liability limit benchmarks & large loss profile by ...€¦ · this year we are pleased to...

Business DescriptorChubb Bermuda

Liability Limit Benchmarks & Large Loss Profile by Industry Sector 2017

Contents

How Much Limit is Enough? 03

Auto & Auto Parts Manufacturing Sector 04

Chemical Sector 06

Construction Sector 08

Consumer Products Sector 10

Healthcare Sector 12

Industrial Manufacturing Sector 16

Life Sciences Sector 18

Oil & Gas Sector 20

Real Estate Sector 24

Transportation Sector – Rail 26

Transportation Sector – Road 28

Utilities Sector – Energy 30

U.S. Punitive Damages Liability Landscape 34

About Chubb 38

How Much Limit is Enough?

How much liability insurance to buy, to adequately protect against the unexpected, is a critical decision every risk manager must make. Unfortunately, bad things can happen to the very best of companies, and no-one wants to be under-insured if and when a large catastrophic loss occurs.

Chubb Bermuda’s annual Liability Limit Benchmarks and Large Loss Profile has been developed as a tool to assist in the decision-making process around how much limit is enough. Now in its eighth year of publication, our report provides data to address three common, yet key, questions we frequently hear from our clients:

1. What size of liability limits are peers in my industry sector(s) purchasing?*

2. What large losses and historical frequency/severity patterns have occurred in my industry sector(s)?*

3. What newly developing or changing risks and exposures are on the horizon in my industry sector(s)?*

This year we are pleased to expand our report to include additional items for consideration when deciding how much limit is enough:

• A summary extract from Chubb Bermuda’s 2016 Review of the U.S. Punitive Damages Liability Landscape paper that presents data showing punitive damage awards granted at trial are more prevalent than previously thought.

• Highlighted auto liability losses across all industry sectors. Every company in every industry has auto or fleet liability exposure to some degree and, despite significant improvements in general automotive safety, collisions and crashes remain high on the top ten list of large liability losses.

• Batch or Integrated Occurrence claim scenarios in the Healthcare sector.

We continue to look for ways to expand and customize the Chubb Bermuda Liability Limit Benchmarks & Large Loss Profile to assist our clients, both current and prospective, in reaching an informed decision as to how much liability limit is enough.

* Average liability limits purchased by industry sector are based entirely on Chubb Bermuda’s 2016 Excess Liability portfolio. Large loss data has been compiled from publicly available sources only, and our snapshot of emerging exposures is a combination of both internal and external input.

3

Have You Considered These Exposures?

– Driverless Vehicles

– Internet of Things

– 3-D Printing

– Deep Pocket

– Increasing Defense Costs/ Collective Redress

– Electronic Data Event

– Supply Chain Risk Management

– Artificial Intelligence & Robotics

4

Sample Large Losses for Industry - 10 year

Date of Loss

Loss Details

Location Incurred Amount

2006 Seat collapse during collision resulted in serious injuries USA $25 million

2007 Seat collapse during collision resulted in serious injuries USA $43 million

2007 Tire defect caused vehicle accident resulting in multiple injuries and a fatality

USA $33 million

2007 Alleged engine defect USA $30 million1

2007 Tire defect caused vehicle accident resulting in multiple injuries USA $23 million

2008 Airbag deployment caused multiple fatalities resulting in vehicle recalls USA $4 - $5 billion2

2009 Sudden unintended acceleration of vehicle engines resulting in injuries USA $1.6 billion3

2009 Serious injury from auto accident caused by separated tire tread USA $42 million

2010 Defective seatbelt failed to prevent serious injury in accident USA $57 million

2011 Defective steering caused accident resulting in multiple fatalities and injuries

USA $245 million

2011 Tour Bus crash resulted in multiple fatalities and injuries USA $40 million4

2012 Truck alleged to move forward unexpectedly while parking brake engaged

USA $52 million

2012 Design defect caused gas pedal to become trapped resulting in sudden and unintended acceleration

Japan $17million

2012 Fiery automobile crash results in fatality of a minor USA $40 million

2012 Design and manufacturing defects and negligence in warning regarding use of vehicle

USA $125 million5

2013 Car collision resulted in amputation USA $46 million

2013 DUI resulted in fatality USA $563 million

20146 Luxury car tube alleged to degrade, crack and fail prematurely USA $45 million

20156 Alleged ignition switch defect. USA $870 million7

2015 Hacker was able to remotely take control and crash vehicles USA Pending

2015 Alleged defective airbags using same explosive compounds as other manufacturer of defective airbags

USA Pending

1Tentative Settlement 2Estimate 3Economic Loss (Wrongful Death & Personal Injury Undisclosed) 4Demand 5Total Loss/Liability Apportioned 6Disposition Date 7Proposed Settlement

Auto & Auto Parts Manufacturing SectorCompanies engaged in the design, development, assembly, manufacturing, marketing, distribution, and sale of motor vehicles and component parts.

