Latest Studies - December 2014

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. PROPERTY-CASUALTY INSURERS FACING THE CHALLENGE OF CONTINUED LOW INTEREST RATE ENVIRONMENT
Conning. Study; Page N/A
November 21, 2014

The property/casualty industry has been challenged by falling interest rates, but most companies have the balance sheet strength required to meet and respond to the challenge, according to a new study by Conning, “Property-Casualty Investments: The Low Interest Rate Continues—Wait it Out or Take on Risk?” The study explores how the industry has responded to the interest rate challenge, and looks prospectively to how this response may continue and change as companies look for broader opportunities. It also reviews differences by subsectors of the industry. The study is available for purchase from Conning by calling (888) 707-1177 or from the company’s website at www.conningresearch.com.


2. UNNECESSARY INJURY: THE ECONOMIC COSTS OF IMPOSING NEW GLOBAL CAPITAL REQUIREMENTS ON LARGE U.S. PROPERTY AND CASUALTY INSURERS
Robert J. Shapiro and Aparna Mathur
Sonecon; 38 Pages
November 1, 2014

This report, which was authored by economist Dr. Robert Shapiro and supported by The National Association of Mutual Insurance Companies (NAMIC) and the Property and Casualty Insurers Association of America (PCI), highlights the unnecessary and harmful impact on U.S. consumers of the effort by international regulators to apply global capital requirements to large U.S insurers with substantial foreign business. It concludes that imposing these regulations on U.S. insurers would likely result in higher rates and less choice across the insurance industry. The report specifically finds that if large U.S. property and casualty insurers were subject to the new requirements, it could raise annual premiums for homeowner's coverage by as much as $109 and slow the growth of insurance offerings by as much as $7.3 billion each year. Full Report


3. OREGON REPORT SHOWS DECREASE IN NATIONAL MEDIAN WC RATE
Workers’ Compensation Report; Page 2
October 21, 2014

The latest biennial study from the Oregon Department of Consumer & Business Services shows that workers comp rates in California are the highest in the U.S. and the rates in North Dakota are the nation’s lowest. The report lists the 50 states and Washington, D.C., in the order of highest comp rates to lowest as of January 1, 2014. The report also compares each state’s rates with the national median of $1.85 per $100 of payroll. The median declined 2 percent, compared with the figure in the 2012 study. The study is widely used by workers comp experts and state regulators when they consider reforms to workers comp systems. Mark Walls, vice president of communications and strategic analysis for Safety National, describes the Oregon Workers’ Compensation Premium Rate Ranking Summary as a benchmark for comparing the states’ systems. The article lists the 10 states at the top of the list in the latest study and compares each with its 2012 ranking. The report can be downloaded from www.cbs.state.or.us


4. MEDICAL MALPRACTICE REFORM: NONECONOMIC DAMAGES CAPS REDUCED PAYMENTS 15 PERCENT, WITH VARIED EFFECTS BY SPECIALTY
Seth Seabury, Eric Helland and Anupam Jena; Page N/A
November 1, 2014

“The impact of medical malpractice reforms on the average size of malpractice payments in specific physician specialties is unknown and subject to debate. We analyzed a national sample of malpractice claims for the period 1985–2010, merged with information on state liability reforms, to estimate the impact of state noneconomic damages caps on average malpractice payment size for physicians overall and for ten different specialty categories. We then compared how the effects differed according to the restrictiveness of the cap ($250,000 versus $500,000). We found that, overall, noneconomic damages caps reduced average payments by $42,980 (15 percent), compared to having no cap at all. A more restrictive $250,000 cap reduced average payments by $59,331 (20 percent), and a less restrictive $500,000 cap had no significant effect, compared to no cap at all. The effect of the caps overall varied according to specialty, with the largest impact being on claims involving pediatricians and the smallest on claims involving surgical subspecialties and ophthalmologists.” Journal Abstract. To purchase this article go to http://content.healthaffairs.org/content/33/11/2048.full


5. PREVALENCE OF MOTOR VEHICLE CRASHES INVOLVING DROWSY DRIVERS, UNITED STATES, 2009 – 2013
AAA Foundation for Traffic safety; 10 Pages
November 1, 2014

A previous study by the AAA Foundation for Traffic Safety found that a drowsy driver was involved in 7 percent of all crashes in which a vehicle was towed from the scene, 13 percent of crashes in which a person was hospitalized, and 17 percent of fatal crashes in years 1999 – 2008. The current study updates that study with data from years 2009 – 2013. Data from a representative sample of 14,268 crashes in which a vehicle was towed from the scene were examined. Driver drowsiness was assessed by trained investigators. Multiple imputation was used to estimate the proportion of drivers who were drowsy among those whose drowsiness status investigators were unable to ascertain. Results showed that an estimated 6 percent of all crashes in which a vehicle was towed from the scene, 7 percent of crashes in which a person received treatment for injuries sustained in the crash, 13 percent of crashes in which a person was hospitalized, and 21 percent of crashes in which a person was killed involved a drowsy driver. If these proportions are applied to all reported crashes nationwide, results suggest that an average of 328,000 crashes annually, including 109,000 crashes that result in injuries and 6,400 fatal crashes, involve a drowsy driver. Full Report


