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Claim severity in public transit trends upward Aon Risk Solutions 2011 Public Transit Liability Benchmark Analysis By Terry C. Pfeifer

Occurrence frequency by 100,000 transit trips by transit operation type.

The Aon Risk Solutions 2011 Public Transit Liability Benchmark Analysis provides public transit risk managers with a better understanding of the liability cost of risk. The study found significant differences in both the frequency and severity of liability claims for bus operations compared to those of rail operations. Over the last five accident years public transit liability costs have been increasing slightly. Since 2006 there was a 3 percent average annual loss rate increase, a 1 percent average annual claim frequency increase and a 2 percent average annual claim severity increase.

Findings expressed numerically

Occurrence severity limited to $5 million per occurrence by transit operation type.

Loss Rate per 1,000 transit trips limited to $5 million per occurrence by transit operation type.

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April 2012

The Aon study shows that while the average dollar severity of a rail liability occurrence is higher than a bus occurrence, the much higher frequency of liability occurrences associated with bus operations is a key driver of the overall cost of liability claims. • Projected 2011 frequency was one occurrence per 1.075 million rail transit trips, and one occurrence per 170,000 bus transit trips • Projected 2011 severity was $31,300 for rail operations and $21,000 for bus operations • Projected 2011 loss rate was 2.9 cents per rail transit trip and 12.3 cents per bus transit trip A closer examination of the nature of bus operations compared to rail operations further explains these findings. As buses interact with pedestrians and other road traffic there is a greater potential for incidents leading to liability claims. While these claims can sometimes be severe or expensive, many others only relate to minor fender-bender incidents, which drive down the overall average bus liability claim severity. On the other hand, rail operations tend to operate on dedicated tracks with little or no interaction with pedestrians and vehicular traffic. While there are sometimes very severe rail occurrences, these are

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