Latest Studies July 2014

1. ARE POTATO CHIPS THE NEW CIGARETTES?
Michael Clark, Carol Kreiling and Victoria Mace
Swiss Re; 12 Pages
June 1, 2014

This extensively footnoted document discusses the health issues related to the increased consumption of fats, sugars, oils and animal products that have made approximately one third of the world’s population obese. The study also considers the potential liability of the food and beverage industry, a legal liability that is compared to that faced by cigarette manufacturers. The study discusses how sugar affects health and disease and questions whether the food industry has intentionally developed products that are addictive. Health advocates contend that beverage companies have increased the amount of sodium in their products so that consumers will be driven by thirst to consume more. These advocates also claim that the food and beverage industries have targeted children. Yale’s Rudd Center for Food Policy and Obesity published a report concluding that beverage companies aggressively and disproportionately target black and Latino children for a variety of their products. The industry is also being criticized for deceptive advertising. The Center for Science in the Public Interest (CSPI), a nonprofit food health advocacy group, is the lead plaintiff in a class action lawsuit in U.S. District Court for the Eastern District of New York, claiming that Coca Cola’s ads for its sports drink Vitaminwater contain numerous deceptive and unsubstantiated claims. The company’s motion to dismiss the case was denied by Judge John Gleeson, who ruled that the company’s health claims may violate FDA regulations. In 2013 U.S. Magistrate Judge Robert Levy ruled that the case could proceed as a class action and the case is still pending in the U.S. District Court in Brooklyn. The study discusses other lawsuits and regulatory actions against beverage companies and concludes with a discussion of how potential litigation similar to lawsuits against the tobacco industry could affect insurers. AON reports that the largest members of the food and beverage industry purchased a large amount of umbrella/excess casualty insurance, with total limits averaging $283.75 million in 2011. A number of different insurance companies participate in this coverage and could be impacted by even a single substantial loss. Full Report 


2. THE ECONOMIC AND SOCIETAL IMPACT OF MOTOR VEHICLE CRASHES, 2010
National Highway Traffic Safety Administration, Washington, DC; 306 pages
May 28, 2014

This study underscores the high economic toll and societal impact of motor vehicle crashes in the United States. The price tag for crashes comes at a heavy burden for Americans at $871 billion in economic loss and societal harm. This includes $277 billion in economic costs – nearly $900 for each person living in the United States based on calendar year 2010 data — and $594 billion in harm from the loss of life and the pain and decreased quality of life due to injuries. The study cites several behavioral factors as contributing to the huge price-tag of roadway crashes based on the 32,999 fatalities, 3.9 million non-fatal injuries, and 24 million damaged vehicles that took place in 2010. Key findings include: crashes caused by drivers under the influence of alcohol accounted for 18 percent of the total economic loss due to motor vehicle crashes; crashes involving a speeding vehicle traveling over the posted speed limit or too fast for conditions accounted for 21 percent of the total economic loss and cost the nation $59 billion; crashes involving a distracted driver accounted for 17 percent of the total economic loss and cost the nation $46 billion; and crashes involving pedestrians and bicyclists accounted for 7 percent of the total economic loss and cost the nation $19 billion. Seatbelt use prevented $69 billion in medical care, lost productivity, and other injury related costs. Conversely, preventable fatalities and injuries to unbelted occupants accounted for 5 percent of the total economic loss and cost the nation $14 billion in 2010. The economic cost of motor vehicle crashes in the U.S. is the equivalent of 1.9 percent of the $14.96 trillion Gross Domestic Product (GDP) in 2010. Factors contributing to the price tag include productivity losses, property damage, medical and rehabilitation costs, congestion costs, legal and court costs, emergency services, insurance administration costs, and the costs to employers, among others. Overall, nearly 75 percent of these costs are paid through taxes, insurance premiums, and congestion related costs such as travel delay, excess fuel consumption, and increased environmental impacts. These costs, borne by society rather than individual crash victims, totaled over $200 billion. Full Report


3. ALTERNATIVE CAPITAL IN THE RETIREMENT MARKETS: A NEW ROAD MAP TO FOLLOW?
Conning. Study.; Page N/A
June 19, 2014

The life/annuity industry has been responding to the entrance of alternative capital in the form of investment firms acquiring annuity businesses over the past few years, according to a new study by Conning, “The Retirement Market Attracts New Entrants: Alternative Capital Moves In.” The study recaps and analyzes the market moves of the key alternative market players and their performance to date, and explores some possible strategies that may be driving this change. Further, the study provides profiles of the alternative capital players and their development to date. It is available for purchase from Conning by calling (888) 707 1177 or from the company’s website at www.conningresearch.com.


4. J.D. POWER REPORTS: AUTO INSURANCE SATISFACTION REACHES ALL-TIME HIGH, FEWER AND SMALLER PREMIUM INCREASES CITED
J.D. Power and Associates; 14 Pages
June 20, 2014

Despite steady increases in premium prices during the past five years, auto owners’ satisfaction with auto insurers reaches record-high levels, according to the J.D. Power 2014 U.S. Auto Insurance Study.  The study measures customer satisfaction across five factors: interaction; price; policy offerings; billing and payment; and claims. Overall satisfaction with auto insurance companies increases by a significant 16 points (on a 1,000-point scale) to 810 in 2014, the highest since the study launched in 2000. The satisfaction milestone comes at a time when premiums have been trending up for the past few years. While the percent of customers experiencing an insurer-initiated premium increase is about even to last year, 19 percent vs. 20 percent in 2013, among those who experienced a rate hike, the average increase is much lower than last year, $86 in 2014, compared with $153 in 2013. Satisfaction varies regionally from a high of 820 in the Texas and Central regions to a low of 795 in the California and New England regions. Ten of the 11 study regions post significant double-digit increases in insurer performance in 2014, with the largest improvements in the New York (+29 points) and New England (+26) regions.  Auto-Owners Insurance, State Farm and The Hartford each ranked highest in two of the 11 regions. Full news release with charts


