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` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
` __________________
` LIBERTY MUTUAL INSURANCE CO.
` Petitioner
` v.
` PROGRESSIVE CASUALTY INSURANCE CO.
` Patent Owner
` __________________
` Cases CBM2012-00002; CBM2012-00004(JL)
` Patent 6,064,970
`
` Case CBM2013-00004(JL)
` Patent 8,090,598
` Cases CBM2012-00003; CBM2013-00009(JL)
` Patent 8,140,358
`
` __________________
`
` DEPOSITION OF MARY LOU O'NEIL
` Washington, D.C.
` Friday, September 13, 2013
`
`Reported by: John L. Harmonson, RPR
`Job 65806
`
`TSG Reporting - Worldwide 877-702-9580
`
`

`

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`
` M. O'NEIL
`introduced by Mr. Miller.
` Q. Were you familiar with this document
`before it was offered by Progressive in its
`response to the Liberty Mutual petition?
` A. Yes. I've been familiar with this
`document since its initial publication. I
`believe it was back in the 1980s, maybe 1982 or
`somewhere in that range.
` Q. So it's a document you're well
`acquainted with; is that right?
` A. It's not something --
` MR. MYERS: Objection. 402, 403.
` A. I'm familiar with the document as any
`other professional actuary might be.
` Q. It's not a document that would be
`obscured to actuaries practicing in their field;
`is that right?
` MR. MYERS: Objection. Federal Rule
` of Evidence 402, 403. I'm going to give the
` rule number as we go forward, but I'm
` referring to the Federal Rules of Evidence.
` A. I'm not sure what you meant by
`"obscure." We don't -- at least I as a
`professional don't sit and look through all of
`Page 8
`
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` M. O'NEIL
`2
`CBM2012-2.
`3
` (Liberty Mutual Exhibit 1022, having
`4
` been marked for identification, is attached
`5
` hereto.)
`6
` Q. Can you identify that document,
`7 Ms. O'Neil?
`8
` A. Do you wish for me to read the entire
`9
`description on the cover?
`10
` Q. If that's how you would like to
`11
`identify it.
`12
` Let me ask a different question. Is
`13
`this your rebuttal declaration in the
`14
`CBM2012-2 case?
`15
` A. That is correct. That is what the
`16
`identifying caption says.
`17
` Q. And you recognize it as such, correct?
`18
` A. Yes.
`19
` Q. Okay. Now, I would ask you to turn to
`20
`Paragraph 46. Are you there?
`21
` A. Yes.
`22
` Q. Okay. In this paragraph you're
`23
`providing testimony about helping to develop an
`24
`actuarial class system in New Jersey, correct?
`25
` MR. MYERS: Objection. 402, 403.
`
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`
` M. O'NEIL
`the -- you know, I guess there are 50 standards
`of practice and several statements of principle,
`daily. I mean, it's on an as-needed basis. You
`go back to the document whenever you might want
`to use it.
` Q. And in fact, you've used this document
`in your actuarial work in the past?
` A. Yes, I have used it in the past.
` Q. And in fact, in the past has some of
`your actuarial work been conducted in a way
`that's consistent with the statement of
`principles set forth in this document?
` MR. MYERS: Objection. 402, 403.
` A. I believe all of my actuarial work has
`always been consistent with all of the standards
`of practice, which includes the statements of
`principles.
` Q. And by that, you mean this statement
`of principles that is Progressive's Exhibit 2012?
` A. Well, there are several statements of
`principles attached to the standards of practice.
`This is one of them. So I included everything.
` Q. Okay. Let me now hand you another
`exhibit, Liberty Mutual Exhibit 1022 in case
`Page 9
`
` M. O'NEIL
` A. This paragraph mentions something I
`did as a consultant to the New Jersey Market
`Transition Facility.
` Q. And what you did was help to develop
`an actuarial class system using driving record
`points; is that right?
` A. Correct.
` Q. And when you did that, was your work
`consistent with the risk classification statement
`of principles that's Progressive's Exhibit 2012?
` MR. MYERS: Objection. 402, 403.
` A. Yes. As I said, my work has always
`been consistent with the statement of principles.
` Q. So in your experience, you have always
`adhered to this statement of principles whenever
`you have provided your professional services as
`an actuary?