5

<25Revenues ($b)

>25

600

700

400

500

300

200

100

0

Average Program Limits Purchased Based on Chubb Bermuda’s 2016 Portfolio ($M) (inclusive of Self-Insured Retentions)

Shaded Rows Indicate Auto Liability Losses



– Waste Water Contamination

– Endocrine Disruptors

– Genetically Modified Organisms

– Deep Pocket

– Extreme Weather

– Nanotechnology

– Persistent Organic Pollutants

– Counterfeiting


– Prevalence of Publicly Available Data


– M&A

- Political, Regulatory & Risk Environment Reform


– High Temperature Hydrogen Attack

6


Date of Loss

Loss Details


2006 Alleged genetically modified rice entered the crops of commercially grown rice

USA $934 million1

2006 Alleged flammability of product undisclosed by distributor USA $15 million2

2007 Waste receiving site alleged to cause personal injuries USA $131 million

2009 Explosion at petrochemical plant with multiple fatalities France Pending

2009 An empty sulphuric acid tank overturned at a plant with injuries France Pending

2010 Toxic product contaminated water systems USA $105 million

2010 Sealant vapors ignited causing explosion that resulted in serious injuries

USA $11 million

2010 Third party damage from herbicide application USA $1.7 billion

2012 Defective spray insulation emitted toxic chemicals into the air USA Pending

2012 Fire/explosion on a vessel inside a facility resulted in multiple deaths and multiple injuries

Thailand $296 million

2013 Fire/explosion occurred at a storage and distribution facility that resulted in multiple deaths and injuries and property damage

USA $101 million

2013 Fire/explosion at facility resulted in third party property damage, personal injury, and pollution

USA Pending

2014 Pesticide alleged to have harmed insect population Canada/USA

$450 million3

2014 Waste treatment chemical stored in truck exploded at facility and resulted in several injuries

USA Pending

2014 Loss of water supply due to chemical spill USA $153 million4

2015 Explosion at chemical plant resulted in injuries Spain Pending

2017 Drinking water exposed to toxic chemicals USA $18 million5

1 Inclusive of Economic Loss 2 Liability Apportioned - 60% Retailer/40% Distributor 3 Demand 4Inclusive of Economic Loss 5 Disposition Date

Chemical SectorCompanies engaged in the research, development, manufacturing, marketing and distribution of petrochemicals, basic and specialty chemicals, agricultural chemicals, and chemical intermediates.

7

<5 5-15Assets ($b)

>15

500

600

400

300

200

100

0



– Eco-Friendly/Green Materials

– 3-D Printing

– P3s

– Smart Buildings/Internet of Things


– Unmanned Aerial Vehicles

– Extreme Weather

– Deep Pocket


- Pioneer Designed Construction

- Talent Gaps

8


Date of Loss

Loss Details


2006 Truck collision resulting in quadriplegia USA $45 million

2006 Tunnel collapse USA $54 million

2006 Auto accident resulting in fatalities and serious injuries USA $45 million

2007 Iron worker paralyzed from fall off steel beam USA $64 million

2007 Bridge collapse USA $73 million

20071 Fire started from shelving system collapse resulting in property damage USA $63 million

2008 Laborer fell off roof at construction site USA $62 million

2008 Crane collapse USA Confidential Settlement

2008 Scaffold’s tin roof collapsed while worker was standing on it resulting in injuries

USA $17 million

2008 Laborer fell from roof at construction site USA $31 million

2009 Workers fell to their death while working on exterior of apartment USA Confidential Settlement

2009 Defective pipes damaged equipment and other property USA $107 million

2009 Fire started from welding activity which caused neighboring property damage

USA $30 million

2009 Purging of a natural gas line resulted in an explosion and fatalities USA $15 million

2010 Concrete slab fell from a garage entryway resulting in one fatality and multiple injuries

USA $31 million

2010 Passengers sustained injuries in collision USA $42 million

2010 Worker fell while working on roof USA $34 million

2010 Excavation work caused pipeline explosion resulting in multiple injuries and a fatality

Canada $27 million

2012 Auto collision resulting in serious permanent injury USA $55 million2

2012 Crane collapsed during Hurricane USA Pending

20121 Occupational disease Iraq $85 million

2013 Crane collapse resulted in life changing injury USA $44 million

2013 Demolition practices on building caused neighboring store collapse USA Pending

2013 Worker fell four stories on construction site USA $42 million

2015 Scaffolding collapse resulted in multiple fatalities USA Pending

2015 Alleged faulty construction sank oil rig USA $550 million3

2015 Hotel Fire U.A.E. $322 million4

2016 Crane collapse resulted in fatality USA Pending

1Disposition or Filing Date 2Total Loss/Liability Apportioned 3Inclusive of Economic Loss 4Inclusive of 1st Party Property Damage

Shaded rows indicate auto liability losses

Construction SectorCompanies engaged in design, engineering, development and construction.

9

<2.5 2.5-10

Revenues ($b)

>10

1200

800

1000

600

400

200

0




– 3-D Printing

– Nanotechnology

– Endocrine Disruptors

– Counterfeiting


– Obesity

– Food Safety/Supply Chain Globalization

– Brain Injury

– Genetically Modified Organisms


– Deep Pocket




– Talc


– Lithium Batteries

10

Consumer Products SectorCompanies engaged in the manufacturing, distribution and sale of food, beverage or other consumable goods and products.

11

1-10 11-20Revenues ($b)

>20

400

500

300

200

100

0



Date of Loss

Loss Details


2006 Secondary product recall Worldwide $429 million1

2007 Toys withdrawn from market as contain excess amount of lead USA $66 million

2008 Recall of tainted meat products linked to a listeriosis outbreak Canada $21 million

2008 Alcohol sold to minor led to fatal vehicle accident USA $717 million2

2008 Defectively designed booster seat caused serious injury during an auto accident

USA $26 million

2009 Fire/explosion and roof collapse at food manufacturing plant USA Unknown

2009 Tractor-trailer collision USA $63 million

2010 Alleged zinc poisoning from product resulting in neurological injury USA >$400 million

2010 Explosion at facility caused severe injuries USA $179 million

2010 Product contamination USA $33 million

2010 Plaintiff failed to inspect tire tread resulting in a vehicle accident and a fatality

USA $24 million

20113 Defective plumbing systems Canada/USA $200 million

2011 Defective heater started fire which resulted in a fatality USA $47 million

2012 Employee unlawfully disposed of hazardous wastes and confidential customer information

USA $17 million

20124 Concussion injuries USA $768 million5

2012 Footwear alleged to cause health risks USA $40 million

2012 Gender discrimination USA $31 million

2013 Building being demolished collapsed onto neighboring store USA $227 million2

2013 Secondary product recall New Zealand

$272 million

2014 E.coli contaminated food products USA Pending

2014 Mishandled deceased body USA $28 million6

2015 Defective plumbing systems USA $139 million

20154 Shampoo alleged to cause baldness USA $25 million

2015 Pesticide poisoning USA $90 million

20163 Plaintiff alleged developing cancer after utilizing product over multi-year period

USA $140 million

1 Estimate 2 Total Loss/Liability Apportioned 3 Disposition Date 4 Filing Date 5Proposed Settlement 6 89% Punitive Damages




