Latest Studies - May 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. 2015 INSURANCE BAROMETER STUDY
LIMRA; Page N/A
April 1, 2015

Fifty-seven percent of all people in the United States were covered by some type of life insurance in 2014, according to LIMRA’s 2015 Insurance Barometer Study. Nearly one-third of Americans said they need more life insurance in 2015. Other findings from the 2015 report include: fifty-four percent of Americans say they are unlikely to purchase a life insurance policy within the next year; sixty-five percent said that they have not purchased more life insurance because they think it is too expensive, yet 80 percent of consumers misjudge the price of term life insurance. Millennials overestimate the cost by 213 percent, and Gen Xers overestimate the cost by 119 percent. The most common financial worry among consumers more than 25 years old is being able to afford a comfortable retirement, while consumers 25 and under are more concerned with paying monthly bills. Only 13 percent of Americans own long-term care insurance and twenty-six percent of Americans own disability insurance. The study is available to LIMRA members via www.limra.com.


2. WORKERS' COMPENSATION MEDICAL COST CONTAINMENT: A NATIONAL INVENTORY, 2015
Ramona P. Tanabe
Workers Compensation Research Institute (WCRI); Page N/A
April 1, 2015

This study provides policymakers and system stakeholders with an inventory of the cost containment initiatives employed by 51 jurisdictions. This study updates the tables from the previous edition with the statutory provisions, administrative rules and administrative procedures as of January 1, 2015. Cost containment initiatives aim to curb the cost of a particular service or to reduce the amount of services provided. They entail a balancing act of limiting the cost of services and inappropriate or unnecessary treatment without negatively affecting the quality of treatment or access to care for injured workers. To learn more or purchase a copy of the study click here


3. COMMERCIAL INSURERS’ PERFORMANCE DRIVEN BY SPECIALIZATION, SEGMENTATION AND ALIGNMENT
Conning. News release; Page N/A
April 6, 2015

Commercial lines insurers that exhibit consistently superior performance share a number of key traits, according to a new study by Conning. The study, “Growth and Profit Leaders in Commercial Lines: Specialization, Segmentation, and Alignment Drive Results,” identifies 15 companies that demonstrated consistent growth and profitability over a 10-year period. It also analyzes the common traits and strategies among those companies. The study is available for purchase from Conning by calling (888) 707-1177 or from the company’s website at www.conningresearch.com.


4. USING NATURALISTIC DRIVING DATA TO ASSESS THE PREVALENCE OF ENVIRONMENTAL FACTORS AND DRIVER BEHAVIORS IN TEEN DRIVER CRASHES
Cher Carney et al
AAA Foundation for Traffic Safety; 71 Pages
March 31, 2015

For this study, University of Iowa researchers reviewed 1,691 moderate-to-severe crashes involving young drivers ages 16-19 (no fatal crashes were included in this analysis). Male drivers were involved in 52 percent of crashes and females 48 percent. When drivers were examined by crash type, results indicated that more males were involved in single-vehicle crashes than females (56 percent vs 44 percent), and more females in vehicle-to-vehicle crashes than males (53 percent vs 46 percent). The driver was found to have been driving too fast for conditions in 79 percent of single-vehicle crashes; following too closely in 36 percent of rear-end crashes, and failed to yield to another vehicle in 43 percent of angle crashes. The driver was inattentive or engaged in some other non-driving-related activity in 58 percent of crashes overall. The most frequent potentially-distracting behaviors were conversing or otherwise interacting with passengers and cell phone use. Passengers were present in 36 percent of all crashes 84 percent of passengers were estimated to be ages 16-19; fewer than 5 percent were parents or other adults. Driver was conversing or otherwise interacting with passenger in 15 percent of crashes. The driver was engaged in cell phone use in 12 percent of crashes. The driver was visibly using a cell phone in 8 percent of all crashes; cell phone use appeared likely in an additional 4 percent. Cell phone use varied significantly by crash type. The study found that distraction due to cell phone use appears to be much more prevalent than is reflected in official government statistics derived from police reports. Full Report