` MR. MYERS: Objection.
` Q. Is that right?
` MR. MYERS: Objection. 402, 403.
` A. I wouldn't use that terminology, that
`terminology of "adhered." As I've explained
`other places in my declaration, these statements
`of principles and the standards of practice are
`3 (Pages 6 to 9)
`
`TSG Reporting - Worldwide 877-702-9580
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`

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` M. O'NEIL
`2
`driving record points were the supposed bad
`3
`drivers. And they are the ones, then, that
`4
`should pay.
`5
` So this plan was devised by gathering
`6
`data from DMV. It was actually Department of
`7 Motor Vehicle data. And what they were able to
`8
`provide were counts, basically, frequency counts
`9
`by driving record points. Well, then, there --
`10
`Those data were now analyzed for revenue
`11
`generation; break points, where would you break
`12
`this, would you have groupings of zero to one
`13
`point, two to three, so on. Where would you
`14
`break it, what kind of charges would you have at
`15
`each subdivision.
`16
` And then there was the consideration
`17
`of possibly point forgiveness for those that
`18 maybe had one ticket or two points.
`19
` So a lot of different scenarios were
`20
`reviewed and considered, and in the end the only
`21
`data that were available were indeed just those
`22
`distributions by number of points and then
`23
`assignment of dollar values to determine the
`24
`revenue that might be generated from the system
`25
`to provide it to the residual market system.
`Page 16
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` M. O'NEIL
` Q. That was an extremely long answer --
` A. I'm sorry.
` Q. -- to a different question than the
`one I asked.
` MR. MYERS: Objection. 402, 403.
` If you want to ask questions, that's
` great. If you want to comment about the
` testimony --
` MR. WAMSLEY: I do --
` MR. MYERS: -- then we're going to
` have problems.
` MR. WAMSLEY: I do want to have --
` MR. MYERS: Then we're going to have
` problems.
` MR. WAMSLEY: I do want to have a
` conversation. I'll have it with you,
` Mr. Myers. We have limited time. We have
` five proceedings. And we -- I don't intend
` to have a filibuster session.
` When I ask a question that can be
` answered yes or no or in a few words, I'd
` appreciate that kind of answer. If there's
` a need for qualification, I certainly
` understand. That's permissible and that's
`Page 17
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` M. O'NEIL
` appropriate. But an answer that goes on for
` several pages that is not responsive to the
` question is going to waste our time here and
` we're going to end up having to bring
` Ms. O'Neil back, and I don't think any of us
` wants to do that.
` MR. MYERS: I disagree with you. The
` record will speak for itself.
` MR. WAMSLEY: Can we go back to the
` question and read it to her?
` (Whereupon, the requested portion was
` read back by the Reporter.)
` MR. MYERS: Objection. Rule 402, 403.
` Q. Can you answer that question yes or
`no, Ms. O'Neil?
` A. Well, once again, my long answer, as
`you said, was a description of the data and how
`it was used and why those were the data that were
`used.
` Were those data homogeneous? I would
`answer yes. I mean, let's look at the definition
`provided by the standard. Let's see here.
` Now, the standard utilizes expected
`loss costs in its definition of homogeneity.
`
`1
` M. O'NEIL
`2 Now, I did not have expected loss costs available
`3
`to me in utilizing the data that I was using.
`4 Nevertheless, based on my experience in the
`5
`field, I believe that expected loss costs were
`6
`appropriately identified by the groupings that
`7 were set up.
`8
` Q. This statement of principles is one
`9
`of -- one source of generally accepted actuarial
`10
`principles and practices; am I right?
`11
` A. That is correct. Like I -- I believe
`12
`I said earlier, you would look at the literature
`13
`as well and other standards of practice and so
`14
`on.
`15
` Q. And there are other -- as you say,
`16
`there are other sources of generally accepted
`17
`actuarial principles and practices besides this
`18
`statement of principles?
`19
` A. Definitely. This is a very small
`20
`piece of the entire body of information.
`21
` Q. Are there any other generally accepted
`22
`actuarial principles and practices that are in
`23
`conflict with the ones that are set forth in
`24
`Exhibit 2012?
