Property and Casualty, commonly referred to as “P&C,” is an umbrella term to classify multiple types of insurance: those associated with your property, and those associated with casualty, risks that don’t relate to life, health or property, but instead entails liability coverage for an individual or organization for negligent actions or omissions.

 

After interning as a Property and Casualty Actuarial Intern this past summer, I decided I wanted to pursue the P&C track of insurance because of how diverse it can be. P&C Insurance is known to be more statistical in nature than life insurance (which is more financial). Because of this, Property Casualty is more dynamic in comparison to life insurance. With life insurance, you don’t always have to adjust life insurance product assumptions to market conditions, since a product is created that is meant to last for a pretty long time, like 30-40 years. On the other hand, P&C products have much more variability. Something that you assume today in your actuarial models may not be valid in a month from now. This makes P&C constantly unpredictable. Personally, I find this variability and diversity of the field to be more interesting than life insurance or pensions.

In this article, I will first give examples of both property insurance and casualty insurance, go into detail about the most common P&C products, and lastly give a long list of more niche/specialized products that P&C actuaries also work in.

Property Insurance entails anything that relates to the risk of damage to property. This can be related to natural disasters, other weather-related damages, fire, and theft damage. If one needs more coverage, or a specific type of homeowner’s coverage, he/she can purchase specialized forms of property insurance. This includes, but is not limited to: flood insurance, earthquake insurance, just general home insurance boiler insurance, renter’s insurance, landlord insurance, and condo insurance.

Casualty Insurance entails any liability coverage for an individual for what is considered “negligent actions.” This includes, but is not limited to: Automobile Insurance, Liability, Workers’ Compensation, Surety Bonds, Errors and Omissions (E&O) Insurance, Directors and Officers (D&O) Insurance, Credit and Political Risk Insurance, Terrorism Insurance, Marine Insurance, and Fidelity Bonds. Casualty insurance is hard to define, since it basically includes a bunch of insurance products that aren’t related. Think this: if it isn’t related to your house (property), your health, or your life, then its most likely casualty insurance.

 

Now, I will talk about some of the most common types of P&C Insurance in a little more detail:

 

GENERAL LIABILITY (GL)

 

General Liability Insurance protects businesses from the possibility of incurring losses that arise out of business operations on the work premises. Sometimes when individuals get injured on the premises of some building (e.g., a slip-and-fall), they sue the building/business owner on whose property they got injured. GL insurance pays legal fees related to the defense of the business/policyholder named in the lawsuit (this is typically costs thousands of dollars). If you are found innocent of any liability due to someone’s injury, GL just covers the court fees. However, if you are found guilty, GL will make sure to cover a large portion (if not all) of fees associated with a payout to the injured individual due to this incident. Because of multiple factors, it usually takes the insurance company a long time (10-30) to determine if they have made a profit on the GL (because of IBNR, etc.).

 

AUTO

 

Auto insurance is exactly what it sounds like. You pay a premium to be covered any time that you are driving on the road. Your premium amount can depend on many factors: your gender, age, number of years driving, car type, economic status, are you a veteran, senior citizen, etc. Whenever you have an accident, your premiums are more likely to raise since you are a higher liability to the insurance company providing you coverage. If you are under 25, your auto insurance rates are more likely to be higher since teenagers and young adults pose the highest risks to insurance companies.

 

WORKERS’ COMPENSATION (WC)

 

Workers’ Compensation is insurance that covers medical benefits and wage compensation for employees that cannot work during their normal course of employment. WC can give individuals lifelong benefits due to permanent disabilities, assurance that workers don’t have to pay out of pocket when they have an injury, or that their family gets compensation due to an injury that occurs on the work premises. Many insurance policies have policy limits, or a cap, an amount that is the maximum that an insurance company is willing to pay for a certain loss. For WC, there is no policy limit, in some/most cases, as their main goal is to make sure that individuals get the care they need and get back on their feet as soon as possible.

Note that the key to receiving workers’ compensation is that the injury afflicted to the person must arise out of their employment, as well as during the course of their employment. In other words, the worker’s injury must occur at their workplace, while they are still employed

by that workplace. For example, the following scenarios exemplify cases in which a WC benefit would be paid to the worker:

• A UPS delivery man gets in a crash while dropping off packages, breaks his rib, and is unable to work for a month.

• A worker falls on a slippery floor because someone didn’t clean up a spill that happened during lunch break.

 

The following scenarios do NOT warrant a WC benefit:

• An actuary, while pricing whole life insurance, gets a heart attack, and dies.

• A doctor gets into an accident while driving to work, and breaks her leg.

• A teacher, who has the flu, gets another teacher sick with the flu, causing both of them to be out from work for 2 weeks.

As you can see, the scenarios in which an individual receives a WC benefit are very specific. Because of this, they need skilled actuaries in order to properly price their WC products.

 

If you’re interested in learning more about the CAS side of Actuarial Science, make sure to check out the links at the bottom of this article in addition to these links from the Casualty Actuarial Society website:

Casualty Actuarial Society CAS Student Central

 

Here is a comprehensive list of every P&C type of Insurance, or Product offered that I can think of (not that there are more types of P&C insurance products than what is listed):

• Property

• Business Income

• Crime

• Equipment Breakdown

• Inland Marine

• Ocean Marine

• General Liability

• Auto

• Tires Insurance

• Farm

• Crop

• Workers’ Compensation

• Excess

• Professional Liability (PLI)

• Medical Malpractice

• Errors and Omissions (E&O)

• Environmental

• Umbrella

• Construction

• Railroad

• Art

• Cyber and Technology

• Aviation

• Space

• Credit and Political Risk

• War, Terrorism, and Political Violence

• Valuables

• Livestock

• Surety

• Fidelity

• ERM (Enterprise Risk Management)

• Predictive Modeling

 

Resources:

https://en.wikipedia.org/wiki/Property_insurance https://www.investopedia.com/terms/c/casualtyinsurance.asp https://en.wikipedia.org/wiki/Casualty_insurance https://www.nationwide.com/what-is-property-and-casualty-insurance.jsp https://www.allstate.com/tools-and-resources/insurance-basics/property-and-casualty- insurance.aspx

www.InsuranceJournal.com www.Propertycasualty360.com http://xlcatlin.com/insurance/insurance-coverage http://www.casact.org

http://www.casstudentcentral.org/