Latest Studies - February 2015

Each month the Insurance Information Institute compiles recent studies from industry, government, academic and other sources. Topics include consumer issues, industry trends, climate and environment, and studies covering individual lines of business like automobile liability and workers compensation.

1. DWELLING, FIRE, HOMEOWNERS OWNER-OCCUPIED, AND HOMEOWNERS TENANT AND CONDOMINIUM/COOPERATIVE UNIT OWNER'S INSURANCE - 2012
National Association of Insurance Commissioners (NAIC); Page N/A
January 1, 2015

The National Association of Insurance Commissioners (NAIC) has released its 2012 Homeowners Insurance Report, providing data on market distribution and average cost by policy form and insurance amount. The report includes national and state specific premium and exposure information for non-commercial dwelling fire insurance and for homeowners insurance package policies. It also contains data descriptions and a discussion about the way certain economic, demographic and natural phenomena impact the price of homeowners insurance. The data in the report includes written exposure (earned house years) and aggregate written premiums by state and countrywide for the 2012 data year. It contains tables that show state and countrywide exposures by policy type, individual policy form, and insurance coverage amount. The report includes a state by state breakdown of the information. The report is now available free of charge from the NAIC.


2. 2015 ROADMAP OF STATE HIGHWAY SAFETY LAWS
Advocates for Highway Auto Safety; 55 Pages
January 1, 2015

The 12th edition of this annual report assigns a rating to all 50 states and the District of Columbia on their progress toward adoption of 15 basic traffic safety laws. Every state legislature will meet this year and safety groups call on elected officials to close “lethal loopholes” including lifesaving laws that are missing as well as dangerous exemptions and secondary enforcement of laws that are leaving drivers and passengers unprotected and susceptible to needless death and injury. “Last year was a lackluster year for states in terms of passing highway safety laws with a mere eight laws enacted in only seven states. Governors and state legislators must renew, reinvigorate and re-energize their efforts to close safety loopholes. These laws will save lives, prevent costly injuries and help states close budget gaps. And, they are strongly supported by the public,” said Jackie Gillan, President of Advocates. Advocates recommends 15 optimal laws that have been proven by research and experience to be effective. Each state is assigned a rating of: Green (Good); Yellow (Caution); and Red (Danger). This year, there were only eight new laws passed in seven states that meet the criteria for an optimal law as defined in the report. These new state laws enacted in 2014 are: Primary Enforcement of Seat Belts: None (17 states still need front seat; 33 states need rear seat); All-Rider Motorcycle Helmet Law: None adopted or repealed (31 states still need); Booster Seats (ages 4 through 7): None adopted (19 states still need); Graduated Driver Licensing (GDL) for teen drivers: NH (cell phone restriction) and MN (supervised driving requirement); (No state meets all the criteria/174 laws still needed); Impaired Driving: AL, DE, MS, NH (ignition interlock devices for all offenders); (39 states and DC are missing laws/42 laws still needed); All-Driver Text Messaging Restriction: NM, SC (11 states still need). Dr. Mark Rosekind, Administrator of the National Highway Traffic Safety Administration, offered, “I want to thank Advocates for Highway & Auto Safety for years of dedication to our shared mission of saving lives and preventing crashes. The report coming out today is a helpful tool for exploring how we can enhance highway safety programs in states and communities across the country.” Full Report


3. SPRING FORWARD AT YOUR OWN RISK: DAYLIGHT SAVING TIME AND FATAL VEHICLE CRASHES
Austin Smith
University of Colorado Boulder; Page N/A
October 1, 2014

The author of this study, an economist with the University of Colorado-Boulder, analyzed national data on fatal car crashes from 2002 to 2011 to see what happens immediately after people reset their clocks in the spring and fall. The study found that fatal crashes increased in the 6-day period immediately following the spring transition (when clocks are turned forward an hour), but did not change after the fall transition. The author estimates that springing forward resulted in 302 deaths, at a social cost of $2.75 billion over the 10-year sample period. Full Report


4. 2014 ANNUAL GLOBAL CLIMATE AND CATASTROPHE REPORT
Aon; 68 Pages
January 1, 2015

This annual report evaluates the impact of natural disaster events that occurred worldwide during 2014. Global natural disasters in 2014 caused economic losses of $132 billion, 37 percent below the 10-year average of $211 billion. The losses were attributed to 258 separate events, compared with the 10- year average of 260. The disasters caused insured losses of $39 billion, 38 percent below the 10-year average of $63 billion, and was the lowest insured loss total since 2009. This was the second consecutive year with below normal catastrophe losses. Notable events during the year included major flooding in India, Pakistan, China and Southeast Europe; billion-dollar convective thunderstorm events in the United States, France, and Germany; winter storms in Japan and the United States; and widespread drought in the United States and Brazil. The top three perils, flood, tropical cyclone and severe weather, accounted for 72 percent of all economic losses in 2014. Despite 75 percent of catastrophe losses occurring abroad, the U.S. accounted for 53 percent of global insured losses, driven by a higher insurance penetration. Full Report