– Rising Healthcare Costs

– Rogue Doctors/Nurses

– Improper Sterilization of Equipment

– 3rd Party Equipment Leasing

– Emergency Preparedness

– Employee Drug Abuse


– Errors in Diagnosis

– Antimicrobial Resistance

– Robotic Surgery


– Behavioral Health

– Medical Tourism

– 3-D Printing

– Chronic Disease Management

– Telemedicine

– Political, Regulatory & Risk Environment Reform

– Artificial Intelligence

12

Healthcare Sector

13


Date of Loss

Loss Details


2006 Sexual assault and molestation by nursing assistant USA $67 million

2006 Doctor delayed delivery resulting in brain damage and quadriplegia USA $144 million

2007 Doctors misdiagnosed complications from surgery resulting in injury USA $178 million

2007 Unnecessary medical procedures including the implantation of an unnecessary Pacemaker

Germany $67 million

20071 Misdiagnosis resulted in permanent injury USA $43 million

2008 Errors in discharge summary that was outsourced and transcribed in India

USA $140 million

2009 Welfare Professionals missed signs of abuse on a three-month old child USA $166 million

2009 Doctor delayed delivery resulting in cerebral palsy USA $75 million

2009 Medical malpractice caused severe injury to child USA $55 million

2009 Hospital failure to diagnose in a timely manner resulted in amputation USA $62 million

2009 Hospital staff departed from accepted standard of care USA $144 million

2010 Negligence with processing tainted organs caused serious injury USA Pending

2010 Class action against pediatrician for sexual abuse of multiple children USA $123 million

20101 Skilled nursing facility failed to provide adequate personnel and quality of care

USA $63 million

2010 Doctor failed to timely diagnose a teenager resulting in permanent brain injury

USA $39 million

2010 Doctor performed unnecessary stent procedures USA $37 million

2011 Doctors failed to diagnose a life-threatening infection leading to amputation

USA $32 million

2011 Alleged experimental surgery on an infant resulted in serious permanent injury

USA $30 million

2011 Hospital failed to recognize patients adverse reaction to drug resulting in permanent injury

USA $44 million3

2012 Failure to adequately diagnose the mental health of a patient resulted in third party fatalities

USA Pending

2012 Mistakenly operated on wrong body part resulting in fatality USA $21 million

20132 Robotic surgery failure resulted in injury or death of patient USA Pending

20131 Class action lawsuit alleging gross negligence in reusing syringes resulting in Hepatitis C outbreak

USA $524 million

2013 Doctor used a device to take unauthorized photos and video of patients during exams

USA $190 million

2014 CJD resulted from contaminated instruments USA Pending

2014 Multiple fatalities due to sterilization malpractice India Pending

2014 Improper testing carried out by hospital after the possible exposure of patients to life-threatening disease

Canada Pending

2015 Plaintiff contracted “Superbug” in the Hospital when exposed to a contaminated Endoscope

USA Pending

1 Disposition Date 2 Filing Date 3 Liability Apportioned 65%/35%

Healthcare SectorHospitals (not for profit and for profit), Teaching universities/medical schools, Long-term care/assisted living facilities, Managed Care Organizations, Health Maintenance Organizations (HMOs), Preferred Provider Organization (PPOs), Physician-Hospital Organizations (PHOs) and Clinical Trial/Contract Research Organizations.

<1,000 1,000-5,000

Beds>5,000

500

300

400

200

100

0

Average Program Limits Purchased Based on Chubb Bermuda’s 2016 Portfolio ($M) (Inclusive of Self-Insured Retentions)

14

15

Examples of Batch or Integrated Occurrence Events• A doctor used fraudulent credentials to operate on patients even though

he was not a surgeon.

• A substance had been drained from hospital machinery and put into empty drums that were supposed to be removed. Surgical patients were exposed to instruments that had been washed with the machinery substance by mistake and suffered from multiple health problems due to the exposure.

• Physicians misused or lost embryos and eggs from couples who went to their clinic for over a decade.

• Sexual abuse by a single mental health care provider over decades at a children’s hospital.

• Multiple patients were exposed to a disease during their treatment in the hospital by an infected employee.

• A doctor performed unnecessary medical procedures that resulted in undue harm to patients.

• A nurse employed in various hospitals lied about their qualifications (Poor Credentialing).

• Patients received false positive results due to instrument contamination.

• Injuries arising out of the Insured’s failure to comply with regulatory staffing requirements at various facilities.

• Thousands of pathology slides were misread or mislabeled over several months.

• A surgeon was promoted as a specialist and the reason why these patients sought him out. The surgeon had residents perform and or participate on surgeries without the patients consent.

• A nurse with a serious drug problem was stealing morphine from patients by withdrawing the drug from the lines with a syringe and injecting themselves.



