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How an Actuarial Review of Self Insurance Claims Turned the Ship Around for One Large Cruise Line

Seeking savings through safety

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A large cruise line self-insures for claims brought by crew and passengers. It needed to be sure it was holding adequate reserves to cover those claims, but even more, could it find a way a way to reduce the number and cost of claims altogether?

The Challenge

When a routine audit revealed the cruise line was not holding sufficient reserves for the volume of claims made, the auditors suggested an actuarial review to determine what amount would be appropriate. Working with Deloitte, the company conducted the review, which included looking at loss trends: Were the number of claims increasing? Was the amount of those claims increasing as well?

Along with calculating a reserve amount, the analysis gave the company a benchmark of its claims picture against other industries and against other cruise lines. It also revealed a sobering truth: Claims had become increasingly more frequent each year and, in turn, so had the cost required to cover those claims. While crew claims were comparable to the company’s competitors, passenger claims were much higher.

How We Helped

The company was eager to reverse these trends and Deloitte helped them as they evaluated several mitigation strategies. Presentations to various corporate functions, such as finance, claims, risk management, and operations, helped them understand the issues and their role in improvement efforts. The company knew its claims process and systems were less effective than they could be, and took steps to learn effective claims practices and acquire a new, more robust claims system.

Many claims were found to be safety-related, such as slip-and-fall injuries. The company engaged a safety consulting firm to review its practices and work on improvements. To keep management apprised of progress, an executive dashboard was also created as an online window on loss results and a generator for quarterly and monthly monitoring reports.


What began as a somewhat routine actuarial review morphed into a much more helpful examination of overall self-insurance practices that helped the company realize significant benefits. Major accomplishments include:

  • Improved fiscal management. The company now holds a larger, more appropriate liability for self-insured claims and has increased its retention to retain a greater portion of the risk along with anticipated savings in total claim costs.
  • Increased visibility leading to better decision making. Management has a better understanding of the drivers of the company’s loss experience, more closely monitors results, and is able to make better, more informed decisions that support continuous improvement.
  • Improved safety leading to reduced claims frequency. The company’s operations department is fully behind the safety initiatives, including adding more safety features as they build or refurbish ships. Safety efforts have resulted in 30 percent fewer crew claims thus far, and the hope is that over time the company will see similar reductions in passenger claims and realize overall savings in claims costs.

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