`25
` MR. MYERS: Objection. 402, 403.
`5 (Pages 14 to 17)
`TSG Reporting - Worldwide 877-702-9580
`
`

`

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` M. O'NEIL
`2
` A. I guess I don't understand that
`3
`question, because if they're in conflict with it,
`4
`they can't be part of the generally accepted
`5
`principles and practices. I would think the body
`6
`of it is fairly cohesive.
`7
` Q. I would think so too.
`8
` So all the other sources of generally
`9
`accepted actuarial principles and practices, to
`10
`the extent they relate to this same subject
`11 matter as Exhibit 2012, would be consistent with
`12
`it; is that correct?
`13
` MR. MYERS: Objection. 402, 403.
`14
` A. I don't know if I would put it exactly
`15
`that way. Part of the thing about actuarial
`16
`science is that it's not an exact science.
`17
`Everything that has been written in various
`18
`papers, including this, has been written by
`19
`people. And it's not like mathematics where two
`20
`times two is four. This is in the best judgment
`21
`of the people who wrote it at the time.
`22
` The same thing with various papers in
`23
`the literature. I would assume that a
`24
`statistician or even another actuary may not
`25
`necessarily, without this in front of them, write
`Page 20
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`1
` M. O'NEIL
`2
`the same definition for homogeneity. It doesn't
`3 make it wrong; it makes it different. So I would
`4
`think that if we did some research, we would find
`5
`other criteria that people have put forward
`6
`related to classifications, not making any one of
`7
`them more wrong or right, it becomes part of the
`8
`total body of knowledge of an actuary.
`9
` So I really can't -- I can't really
`10
`agree to what you're saying, that every document
`11
`we look at is going to have the same thing in it.
`12
`I don't think so.
`13
` Q. In fact, hasn't this statement of
`14
`principles in Exhibit 2112 -- or excuse me, 2012
`15
`been widely accepted by actuaries practicing in
`16
`the field?
`17
` MR. MYERS: Objection. 402, 403.
`18
` A. I really wouldn't know what "widely
`19
`accepted" means. I know that it's part of the
`20
`standard of practice 12, which is part of the
`21
`entire set of standards of practice. I'm not
`22
`sure what the total number is at this time.
`23
`Nevertheless, there are other papers and so on
`24
`that have been written related to
`25
`classifications, related to statistical analyses
`Page 21
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` M. O'NEIL
`of classifications and so on which might expand
`upon the concepts as they relate to
`classification. This is more simplistic than a
`lot of things one might read on the subject.
` Q. Are you aware of any other guidelines
`that conflict with the Exhibit 2012 statement of
`principles?
` MR. MYERS: Objection. 402, 403.
` A. These are the only guidelines per se
`in terms of something that's been set forth as
`part of the standards of practice. The rest of
`the body of generally accepted principles and
`practices would come from professional writings,
`publications, the body of actuarial literature.
`That's what I'm referring to that would expand
`upon this and actually be more technical than
`this. You would find that in other writings,
`which would become part of generally accepted
`actuarial principles and practices as opposed to
`something that is actually part of the standards
`of practice.
` Q. Are there other standards of practice
`that are in conflict with the statement of
`principles in Exhibit 2012?
`
` M. O'NEIL
` MR. MYERS: Objection. 402, 403.
` A. This is the only standard of practice
`that deals with classifications.
` Q. Okay. In your opinion, has this
`statement of principles been relied upon by
`actuaries on matters that it's germane to?
` MR. MYERS: Objection. 402, 403.
` A. This sounds like the same question you
`asked me before, only instead of "adhered" you've
`now said "relied upon." My answer is the same.
`It's been considered as appropriate along with
`the rest of the body of actuarial literature.
` Q. Have you ever publicly criticized any
`of these statement of principles?
` A. I do not recall having done so. I may
`have objected to someone perhaps stating that
`something should be adhered to or something is
`set in stone type of rule. But I don't recall
`necessarily criticizing. I don't recall doing
`that. Anything is possible, I suppose.