5. YOUTH RISK BEHAVIOR SURVEILLANCE – UNITED STATES, 2013
Centers for Disease Control and Prevention, Washington, DC; 172 Pages
June 12, 2014

The Youth Risk Behavior Surveillance System (YRBSS) monitors six types of health-risk behaviors that contribute to the leading causes of death and disability among youth and adults, including: behaviors that contribute to unintentional injuries and violence; sexual behaviors that contribute to unintended pregnancy and sexually transmitted diseases, including HIV infection; alcohol and other drug use; tobacco use; unhealthy dietary behaviors; inadequate physical activity; driving and texting or emailing; and drinking and driving. The survey also measures the prevalence of obesity and asthma among youth and young adults. It includes a national school-based survey conducted by CDC and state, territorial, tribal, and local surveys conducted by state, territorial, and local education and health agencies and tribal governments. Full Report 


6. PAYMENTS TO AMBULATORY SURGERY CENTERS
Workers Compensation Research Institute, Cambridge, MA; Page N/A
June 24, 2014

This study shows that prices paid to ambulatory surgery centers (ASC) in some states were triple that in other states due to state price regulation or the absence thereof. “This study will help policymakers and system stakeholders better understand the ASC payments for common surgeries in their state, how they compare with others, and the role of different types of fee schedules,” said Dr. Bogdan Savych, author of the report and a public policy analyst with WCRI.  The study examines payments for commonly used outpatient surgeries performed at ASCs in 23 large states that represent over two-thirds of the workers’ compensation benefits paid in the United States and covers surgeries in calendar year 2011. In 2011, ASC payments for the same surgeries performed in higher-cost states were at least three times the payments for similar surgeries performed in lower-cost states. For example, the average ASC payment for knee arthroscopies was less than $2,000 in four study states (Pennsylvania, Michigan, Maryland, and New York) and more than $6,000 in seven study states (Indiana, New Jersey, Virginia, Missouri, Illinois, Connecticut, and Louisiana). Average payments for outpatient surgeries were typically higher in states without fee schedules. For example, the average ASC payment for a common knee arthroscopy in the median state without a fee schedule ($6,272) was nearly double the median payment of the states with fixed-amount fee schedules ($3,174). Similar patterns were also found for shoulder surgeries. Payments for common surgeries were more predictable in states with fixed-amount fee schedules and less predictable in states without fixed-amount fee schedules. Surgeries examined in this analysis represent 44 percent of the ASC surgeries performed for workers with knee conditions and 52 percent of ASC surgeries performed for workers with shoulder conditions. The states covered by the study are Arizona, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Louisiana, Maryland, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, and Wisconsin. For more information or to order the study click here.


7. EVOLVING CONSUMER MARKETS CHALLENGE PERSONAL LINES INSURERS
Conning. Study.; Page N/A
June 26, 2014

Insurers are planning for and dealing with far reaching implications from significant changes in the U.S. consumer market, according to a new study by Conning, “2014 Personal Lines Consumer Markets Annual.” The study reviews the overall consumer demographic landscape and develops a view as to how these pressures might impact the market. The study reviews key niche segments as well, including high net worth, nonstandard auto insurance risks, seniors, the youth market, and the rapidly growing Hispanic market. It is available for purchase from Conning by calling (888) 707 1177 or from the company’s website at www.conningresearch.com.


8. FM GLOBAL RESILIENCE INDEX
FM Global. Report.; Page N/A
June 1, 2014

The FM Global Resilience Index is an online, data driven repository and tool for executives. It ranks 130 countries' business resilience to supply chain disruption and helps executives prioritize where they should focus their risk management and investment efforts. The index aggregates nine drivers of resilience into three factors— economic, risk quality and the supply chain itself. The study index found that countries with strong economies, high quality infrastructures and a high level of risk quality (such as fire safety standards) score well, which is why Norway, Switzerland and Canada appear in the top three slots in 2014. By contrast, the Philippines (14th from the bottom) has a huge exposure to natural hazard risk, as the slow recovery from Typhoon Haiyan has shown, and too little economic strength to demonstrate strong resilience. Because the data are refreshed annually, the index also enables business executives to identify countries that are working hard to make themselves more attractive supply chain partners. In 2014, for example, Bosnia and Herzegovina rose 19 places due to significant improvements in its political risk as well as in the quality of local suppliers, which is a measure derived from an annual survey by the World Economic Forum. 


9. TORNADOES: MODELING FOR A COMPLEX AND GROWING PERIL
Swiss Re; 21 Pages
June 30, 2014

In recent years, the most notable tornado outbreaks have caused damage in smaller cities and towns such as Joplin, Missouri; Tuscaloosa, Alabama; and El Reno, Oklahoma. Downtown areas of cities like Chicago, St. Louis, Dallas, Indianapolis and Detroit have been largely spared, but it’s only a matter of time. Urban centers have experienced plenty of near misses and anecdotal evidence suggests severe tornadoes tracking through major cities. In the publication US tornadoes: An examination of the past to prepare for the future, Swiss Re catastrophe experts use a simple and logic-based methodology to construct scenarios showing the potential social and financial impact of a tornado in the heart of a major city.  Full Report