5. AIR TRAFFIC CONTROL. FAA NEEDS A MORE COMPREHENSIVE APPROACH TO ADDRESS CYBERSECURITY AS AGENCY TRANSITIONS TO NEXTGEN
Government Accountability Office (GAO); 56 Pages
April 30, 2015

This report concludes that the FAA still has a long way to go when it comes to securing its Next Generation Air Transportation System. Cybersecurity challenges exist in securing Air-Traffic Control Information Systems; protecting aircraft avionics used to operate and guide aircraft; and clarifying cybersecurity responsibilities among the multiple FAA offices. One of the challenges to protecting aircraft avionics is increasing connectivity to the Internet on board which exposes the systems to potential unauthorized access. The GAO recommends that the FAA assess developing a cybersecurity threat model; include the Office of Safety as a member of the assessment Committee; and use revisions recommended by the National Institute of Standards and Technology. Full Report.


6. INCREASING CONCENTRATION OF PROPERTY VALUES AND CATASTROPHE RISK IN THE US
Karen Clark and Company; 12 Pages
April 1, 2015

Karen Clark Company (KCC) estimates that insured property values were at over $90 trillion in 2014 (including contents and time element exposures). Property values continue to increase ahead of inflation and GDP growth. At the same time, highly concentrated pockets of exposure continue to accumulate in vulnerable coastal areas and other locations susceptible to natural disasters. Counties along the Gulf and Atlantic coasts account for more than 17 percent of total exposure at $16 trillion. Los Angeles County accounts for more than 3 percent of total exposure. The top 5 states ranked by property value are: California, New York, Texas, Illinois and Florida. A chart breaks out total property values by state in Gulf and Atlantic coastal counties. The report speculates about insured losses from a mega-hurricane hitting Texas, Florida or the Northeast; or an earthquake hitting California. The report warns that catastrophe models used by insurers to predict losses do not give a complete picture of cat loss potential and suggests that insurers use new risk metrics such as Characteristic Event (CE). The full report can be obtained from www.karenclarkandco.com.


7. TRANSPORTATION NETWORK COMPANY INSURANCE PRINCIPLES FOR LEGISLATORS AND REGULATORS
National Association of Insurance Commissioners (NAIC); 30 Pages
March 31, 2015

The National Association of Insurance Commissioners (NAIC) has published this white paper to help state insurance regulators and legislators address the insurance coverage gaps presented by transportation network companies (TNCs) such as Uber, Lyft and Sidecar. Legislation regarding TNC is pending in many states. The paper discusses insurance coverage issues from the driver, passenger, insurer and TNC perspectives and reviews coverage options. A chart in Appendix A contains a list of local ordinances and state legislation currently in place regarding TNCs. Full Report


8. MORE CUSTOMERS ARE SHOPPING FOR NEW AUTO INSURANCE, BUT FEWER ARE SWITCHING
JD Power & Associates; Page N/A
April 27, 2015

Auto Insurance rate increases have many customers shopping for a new insurer, but few are actually switching insurers, according to the J.D. Power 2015 U.S. Insurance Shopping Study. The study measures insurance shopping and purchase behavior, and purchase experience satisfaction among customers who recently purchased insurance across three factors (in order of importance): price, distribution channel and policy offerings. Auto insurers increased rates by an average of 2.1 percent nationwide in 2014. The rate hikes are contributing to customers shopping for a better deal, and while more customers are shopping for a new insurer—39 percent in 2014 compared with 32 percent in 2013—fewer are actually switching. The 2015 study finds that among those who shopped, only 29 percent actually switched in 2014, compared with 37 percent in 2013. Shoppers who switched insurers indicate an average premium savings of $388 in 2015, compared with $340 in 2014 and $351 in 2013. “When looking exclusively at price, consumers may find the grass is not always greener…Many customers are obtaining quotes and gathering information on insurer websites or through aggregators, but the day-to-day interactions they have with their insurer, especially if they have to file a claim, will be the ultimate moment of truth for the customer” said Valerie Monet, director of the insurance practice at J.D. Power. Erie Insurance ranks highest among auto insurers in providing a satisfying purchase experience for a third consecutive year, with a score of 870, up from 843 in 2014. News Release

 


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