– 3-D Printing


– Nanotechnology

– Aging Asset Infrastructure


– Deep Pocket


– Tailing Ponds/Dams


16


Date of Loss

Loss Details


2006 Fire resulting in bodily injury at manufacturing plant Germany $29 million

2007 Alleged Bulldozer design defect caused fatality USA $40 million

2007 Defect in boat design caused accident and resulted in serious injuries USA $31 million

2007 Wildfire started from logging operations USA $47 million

2007 Auto accident resulted in serious injury USA $24 million

20081 Defective whirlpool filters resulted in customers contracting legion-naires disease

USA $70 million

2008 Employee discrimination USA $17 million

2008 Alleged defective engine caused vessel fire and property damage USA $46 million

2009 Alleged Forklift design defect and failure to install safety features resulted in operator being crushed

USA $34 million

2010 Plant’s reservoir broke and flooded town with toxic mud, resulting in property damage and multiple fatalities

Hungary Pending

2010 Defective chain caused serious injury USA $45 million

2011 Class action complaint of an alleged product defect that caused third party property damage

USA $23 million

2012 Auto accident resulted in fatality USA $23 million

2012 Defective fireplace resulting in burn injuries Canada Pending

2012 Auto accident resulted in fatality USA $281 million2

2012 Alleged age discrimination USA $51 million3

2012 Product design defect and failure to warn caused serious permanent injury

USA $16 million

20164 Occupational Disease South Korea

$85 million

1 Various Disposition Dates 2 35.6% Punitive Damages Liability 3 97.3% Punitive Damages Liability 4Disposition Dates


Industrial Manufacturing SectorCompanies engaged in the design, development, assembly, manufacturing and sale of industrial equipment and component parts used in various industries.

17

1-7.5 7.5-20Assets ($b)

>20

600

500

700

400

300

200

100

0



– Biosimilars

– Nanotechnology

– 3-D Printing

– Gene-Testing


– Counterfeiting




– Deep Pocket

– M&A: New Capital/Financial Models /Emerging Markets


– Political, Regulatory & Risk Environment Reform

– Talc


– Lithium Batteries

18


Date of Loss

Loss Details


2006 Diabetes drug alleged to cause cancer and other injuries USA $9 billion

2006 Contraceptive patch linked to blood clots USA Confidential Settlement

2006 Contact lens solution alleged to cause eye infection Worldwide $250 million

2006 Faulty leads attached to pacemakers/defibrillators resulted in multiple explants/fatalities USA $268 million

2006 Prescription drug allegedly caused a variety of side-effects including behavioral changes USA $300 million

2006 Alleged design defect and failure to warn resulting in a patient contracting Hepatitis C USA $775 million

20061 Anti-psychotic drug alleged to have caused diabetes and other injuries USA $1.4 billion

2007 Pain medication alleged to cause addiction and death from overdose USA $750 million2

2007 Implanted device was medically unnecessary USA $67 million3

2007 Life-changing injuries alleged to have been caused by elective injections USA $212 million

2008 Contraceptive device linked to blood clots USA $100 million

2008 Alleged pelvic mesh devices caused serious and life-changing injuries USA $1.7 billion

2009 Protease drug alleged to increase patients risk of death USA $80 million

2009 Experimental drug used on children Nigeria $75 million4

2010 Epilepsy drug allegedly marketed for off-label use USA $142 million

2010 Alleged faulty hip implant design resulted in injuries and replacement USA $4.5 billion

2011 Blood thinning drug alleged to cause serious injuries and fatalities USA $650 million5

20116 Over-the-counter product alleged to cause serious personal injuries USA $120 million

2012 Distributors alleged to contribute to addiction and deaths from opioid use

USA $43 million

2012 Defective surgical stapler misfired causing serious permanent injury USA $80 million

2012 Hemodialysis products alleged to cause serious injury and or death USA $250 million

2012 Patients who took hypothyroidism drug claim to suffer serious side effects Israel Pending

2012 Meningitis contamination of injectable during pharmaceutical compounding USA $200 million2

2012 Hip replacement lawsuits USA $1.4 billion

2014 Serious injuries and or death alleged to result from Hormone Replacement Therapy USA Pending

2015 Clinical trial resulted in fatality and hospitalizations France Pending

20166 Anti-psychotic drug alleged to cause severe side-effects USA $124 million

1 MDL Consolidated 2 Estimate 3 96.6% Punitive Damages 4 Inclusive of Fines and Penalties 5 Proposed Settlement 6 Disposition Date

Life Sciences SectorCompanies engaged in the research, development, manufacturing, marketing, distribution, or sale of pharmaceuticals, biologics and medical products/ devices, including biomedical research/technology.

400

300

<10

Revenues ($b)>10

200

100

0

19



– Hazardous Material Haulage & Storage

– Hydraulic Fracturing – Seismic Activity – Air/Noise Pollution – Regulatory Changes – Methane Migration

– Aging Infrastructure/Fleet

– Extreme Weather

– Flood Scouring

– Frontier Drilling

– Grading

– Sink Holes

– Urban/HCA Footprint


– Strength of Contract Indemnifications


– Managing Cycles

– M&A


– Deep Pocket




– High Temperature Hydrogen Attack

– Talent Gaps

20

21

Oil & Gas Sector

Oil & Gas Sector

Companies engaged in exploration, production, refining, processing, marketing and distribution of natural gas, oil, liquids and derived products, including contract drilling and other oilfield products and services.