` Q. Let me refer you to Paragraph 7 of
`your rebuttal declaration, Exhibit 1022. Feel
`free to refresh your memory by looking at that
`paragraph, or the surrounding paragraphs if you
`6 (Pages 18 to 21)
`TSG Reporting - Worldwide 877-702-9580
`
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` M. O'NEIL
`claims data. In fact, he says actuarial class
`claims data, correct? Which could include other
`types of claims data besides actual claims data,
`correct?
` A. No. He says expected insurance claims
`loss, which is actual claims data. It doesn't
`say actuarial.
` Q. So all expected claims loss data has
`to be actual? It can't be estimated?
` A. Even if it is estimated, it's still --
`you're mistaking the word "actual" meaning of a
`company as opposed to from some other source.
` Q. What did you mean by "actual"?
` A. I meant of a company as opposed to
`some other source.
` Q. You meant their own actual historical
`experience; is that right?
` A. Correct. I meant the company's own
`experience as opposed to some other data from
`some other source.
` Q. But you don't find that in
`Paragraph 16, do you?
` A. I believe I do.
` Q. Expected claims loss could be
`
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` M. O'NEIL
`estimated as well as taken from actual historical
`results. Am I right?
` A. Indeed, I'm not disagreeing with you.
`I'm saying that expected claims loss still would
`need to be based on the company's own data based
`on what Mr. Miller has said here, is what I'm
`saying. I'm saying in my thing that Mr. Miller
`has not allowed for the fact that data could be
`from some other outside source.
` Q. Nonetheless, he does not say "actual
`claims data" in that paragraph?
` A. He does not use that exact word. That
`is -- That is what I read whenever I read his
`testimony. He said expected insurance claims
`loss. That implies or basically is a statement
`that you would use the company's own expected
`insurance claims loss. Expected is estimated,
`basically.
` So when I say "actual" here, it refers
`to within the company as opposed to from some
`other source, which is what this paragraph talks
`about, is that you can use data from other
`sources, you could use industry data, you could
`use data from another company if it were
`
`Page 32
`
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`
`1
` M. O'NEIL
`2
`available. You could use data from -- there are
`3
`other collection places that you can get data
`4
`from. And that's what's not mentioned here.
`5
` Q. Mr. Miller doesn't say that you have
`6
`to use data from a particular company, does he?
`7
` A. The way this is written, a POSITA
`8 would understand that he's saying that it's used
`9
`from the company that is setting up the class.
`10
` Q. Let me direct your attention to
`11
`Paragraph 29 --
`12
` A. Okay.
`13
` Q. -- of Exhibit 2010. Do you see the
`14
`first sentence of that paragraph, Ms. O'Neil?
`15
` A. Yes, I see that.
`16
` Q. Okay. And there Mr. Miller indicates
`17
`that other considerations can be taken into
`18
`account, including the experience of other rate
`19
`filers, business judgment, and all other relevant
`20
`information and data within and outside the
`21
`state.
`22
` Do you see that?
`23
` A. Yes, I see that he wrote that there.
`24 Nonetheless, he didn't allow for that in these
`25
`other places.
`
`1
` M. O'NEIL
`2
` Q. So you don't read his entire
`3
`declaration as being consistent with his opinions
`4
`here?
`5
` A. This statement is in a particular
`6
`section of the declaration. The other -- I
`7
`assume that this definition that we just read in
`8
`16 was meant to stand alone.
`9
` Q. Oh, I see.
`10
` Isn't it correct that the statement of
`11
`principles that Mr. Miller cites in his
`12
`declaration allows for using data other than
`13
`actual claims loss data?
`14
` A. We should check. Do we have a
`15
`specific spot in here?
`16
` Q. You're the actuary. I wouldn't want
`17
`to point you to the wrong section, Ms. O'Neil.
`18
`But I'm referring to Exhibit 2012.
`19
` A. I'm not finding it right now, but I
`20
`suspect that -- I'm not sure that it actually
`21
`addresses the exact source of the data. Because,
`22
`once again, these are guidelines. They're not
`23 meant to be recipe books.
`24
` And I just note one more thing
`25
`regarding Mr. Miller's sentence that you pointed
`9 (Pages 30 to 33)
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`

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`1
` M. O'NEIL
`2 me to. This particular sentence, if you look at
`3
`it carefully, says:
`4
` Demonstration that an insurer's rates
`5
`comply with the statutory rate standards
`6
`typically involves consideration of past and
`7
`prospective loss experience of the insured, the
`8
`experience of other rate filers' business
`9
`judgments, and all other relevant information and
`10
`data within and outside the state.