5. 2014 NATURAL HAZARDS RISK SUMMARY AND ANALYSIS
CoreLogic; 24 Pages
December 1, 2014

2014 was the second consecutive year in which there were few deadly and highly destructive hurricanes, tornadoes and wildfires in the U.S. On December 29 CoreLogic, a private research and consulting company, released a report showing that superstorm Sandy, the storm that devastated the Northeast in 2012, was the last single natural disaster that led to damages in the tens of billions of dollars. The total cost of Sandy was approximately $70 billion. Although the last two years have been relatively quiet in terms of natural disasters, California, Arizona, New York and Michigan were hit by major floods in 2014, with the flooding in the metropolitan area of Detroit causing more than $1 billion in damage. Thirty- one people died in the worst tornado outbreak of 2014 in late April in the South. However, the year is on track to have the fewest number of tornadoes of any year in the last decade. CoreLogic reports that the earthquake in California’s Napa Valley in August would have been far more destructive if the epicenter had been in a more heavily populated area, but property loss for the temblor was relatively small, totaling less than $1 billion. Fewer acres were burned by wildfires in 2014 than in any year in the last decade. Full Report


6. PROBABILISTIC REANALYSIS OF TWENTIETH-CENTURY SEA-LEVEL RISE
Carling C. Hay, Eric Morrow, Robert E. Kopp, Jerry X. Mitrovica
Nature; Page N/A
January 14, 2015

A team of researchers from Harvard and Rutgers Universities reported that the sea level did not increase in the 20th Century as much as indicated in earlier studies. Although the adjustment in the latest study is small, it could lead to a clearer scientific explanation of the problem of the rising sea level. Previous studies have concluded that the sea level rose by approximately six inches during the last century, but the new study shows that the increase was only five inches. The difference amounts to approximately two quadrillion gallons. If their peers accept the findings of the new study, the team may have solved a longstanding question in climate research. Experts have repeatedly added the most precise measurements of the melting of land ice available and other factors causing an increase in sea level, but the total was always a little less than the rise reported from harbors around the world. The discrepancy drove scientists on a search for additional glaciers and land sheets that could be melting or additional heat that could be causing the water to expand. The latest report, published on January 14 in the journal Nature, applied sophisticated statistical techniques to measure increases in the sea level in harbors and found that previous research had slightly overestimated the increase in the last century. The new study has already led to work on new forecasts about how much the sea levels would increase if emissions of greenhouse gases continue at a high level. Full Text


7. ALLIANZ RISK BAROMETER. TOP BUSINESS RISKS 2015
Allianz; Page N/A
January 1, 2015

Businesses face new challenges from disruptive scenarios which are on the rise in an increasingly interconnected corporate environment, according to the fourth Allianz Risk Barometer 2015. In addition, traditional industrial risks such as business interruption and supply chain risk (46% of responses), natural catastrophes (30%), and fire and explosion (27%) continue to concern risk experts, heading this year’s rankings. Cyber (17%) and political risks (11%) are the most significant movers. The survey was conducted among more than 500 risk managers and corporate insurance experts from both Allianz and global businesses in 47 countries. The risk of cybercrime and IT failures continues its rapid rise in the Allianz Risk Barometer, moving into the top five business risks globally for the first time (in 2014, cyber risks ranked 8th and in 2013 just 15th). In Germany, the United Kingdom and the United States cyber risks are now among the top three corporate risks. Loss of reputation (61%) and business interruption (49%) are regarded as the main causes of economic loss following an incident. Full Report


8. INSURANCE AND THE RISE OF THE DRONES
Joseph Colby, Gerald Deneen, Carol Kreiling, et al.; 42 Pages
December 1, 2014

The commercialization of drone technology is just getting started and it appears to have enormous future potential. Insurance coverage for drone operation is absolutely essential for that progress to take place. The goal of this white paper is to explore the development and use of drones and identify the attendant legal and practical issues to help insurance companies and their clients in the United States and Canada to accurately assess and underwrite the risks posed by the use of drones. Full Report


9. SECURITIES CLASS ACTION FILINGS. 2014 YEAR IN REVIEW
Cornerstone Research; 35 Pages
January 1, 2015

This report by Cornerstone Research and the Stanford Law School Securities Class Action Clearinghouse shows that while there was little change in the number of security class actions filed in federal court in 2014, the size of filings, in terms of shareholder losses, was far smaller than compared with 2013. Plaintiffs filed 170 new federal class action securities cases in 2014 – four more than in 2013. The number of 2014 filings was 10 percent below the historical average of 189 filings observed annually between 1997 and 2013. Full Report


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