Date of Loss

Loss Details


2006 Broken gas well caused fatalities Indonesia $100 million

2006 Ship unloaded waste in ocean resulting in fatalities and injuries Ivory Coast $468 million

2006 Oil spill USA $245 million

2006 Oil Spill USA $150 million

2007 Oil spill Mexico $45 million

2007 Fire/explosion at natural gas procession plant USA $83 million

2007 Offshore oil spill South Korea $103 million

2008 Fire/explosion at refinery USA $150 million

20093 Pipeline leak USA $144 million1

2009 Oil spill Australia $160 million1

2010 Gulf of Mexico sub-sea well blowout with multiple fatalities USA $20 billion

2010 Pipeline leak USA $1.2 billion

2010 Coal mine explosion with multiple fatalities USA $210 million

2010 Oil refinery explosion USA $39 million

2011 Oil Spill Brazil $42 million

2011 Class action resulted after oil spill USA Pending

2011 Offshore oil leak China $267 million

2011 Drilling services provider battery pack explosion resulted in fatality USA $29 million

2012 Gasoline spill due to a ruptured pipeline USA Pending

2012 Oil spill Canada Pending

2012 Explosion at oil refinery resulted in multiple fatalities Venezuela $1.8 billion1

2012 Sinkhole resulted in contamination USA $48 million

2012 Tractor-trailer driveshaft assembly broke off in transit and killed passenger in oncoming truck USA $282 million2

2013 Oil pipeline rupture USA Pending

20133 Well water contamination USA $816 million4

2013 Plant fire and explosion USA $30 million5

2014 Oil rig explosion resulted in multiple fatalities and injuries USA Pending

2014 Oil rig explosion resulted in a fatality and several injuries USA Pending

2015 Oil rig explosion resulted in multiple fatalities and injuries Brazil Pending

2015 Gas leak at storage facility USA Pending

2015 Oil pipeline rupture and spill USA $269 million1, 6

20153 Oil spill Nigeria $84 million

1 Inclusive of 1st Party Property Damage or Economic Loss 2 35.5% Punitive Damages 3 Disposition Date 4 Award Apportioned 5Based on two jury awards 6Estimate

22



Oil & Gas Sector

Refining Exploration & Production

Drilling Pipeline

<150K 150-500K

Re�ning Capacity (bpd)>550K

400

800

600

700

200

100

300

500

0

1000

<500K 500-1,000K

Daily Production (boe/d)>1,000K

600

800

200

400

0

<45

Number of Rigs>45

700

300

500

600

400

100

200

0

<15,000 15,000-50,000

Miles of Pipe>50,000

800

400

600

200

0

23


– Eco-friendly/Green Construction

- Smart Buildings

- Internet of Things

- Security

- Unmanned Aerial Vehicles

- Airborne Contaminants

- Contingent Risks/Deep Pocket

- Increasing Defense Costs/ Collective Redress

- M&A

24


Date of Loss

Loss Details


2006 Failure of security guards to perform duties USA $55 million

2006 Automobile crashed into pole leaving passenger paralyzed USA $33 million

2007 Shooting at a restaurant resulting in paralysis USA $13 million

2007 Multiple fatalities in an apartment fire USA $29 million

2007 Scaffolding accident resulted in injury USA $51 million

2007 Theme park employees beat guest after he exited facility USA $32 million

2008 Automobile crashed into store entrance resulting in fatality USA $31 million

2008 Carbon monoxide leak caused severe injury USA $17 million

2008 Security guard severely beaten when he confronted intruder USA $25 million

2008 Guest fell from alleged improperly maintained hotel balcony USA $33 million

2008 Hotel guest privacy violated USA $55 million1

20082 Student severely injured from fall into manhole USA $23 million

2009 Sexual assault by resident USA $20 million

2009 Scaffolding accident resulted in injury USA $11 million

2009 DUI auto accident resulted in fatality USA $40 million

2009 Stabbing inside restaurant & bar resulted in fatality USA $40 million

2010 Child fatality after being struck by a truck USA Pending

2010 Security guard severely injured plaintiff USA $58 million

2010 Gas explosion in apartment USA $26 million

2010 Security guards failed to protect employees resulting in fatalities USA $39 million

2010 Party-goer fell off roof of residential building resulting in paralysis USA $26 million

2011 Carbon-monoxide poisoning in apartment caused serious injury USA $28 million

2012 Apartment floor collapsed resulting in group falling two stories USA $25 million

2012 Restaurant alleged lack of security resulted in patron being beaten to death USA $53 million

2014 Plaintiff was attacked by an assailant in front of her condo entrance USA Pending

2014 Lack of security alleged after fatal shooting in parking lot USA Pending

2015 DUI resulted in fatality USA $60 million

2015 Alleged negligence in the control and drainage of a dam resulted in damage to thousands of homes

USA Pending

2016 Store floor collapse USA $50 million3

1 Liability Apportioned 51% / 49% 2Disposition Date 3Demand

Real Estate SectorCompanies engaged in the ownership, operation or management of premises/ occupancy risks including but not limited to hotels, commercial buildings, residential buildings, and arenas/stadiums.

25

Hotels and Leisure

Financial Institutions and Other


<500Assets ($b)

>500

400

300

200

100

0

<10Assets ($b)

>10

600

500

400

300

200

100

0




- Aging Fleet

- Extreme Weather

- Hazardous Material Haulage & Storage


- Fatigue Risk Management

- Behavioral Health

- Prevalence of Publicly Available Data

- Deep Pocket



- Electronic Data Event


- Technical Advances

- Artificial Intelligence

- Talent Gaps

26

Transportation Sector – RailCompanies engaged in the transportation of passengers and/or products by rail.