`11
` That statement, that sentence, refers
`12
`to the overall rate level. Because if you read
`13
`the next sentences, it speaks about
`14
`classifications. Mr. Miller is not permitting
`15
`these types of data -- at this time, at least,
`16
`suggesting these types of data would apply to
`17
`classifications.
`18
` The next sentences refer to
`19
`classifications.
`20
` Q. That's how you read it, at least?
`21
` A. Well, that's a standard way one would
`22
`state. Because he says insurer's rates. That
`23
`refers to a rate filing, has an overall rate
`24
`level within it, and that's what you would use.
`25
`The data that he's listed here are what are put
`Page 36
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` M. O'NEIL
`2
`forth for the actual base rate. Then the
`3
`classification plan follows from that, which is
`4 what he has got in the next sentence.
`5
` Q. In fact, isn't the insurer required to
`6
`justify that its rates are fair and not unfairly
`7
`discriminatory?
`8
` A. All right, that is one of the
`9
`ratemaking standards in the statute. In order to
`10
`satisfy that demonstration, first the overall
`11
`rate level is in the filing. Then the regulator
`12
`would look at classifications.
`13
` Many times, however, classification
`14
`filing is a separate filing. It's not part of
`15
`the overall rate level filing because of its
`16
`additional complexity. And generally the
`17
`classification filing is more complex and
`18
`therefore takes more time and it's not done as
`19
`frequently as the update of the overall rate
`20
`level.
`21
` So yes, they would have to demonstrate
`22
`the classifications as well and not unfairly
`23
`discriminatory, but not as frequently.
`24
` Q. When you read the words "demonstration
`25
`that an insurer's rates comply with the statutory
`Page 37
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`1
` M. O'NEIL
`2
`rate standards," are you excluding the standards
`3
`that relate to rates not being unfairly
`4
`discriminatory?
`5
` A. No, I'm not. As a regulator,
`6
`obviously you want the rates to be not
`7
`inadequate, not excessive and not unfairly
`8
`discriminatory. The question as a regulator is:
`9 How often must I look at the rates to determine
`10
`compliance?
`11
` Most companies revise their base rates
`12
`frequently as it relates to economic trends and
`13
`so on. So they may want to make a rate filing
`14
`with an insurance regulator every six months. At
`15
`the same time, everyone recognizes, the regulator
`16
`and the company, that classification
`17
`differentials, or whatever you might want to call
`18
`it, classifications don't change all that
`19
`frequently. And so that may not be reviewed by
`20
`the company or by the regulator more than once a
`21
`year or once every several years. So that's why
`22
`it's oftentimes a separate filing.
`23
` And so it's assumed that as long as
`24
`that filing is in place, there has been a filing
`25
`to show that the rates are not unfairly
`
` M. O'NEIL
`discriminatory, you don't have to revise it as
`often as you do the rates that are based on
`trends.
` Q. My question is: Doesn't demonstration
`that an insurer's rates comply with the statutory
`rate standards refer not just to the base rates
`but also to the classifications that the insurer
`is proposing to use?
` MR. MYERS: Objection. 402, 403.
` A. I believe I said that compliance is
`required with all aspects of the rating law.
`However, the actual implementation on the part of
`the regulator of measuring that compliance can be
`done in a distinct fashion with separate rate
`filings for different aspects of that compliance.
` Q. Do you think Mr. Miller here in
`Paragraph 29 is insisting that the insurer must
`rely on actual claims data in justifying
`actuarial classes?
` MR. MYERS: Objection. 402, 403.
` A. That's what he says. If you look at
`the second sentence, he says:
` Any claims data gathered by the
`insurer via its risk classification plan, when
`10 (Pages 34 to 37)
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`Page 39
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` M. O'NEIL
`combined with the insurer's expense data, can be
`important in convincing the insurance regulator
`that the insurance premiums in question are
`fairly discriminatory.
` So that's exactly what he's intending
`to submit or use for the unfairly discriminatory
`portion of the statute.
` Q. So when he says it can be important,
`you read that as saying it's mandatory; is that
`right?