6. BICYCLIST FATALITIES A GROWING PROBLEM FOR KEY GROUPS
Governors Highway Safety Association; Page N/A
October 27, 2014

The number of bicyclists killed on U.S. roadways is trending upward, particularly for certain subsets of the population, according to the Governors Highway Safety Association’s new Spotlight on Highway Safety: Bicyclist Safety report. The report notes that yearly bicyclist deaths increased 16 percent between 2010 and 2012, while overall motor vehicle fatalities increased just one percent during the same time period. There have been some remarkable changes. For example, adults 20 and older represented 84 percent of bicyclist fatalities in 2012, compared to only 21 percent in 1975. Adult males comprised 74 percent of the total number of bicyclists killed in 2012. Bicycle fatalities are increasingly an urban phenomenon, accounting for 69 percent of all bicycle fatalities in 2012, compared with 50 percent in 1975. These changes correlate with an increase in bicycling commuters – a 62  ercent jump since 2000, according to 2013 Census Bureau data. There are some bicycle fatality data that remain unchanged over the decades. Bicyclists killed are predominantly males (88 percent in 2012), and lack of helmet use and alcohol impairment continue to contribute to bicyclist deaths. In 2012, two thirds or more of fatally injured bicyclists were not wearing helmets, and 28 percent of riders age 16 and older had blood alcohol concentrations of 0.08 percent or higher, compared with 33 percent of fatally injured passenger vehicle drivers. Full Report


7. : RESTATING THE NATIONAL HIGHWAY TRANSPORTATION SAFETY ADMINISTRATION’S NATIONAL MOTOR VEHICLE CRASH CAUSATION SURVEY FOR AUTOMATED VEHICLES
Casualty Actuarial Society E-Forum, Fall 2014-Volume 1; 19 Pages
November 1, 2014

Automated vehicles face a myriad of risks, according to a new report by the Casualty Actuarial Society’s Automated Vehicles Task Force (CAS AVTF). The report interprets data from the National Highway Transportation Safety Administration’s (NHTSA) 2008 National Motor Vehicle Crash Causation Survey (NMVCCS). The NMVCCS is the most recent source of the oft-repeated statistic that approximately 90 percent of accidents are caused by human error, which many publications have cited to quantify the potential for automated vehicles to eliminate such accidents. According to the CAS report, almost half of all accidents (49 percent) in the NMVCCS had a technological, infrastructural, or behavioral factor that could have limited or eliminated an automated vehicle’s potential to prevent the accident. This new benchmark illustrates the broad array of risks that need to be addressed before the technology can reach its potential. The CAS AVTF is working to engage the insurance industry and provide a deeper understanding of the risks associated with automated vehicle technology.  Full Report


8. GLOBAL TERRORISM INDEX. 2014
Institute for Economics & Peace; 94 Pages
November 1, 2014

This report found that there was a 61 percent increase in deaths from terrorism globally in 2013 from 2012. There were 17,958 deaths from terrorism in 60 countries in 2013, with over 80 percent of those deaths occurring in just five countries and accounting for the global figures going up. The five countries are: Iraq, Afghanistan, Pakistan, Nigeria and Syria. The Global Terrorism Index (GTI) is a comprehensive study that accounts for the direct and indirect impact of terrorism in 162 countries in terms of lives lost, injuries, property damage and the psychological after-effects of terrorism. This study covers 99.6 per cent of the world’s population. Full Report


9. MANAGING A GLOBALLY COMPLIANT INSURANCE PROGRAM
Advisen; 9 Pages
November 1, 2014

This free paper, sponsored by FM Global, offers insight on assembling the best property insurance program structure to address firms’ risk management objectives while complying with local insurance regulations. Insurance is regulated on a country-by-country basis, meaning that a multinational company must have an insurance program that conforms to a wide array of local laws while still providing adequate, uniform protection. The program also must be structured such that companies with exposures elsewhere in the world can receive indemnification from insurers or to finance insurance losses at those locations without incurring significant tax liabilities, which most often happens when claims are paid in a country that is different than the one where the loss occurred. With the right partner, risk managers will find an optimal blend of global and local insurance coverage to both ensure compliance with local regulations and to achieve risk management, financial and tax goals. Full Report


10. NORTH ATLANTIC TROPICAL CYCLONES AND U.S. FLOODING
Gabriele Villarini, Radoslaw Goska, James A. Smith, and Gabriel A. Vecchi
American Meteorological Society; 8 Pages
November 1, 2014

This study by University of Iowa researchers found that flooding associated with North American tropical cyclones (TCs) is not solely a coastal phenomenon but affects much larger areas of the United States, as far inland as Illinois, Wisconsin, and Michigan. Despite these important repercussions, inland TC flooding has received relatively little attention in the scientific literature, although there has been growing media attention following Hurricanes Irene (2011) and Sandy (2012). Based on discharge data from 1981 to 2011, the authors, provide a climatological view of inland flooding associated with TCs, leveraging using data from the U.S. Geological Survey (USGS). Florida and the eastern seaboard of the United States (from South Carolina to Maine and Vermont) are the areas that are the most susceptible to TC flooding, with typical TC flood peaks that are 2 to 6 times larger than the local 10-yr flood peak, causing major flooding. A secondary swath of extensive TC-induced flooding in the central United States is also identified. Full Report


If you have a suggestion for a study to be included in this section please email info@iii.org.