27


Date of Loss

Loss Details


2007 Crossing grade accident with multiple injuries USA $49 million

20071 Train derailment and chemical spill USA $150 million

2008 Train collided with a tractor trailer resulting in multiple injuries USA Pending

2008 Commuter train collided with freight train USA $200 million

2009 Train derailment resulted in fire/explosion USA $36 million

2009 Train derailment with multiple fatalities Italy Unknown

2010 Train collision with multiple fatalities Belgium $68 million

2012 Failed to properly maintain and inspect track causing injuries USA Pending

20122 Contamination from railroad maintenance and fuel facility USA $36 million3

2013 Commuter train derailed resulting in multiple fatalities and injuries USA $28 million

2013 Train derailment resulted in multiple fatalities, injuries, and property damage Canada $446 million4

2014 Airport train derailment resulted in multiple injuries USA Pending

2014 Train derailment resulted in oil spill USA Pending

2014 Train collided with a tractor trailer resulting in multiple injuries USA Pending

2015 Train filled with smoke after electrical malfunction causing smoke inhalation injuries USA Pending

2015 Train collided with a vehicle resulting in multiple injuries and fatalities USA Pending

2015 Late braking resulted in derailment and multiple fatalities France Pending

2015 Freight train derailment resulted in property damage, an injury, and the evacuation of two towns USA Pending

2015 Freight train derailment resulted in petroleum product spill Canada Pending

2015 Train derailment resulted in hazardous materials spill Australia Pending

2015 Passenger train derailment resulted in fatalities and multiple injuries USA $295 million

2015 Commuter train crashed into truck on tracks resulting in fatalities and injuries USA Pending

2016 Trains collided head-on resulting in multiple fatalities and injuries Italy Pending

2016 Two commuter trains crashed head-on resulting in fatalities and multiple injuries Germany Pending

2016 Commuter train plowed through barrier at the end of the tracks and crashed into terminal wall USA Pending

2016 Passenger tram crash resulted in multiple fatalities and injuries United Kingdom Pending

2017 Commuter train derailment resulted in fatality and multiple injuries Belgium Pending

1 Filing Date 2Disposition Date 3Inclusive of 1st Party Property Damage and or Economic Loss 4Proposed Compensation Fund

Rail Freight

Rail Passenger


<20,000Track Miles

>20,000

1400

0

200

400

600

800

1000

1200

<10,000,000Ridership

>10,000,000

500

300

400

200

100

0



- Driverless Vehicles

- Extreme Weather

- Fatigue Risk Management

- Behavioral Health

- Electronic Data Event

- Deep Pocket



- Technical Advances


28


29


Date of Loss

Loss Details


2006 Car stopped for traffic and was rear-ended by a tractor-trailer USA $35 million

2006 Rental truck rolled over resulting in injuries USA $84 million

2006 Tractor-trailer accident resulted in serious injuries USA $18 million

2007 Vehicle hit by a tractor-trailer USA $65 million

2007 Trucks collided resulting in injury USA $17 million

2007 Tractor-trailer ran a red light resulting in multiple fatalities USA $42 million

2007 Bus lost control on icy roads resulting in multiple injuries USA $16 million

2007 Truck allegedly racing crashed resulting in multiple injuries and fatalities USA $16 million

2007 Ambulance crashed with car USA $24 million

2008 Tractor-trailer accident resulted in serious injury USA $18 million

2009 Plaintiff’s vehicle collided with a parked truck resulting in multiple fatalities USA $151 million

2009 Car veered off interstate crashing into truck USA $180 million1

2010 Multi-vehicle collision when car was struck by tractor-trailer USA $37 million

2010 Semi-tractor collision with bus resulted in serious injury to the bus driver USA $35 million

2010 Collision with tanker truck resulted in fatality USA $30 million

2010 Truck accident resulted in serious injury USA $17 million

2010 DUI manslaughter and vehicular homicide USA $46 million

2010 Patient injured when ambulance rear-ended a truck USA $104 million

20112 Bus hit and seriously injured pedestrian USA $28 million

2011 Semi tractor-trailer accident resulting in multiple fatalities USA Pending

2011 Bus door trapped passenger and drove off resulting in serious injuries USA $17 million

2011 Tractor-trailer accident resulted in multiple fatalities USA $157 million

2011 Tractor-trailer collided with a pick-up truck USA $178 million

2012 Tour bus accident resulting in multiple injuries USA Pending

2012 Dump truck accident with school bus resulting in a fatality USA Pending

2012 Bus accident resulting in multiple injuries USA Pending

2012 Bus hit and seriously injured pedestrian USA $21 million

2012 Tractor-trailer hit and seriously injured cyclist USA $35 million

2012 Vehicle accident resulted in child fatality USA $32 million

2013 Automobile crash resulted in fatality USA Pending

2013 Tractor-trailer and motorcycle side swiped each other USA $29 million

2013 Passenger fell out of bus’ side door resulting in fatality USA Pending

2013 Bus passenger seriously injured in collision with tractor-trailer USA $27 million

2014 Truck hit and injured a pedestrian crossing the road USA Pending

2015 Tractor-trailer collision resulted in fiery crash killing students USA Pending

2016 Bus accident results in fatality and injury USA Pending

2016 Buses collide resulting in fatality and multiple injuries USA Pending

2016 Bus accident results in multiple injuries USA Pending

1 Verdict vacated / Confidential Settlement 2 Disposition Date

Transportation Sector – RoadCompanies engaged in the transportation of passengers and/or products by roadway.

<3

Revenues ($b)>3

300

350

400

250

150

200

100

50

0





– Extreme Weather

– Asset Decommissioning


– Vulnerability to Solar Flares/ Geomagnetic Storms

– Flood Scouring

– Power Generation – Noise Pollution

– Pipeline Maintenance/ Cleaning

– Smart Grid Advancements

– Carbon Capture & Storage

– Urban/HCA Footprint

– Renewable Energy

- Wildfires



30

31

Utilities Sector – Energy

31

Utilities Sector – EnergyCompanies engaged in the generation, transmission and distribution of electricity including the transmission or distribution of gas.