` MR. MYERS: Objection. 402, 403.
` A. No. I'm reading this first part, any
`claims data gathered by the insurer via its risk
`classification plan. So that means its own data.
` Q. And go on. The rest of the sentence
`reads that that data can be important --
` A. Uh-huh, it does say that.
` Q. -- in convincing the insurance
`regulator.
` And you read that to mean that it
`is -- that Mr. Miller is saying it's required?
`Is that what you're saying?
` MR. MYERS: Objection. 402, 403.
` A. He didn't use the word "required." He
`Page 40
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`1
` M. O'NEIL
`2
`said that's what he would use.
`3
` Q. Where does he say that's what he would
`4
`use?
`5
` A. Well, okay, it doesn't say what he
`6 would use. He's saying that's what is used. Any
`7
`claims data gathered by the insurer, when
`8
`combined with expense, can be important. So he's
`9
`suggesting that's one way to demonstrate.
`10
` Q. Exactly, it's one way.
`11
` A. Yes. Yes.
`12
` Q. It's not the only way he's suggesting,
`13
`is it?
`14
` MR. MYERS: Objection. 402, 403.
`15
` A. The next sentence just goes on to say
`16
`that there may be some other basis for
`17
`justification, but it doesn't provide what that
`18 might be.
`19
` Q. So you agree with me?
`20
` MR. MYERS: Objection.
`21
` Q. Actual claims data is not the only way
`22
`he's saying it should be done?
`23
` A. That's what I'm saying, actual claims
`24
`data is not the only way that it should be done.
`25
` Q. And you would agree with me that his
`Page 41
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`1
` M. O'NEIL
`2
`statements here are consistent with that?
`3
` A. No. I think that maybe in this
`4
`particular situation he has allowed that there
`5 may be some other way to do it, but he is saying
`6
`that actual claims data should be provided. And
`7
`also he's allowing that there may be something
`8
`else in this case, but these other situations
`9 within the document that's he's provided are not
`10
`so flexible.
`11
` Q. Let me direct your attention back to
`12
`Paragraph 16 of Mr. Miller's declaration. In
`13
`this paragraph at least Mr. Miller specifically
`14
`cites the statement of principles that we've been
`15
`looking at, Exhibit 2012, in his definition of
`16
`actuarial class, correct?
`17
` A. He has a sentence here referencing the
`18
`risk classification statement of principles.
`19
` Q. So you agree?
`20
` MR. MYERS: Objection.
`21
` A. Agree with what?
`22
` Q. My question.
`23
` MR. MYERS: Objection.
`24
` A. I'm not sure what you're asking me
`25
`that I agree with.
`
` M. O'NEIL
` MR. WAMSLEY: Can you read the
` question back?
` (Whereupon, the requested portion was
` read back by the Reporter.)
` A. And I believe I answered --
` Q. Can you answer yes or no?
` A. I believe I answered that he does say
`that he has referenced classification statement
`of principles.
` Q. You can't answer my question yes or
`no, though?
` MR. MYERS: Objection. She's answered
` your question.
` A. He says he referenced the statement of
`principles. I think we should look at them if we
`want to see exactly what he's referencing. He
`doesn't provide a cite.
` Q. You agree that he cites them?
` A. I agree he cites them. But I don't
`agree necessarily that they're cited word for
`word. So I don't see a definition in here.
` Q. Let me ask you to turn to your own
`declaration, rebuttal declaration that's
`Exhibit 1022, at Paragraph 12. Feel free to
`11 (Pages 38 to 41)
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`Page 42
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`Page 43
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`1
` M. O'NEIL
`2
`refresh your memory and look at that material.
`3
` A. I've taken a quick look at that.
`4
` Q. Okay. Let me direct your attention to
`5
`the first sentence of the paragraph, Ms. O'Neil.
`6 Would you agree with me that automobile accident
`7
`statistics such as the number of at-fault
`8
`accidents can be considered as a risk
`9
`characteristic for which an actuarial class might
`10
`be created?
`11
` MR. MYERS: Objection. 402, 403.
`12
` A. I believe there are existing actuarial
`13
`classes based on number of at-fault accidents,
`14
`zero, one, two, three, four.
