents, which may translate into smaller tail losses in some portfolios.
Oortfolio will reincorporate crumb rubber as a Litagion agent with modeled losses in a future release.