Date of Loss

Loss Details


2007 Water from hydroelectric power plant damaged nearby property USA $173 million

2007 Wildfire USA $2.2 billion

2007 Utility company vessel crashed into anchored oil tanker causing oil spill China $142 million

2007 Wildfire USA $370 million

2008 Impoundment failure USA $1.1 billion1

2008 Gas line explosion resulted in fatality and injuries USA $25 million

2009 Explosion at hydroelectric plant with multiple fatalities Russia 3rd Party Unknown

2009 Electrocution caused fatality USA $109 million

2009 Bushfire resulted in multiple fatalities and property damage Australia $379 million

2009 Bushfire resulted in property damage Australia $50 million

2010 Pipeline explosion with multiple fatalities and property damage USA $650 million

2010 Natural gas pipeline explosion with multiple fatalities USA $27 million

2012 A natural gas explosion resulting in multiple injuries and property damage

USA Pending

2012 Downed power line caused electrocution resulting in fatality USA $60 million

2013 Tree collapsed causing a fatality and multiple injuries USA Pending

2013 Gas explosion resulted in fatality and multiple injuries USA Pending

2013 Multiple fatalities as a result of electrocution USA Pending

2013 Alleged negligence during maintenance resulting in serious injuries USA $22 million

2014 Gas explosion at residential building resulted in multiple fatalities and injuries.

USA $153 million2, 3

2014 Contamination of drinking water USA Pending

2014 Home explosion resulted in fatality and multiple injuries USA Pending

2014 Alleged negligence resulted in apartment explosion USA Pending

2015 Wildfire USA $750 million4

2015 Gas leak caused explosion at residence resulting in third party property damage and several injuries

USA Pending

2015 Natural gas leak resulted in alleged illnesses and mandatory evacuation of a few thousand families

USA $717 million4

2016 Gas build up in apartment basement lead to explosion and fatalities USA Pending

2016 Dam/Reservoir spillway release alleged to contribute to the flooding damage of hundreds of homes

USA Pending

1 Inclusive of 1st Party Property Damage 2 Civil Claims Pending 3Inclusive of 1st Party Property Damage and or Economic Loss 4Estimate

32

Utilities Sector – Energy

33


Gas Electric

Combined Gas & Electric

<15,000 15,000-35,000

Miles of Pipe>35,000

700

600

500

300

200

400

100

0

<1.5 1.5-4.5

Number of Customers (m)>4.5

600

500

300

400

200

100

0

<2 2-4

Number of Customers (m)>4

1200

1000

600

400

800

200

0

Oil & Gas SectorA Review of the U.S. Punitive Damages Liability LandscapeBy Richard Porter

34

This is a summary of the original paper. The full document and references can be found at www.chubb.com/bm

The full document addresses the availability of punitive damages, the insurability of punitive damages, the prevalence of punitive damage awards and the type of insurance products available for those seeking punitive damages cover.

Prevalence of Punitive Damage Awards

Older research has reported that a small percentage of civil litigation is resolved by trial and even a smaller percentage of those trials award punitive damages.1 However, more recent analysis suggests that punitive damage awards are considerably more prevalent than previously thought.

The statistical methodology is beyond the scope of this paper, but essentially, the older research measured all cases filed in a studied jurisdiction and compared that figure to cases resulting in punitive damages. Such analyses yielded a small percentage of cases actually resulting in punitive awards.

The newer research eliminates cases which were abandoned, disposed of before trial and/or which never actually sought punitive damages.2 The results show that for those plaintiffs who win at trial and seek punitive damages, their success rate is quite high. Notably, a 2010 report from Cornell Law School found:

• In all cases where the plaintiff sought punitive damages and won at trial, punitive damages were awarded in 35.5% of the studied cases.

• In EPL cases where the plaintiff sought punitive damages and won at trial, punitive damages were awarded in 38.5% of the studied cases.

• In cases where compensatory damages were between $1 million and $10 million and plaintiff sought punitive damages, punitive damages were awarded in 53% of the studied cases.

• In cases where compensatory damages were greater than $10 million and plaintiff sought punitive damages, punitive damages were awarded in 82% of the studied cases.

References

1. See e.g. Bureau of Justice Statistics. 2008. Special Report: Civil Justice Survey of State Courts, 2005: Civil Bench and Jury Trials in States Courts, 2005. Washington, D.C.: Department of Justice.

2. See e.g. Neil Vidmar and Mirya R. Holman, Duke University. The Frequency, Predictability and Proportionality of Jury Awards of Punitive Damages in State Courts, A New Audit. See also Eisenberg, Theodore: “The decision to Award Punitive Damages: An Empirical Study” (2010). Cornell Law Faculty Publications. Paper 185.

About the Author

Richard Porter is General Counsel and Corporate Secretary of Chubb Bermuda. He is responsible for the company’s legal department and has oversight of all legal affairs within Chubb Bermuda’s subsidiaries in Bermuda and Dublin.

A Review of the U.S. Punitive Damages Liability Landscape

35

A Review of the U.S. Punitive Damages Liability Landscape

By State All Trials Plaintiff Won Trial Plaintiff Won and Puni Sought

% Punis sought Number % Punis

sought Number % w/ Puni award Number

California* 21% 1263 23.4% 636 33.8% 148

Illinois* 2.9% 756 4.1% 418 47.1% 17

Penn.* 3.6% 853 4.4% 480 31.6% 19

Texas 6.5% 909 8.8% 444 56.4% 39

* Jurisdictions which restrict insurability

By County All Trials Plaintiff Won Trial Plaintiff Won and Puni Sought



L.A. (Calif )* 27.2% 379 32.3% 186 28.8% 59

Franklin (OH)* 29.8% 131 20.4% 93 44.4% 18

Orange (Calif )* 19.5% 272 24.8% 129 31.3% 32

Fairfax (Va)* 20.9% 163 22.8% 101 43.5% 23

* Jurisdictions which restrict insurability

By Type of Claim All Trials Plaintiff Won Trial Plaintiff Won and Puni Sought



Employment Discrimination 32.8% 131 41.3% 63 25% 24

Intentional Tort 23.6% 259 32% 128 65.8% 38

Negligence / Tort Other 9.9% 202 10.6% 104 36.4% 11

Employment Other 25.7% 183 26% 100 38.5% 26

Medical/Dental Malpractice 5.9% 972 7.4% 203 30.8% 13

The following tables show selected data from the Cornell Study:

36

By State

The four states selected for Table 3 were those in the Cornell study with the largest number of trials in the “All Trials” column. (See Cornell study Table 5). In California, for example, punitives were sought in 21% of all trials and sought in 23.4% of trials won by plaintiffs. And in those trials won by the plaintiff and where punitives were sought, punitive damages were awarded in 33.8% of the studied cases in California.