`15
` MR. WAMSLEY: My issue is, Jim, that
`16
` rather than answer yes or no and explain,
`17
` Ms. O'Neil provides a narrative answer which
`18
` does not frequently respond to my question.
`19
` So I really would, in the interest of
`20
` getting this done expeditiously, like to
`21
` suggest that the witness, when I present a
`22
` simple question that asks for a yes or no,
`23
` give a yes or no. If she feels the need to
`24
` explain or qualify, she's obviously free to
`25
` do so.
`
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` M. O'NEIL
` MR. MYERS: We disagree. Please
` proceed.
` Q. If one were to create or evaluate a
`potential actuarial class relating to number of
`accidents, expected claims loss data would be
`used in doing that. Am I right?
` MR. MYERS: Objection. 402, 403.
` A. I'm not sure what you mean by
`"evaluate."
` Q. To assess whether an actuarial class
`can be created.
` A. I don't agree with that. I believe
`you can create classes, zero, one, two, three,
`four accidents. And regardless, as a hypothesis,
`one would create those classes.
` Q. But in order to actually use them as
`classes in setting insurance premiums, am I
`correct that expected claims loss data would be
`used to determine whether they were actually
`useable in that fashion?
` MR. MYERS: Objection. 402, 403.
` A. It is not that simple of an analysis
`to determine what the appropriate -- Well, let me
`go back.
`
`Page 44
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` M. O'NEIL
`2
` You're setting up the class, is what I
`3
`understand. Is that correct?
`4
` Q. You're considering setting up that
`5
`class, that's right. That's my hypothetical.
`6
` A. So we don't already have it. Well, I
`7
`think what would be done, if one did not want to
`8
`collect any information ahead of time, is we
`9 would hypothecate that drivers with more
`10
`accidents might be drivers who have more claims.
`11
`So we set up the classes and we collect data, and
`12
`then we look at the data to see if indeed it is
`13
`true that those drivers that have more accidents
`14
`have more claims.
`15
` Q. So the data you collect is claims
`16
`data. Am I right?
`17
` A. Well, you collect more than that. You
`18
`would collect premium data, claims data,
`19
`obviously the number of exposures. You would
`20
`collect a lot of data.
`21
` Q. So when you were doing your work in
`22
`New Jersey that you testified about previously
`23
`this morning, what data did you refer to in your
`24
`work there?
`25
` A. For determining what portion of that
`
`1
` M. O'NEIL
`2
`analysis are you referring to?
`3
` Q. It's the activity that's mentioned in
`4
`Paragraph 46 of your rebuttal declaration,
`5 Ms. O'Neil.
`6
` A. Yes.
`7
` Q. That's what I'm referring to.
`8
` A. Yes. But what portion of that are you
`9
`referring to here now?
`10
` Q. I'm referring to the part where --
`11
`your activity in support of the development of an
`12
`actuarial class system using driver record
`13
`points.
`14
` A. As I explained before, that system was
`15
`developed, as I just mentioned, using the initial
`16
`hypothesis that drivers with more driving record
`17
`points would result in more claims. So given
`18
`that hypothesis and the absence of any prior
`19
`historical data of any kind, and the idea was to
`20
`generate revenue, I believe we looked at what had
`21
`been charged in -- by some companies that
`22
`actually charged for violations and began with
`23
`that, and then created scenarios that if these
`24
`prices were utilized, what would be the revenue
`25
`generated, what would be a reasonable charge over
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`Page 50
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`Page 51
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`1
` M. O'NEIL
`2
`declaration you filed accompanying Liberty
`3 Mutual's petition in this matter?
`4
` A. Yes, this appears to be my original
`5
`declaration, one of them.
`6
` Q. Let me direct your attention to
`7
`Paragraph 17. Do you see there you've rendered
`8
`opinions about the person of ordinary skill,
`9
`right?
`10
` A. Correct.
`11
` Q. Are those opinions still your opinions
`12
`today?
`13
` A. I have not changed this, so yes, that
`14
`remains my opinion.
`15
` Q. Is it correct that a person of
`16
`ordinary skill in 1996 would not have had
`17
`experience using or applying fuzzy logic in the
`18
`determination of insurance premiums?
`19
` A. That's not nec