By County

The four counties selected for Table 4 were those from the Cornell study with the largest number of trials in the far right column, ‘Plaintiff Won and Punitives Sought’.

So, in Franklin County, Ohio, when a plaintiff won at trial and sought punitives, punitive damages were awarded in 44.4% of the studied cases.

By Type of Claim

The selected data shows that in cases classified as “Medical/Dental Malpractice,” where plaintiff won at trial and sought punitives, punitive damages were awarded in 30.8% of the studied cases.

Awards in Insurability Restricted Jurisdictions

State County Total $ Puni Award

California

Alameda 4,451,000.00

Contra Costa 25,000.00

Fresno 183,000.00

LA 2,179,000.00

Orange 26,149,000.00

San Bernardino 3,032,000.00

San Francisco 263,000.00

Santa Clara 780,000.00

Ventura 105,000.00

Connecticut

Fairfield 0

Hartford 629,000.00

Florida

Dade 280,450,000.00

Orange 300,000.00

Palm Beach 5,000,000.00

Illinois Cook 188,000.00

Indiana

Du Page 150,000.00

Marion 510,000.00

Massachusetts

Essex 0

Middlesex 25,000.00

Suffolk 2,750,000.00

Worcester 18,000.00

Missouri St. Louis 203,000.00

New Jersey

Bergen 370,000.00

Essex 2,000.00

Middlesex 555,000.00

New York New York 7,850,000.00

North Carolina Mecklenburg 518,000.00

Ohio

Cuyahoga 1,772,000.00

Franklin 4,661,000.00

Pennsylvania

Allegheny 3,051,000.00

Philadelphia 149,141,000.00

Virginia Fairfax 1,352,000.00

Total in restricted jurisdictions $496,662,000.00

Awards in Insurability Undecided Jurisdictions


Michigan (punis not available)

Oakland 0

Wayne 0

Texas Bexar 77,062,000.00

Dallas 393,296,000.00

El Paso 1,667,000.00

Harris 35,701,000.00

Washington King 134,000.00

Total in insurability undecided $507,860,000.00

Awards in No Restriction Jurisdictions


Arizona Maricopa 31,940,000.00

Pima 41,000.00

Georgia Fulton 446,000.00

Hawaii Honolulu 2,501,000.00

Kentucky Jefferson 100,000.00

Minnesota Hennepin 0

Wisconsin Milwaukee 103,000.00

Total in no restriction jurisdictions $35,131,000.00

Total in restricted jurisdictions $496,662,000.00

Total in insurability undecided $507,860,000.00

Total in no restriction jurisdictions $35,131,000.00

Total Awards (46 counties) $1,039,653,000.00

Excluding undecideds, 93.2% of the dollars were awarded in restricted jurisdictions.

2001 Snapshot: Punitive Damage Awards in 46 Counties Colour Coded for Insurability

Punitive Damage Awards by Insurability

Insurability not restricted 3% $35,131,000.00

Insurability undecided 49% $507,860,000.00

Insurability restricted 48% $496,662,000.00

37

Can punitive damages be paid by a defendant’s insurance? The answer varies from state to state.

About Chubb

Chubb is the world’s largest publicly traded property and casualty insurer. With operations in 54 countries, Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance to a diverse group of clients. Chubb Limited, the parent company of Chubb, is listed on the New York Stock Exchange (NYSE: CB) and is a component of the S&P 500 index. Chubb’s core operating insurance companies maintain financial strength ratings of AA from Standard & Poor’s and A++ from A.M. Best.

Chubb’s insurance operation in Bermuda is a leading provider of high excess capacity to Fortune 1000 companies including excess casualty, property, professional liability and punitive damages wraps. What sets Chubb Bermuda part is its unique product capabilities and depth of underwriting and claims management expertise. Chubb’s excess capacity products are also available from our Dublin and London operations.

38

Contact Us

Chubb Bermuda’s products are available only through Bermuda and non-U.S. based brokers.

Chubb Building17 Woodbourne AvenueHamilton HM 08BermudaO +441-295-5200www.chubb.com/bm

Chubb Bermuda International 5 George’s Dock International Financial Services Centre Dublin 1 Ireland T +353 (0)1 440 1700

Chubb Bermuda International Chubb Building 100 Leadenhall Street London EC3A 3BP United Kingdom T +44 (0)20 7173 7000

Chubb. Insured.SM

Copyright © 2017, Chubb. All rights reserved. The information contained in this document is intended for general marketing purposes and information only. For terms and conditions of coverage, please refer to the specific policy wording.

This information is intended to be illustrative of the average limits of liability being purchased by companies within particular industry sectors, and of notable large loss industry events which have given rise to liability claims. The Estimated Loss Amounts may or may not include defense costs. The Estimated Loss Amounts shown for earlier years have not been trended or developed. No inference should be drawn from this loss information that such an event or resultant liability claim would (or would not) be covered by a Chubb Policy.

Chubb Bermuda is regulated by the Bermuda Monetary Authority. It is not licensed in the U.S. as an admitted insurer nor is it an eligible excess and surplus lines insurer.

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