As holiday shopping gets underway, several major retailers are opening even earlier this year offering the prospect of deep discounts and large crowds to an ever growing number of shoppers.

The National Retail Federation (NRF) notes that 140 million holiday shoppers are likely to take advantage of Thanksgiving weekend deals in stores and online.

Millennials are most eager to shop, with the NRF survey showing 8 in 10 (79.6 percent) of 18-24 year olds will or may shop over the weekend, the highest of any age group.

Much has been written about the risks of online shopping, but for those who still head to the stores, there are dangers there too.

The Occupational Safety and Health Administration (OSHA) reminds us that crowd related injuries can occur during special sales and promotional events. In 2008, a worker at Wal-Mart died after being trampled in a Black Friday stampede.

According to the aptly named blackfridaydeathcount.com, since 2006 there have been seven Black Friday-related fatalities and 90 injuries. As well as stampeding crowds, injuries have occurred as a result of altercations over TVs, road rage over parking spaces, shootings and distracted driving.

For employers and store owners OSHA offers comprehensive tips on how to create a safe shopping experience.

Crowd management planning should begin in advance of events likely to draw large crowds, and crowd management, pre-event setup, and emergency situation management should be part of event planning, OSHA says.

Tips include: hiring additional staff; having trained security or crowd management personnel on site; determining the number of workers needed in different locations to ensure the safety of an event; and preparing an emergency plan that addresses potential dangers facing workers including overcrowding, crowd crushing, being struck by the crowd, violent acts and fire.

For shoppers too, a personal safety and security plan is a good idea. The National Crime Prevention Council (NCPC) advises not to buy more than you can carry and to plan ahead by taking a friend with you or asking a store employee to help you carry packages to the car. Travelers offers some important tips here.

To all our readers, have a happy and safe Thanksgiving!

Reputational risk is among the most challenging to insure, says I.I.I.’s VP of Communications Loretta Worters in this timely tale of Uber shenanigans:

There’s no such thing as bad publicity, the old saying goes. But the publicity ridesharing company Uber is getting lately may not just harm its image, but can hurt its bottom line. And for a business valued by some at north of $50 billion, that’s a world of hurt!

The latest trouble for the beleaguered rideshare titan started earlier this week when SVP of Business Emil Michael was reported by BuzzFeed to have said that the company should initiate a million-dollar “smear campaign” against journalists. Worse still was CEO Travis Kalanick’s response, a rambling 13-tweet condemnation of Michael’s on-the-record screed. (To date, however, Michael still has his job.) Jumping into the fray was Uber investor Ashton Kutcher, who defended the company for “digging up dirt” on journalists.

A company’s reputation is core to its profitability and long-term competitiveness. And the challenges from social media and other interactive online platforms often force businesses to respond immediately. This in part explains why damage from reputational risk events oftentimes does not result from the initial crisis, but from how well the company responds to it.

This isn’t exactly the first time Uber has “stepped in it.” However, leaving aside Uber’s occasional self-destructive missteps, how vulnerable is Uber or any other company with a capricious C-suite?

Reputational risk is among the most challenging categories of risk to manage, according to 92 percent of companies responding to a survey from ACE Group. Fully 81 percent of respondents view reputation as their most significant asset—and most of them admit that they struggle to protect it. The report also suggests that organizations need a clear framework for managing reputational risk that reduces the potential for crises, taking a multi-disciplinary approach that involves the CEO, PR specialists and other business leaders.

While Uber’s Kalanick acknowledged his company needs to repair its image, he clearly would benefit from reputational risk insurance and the expertise of a risk manager—even if that risk manager’s counsel amounts to: “dude, shut UP!”

Reputational risk is not covered under a typical business policy, but companies can purchase coverage as a stand-alone policy which typically pays fees for professional crisis management and communications services; media spending and production costs; some legal fees; other crisis response and campaign costs such as research, events, social media, and directly associated activities.

New reputation insurance products have started to emerge in the marketplace that cover financial losses caused by bad news that harms a company’s profits. For example, Aon with Zurich, Willis and Chartis among others have come out with policies that address the exposures of reputational risk and offer risk management services to help corporations keep their reputations intact.

One thing is clear: as the rideshare business grows more competitive, Kalanick will need to do better at projecting a positive image. And if he took a cue from his own product, and let somebody else do the driving for a change, Kalanick would be following the lead of many a troubled CEO before him.

For information on the insurance implications of ride-sharing, check out this handy Q&A.

If you know someone who leads an active lifestyle, you may already know what a Fitbit is. For everyone else, a Fitbit is a wearable device that tracks steps, calories, distance and even sleep.

Now it appears data from wearable devices may be admissible in court.

Forbes.com reports that a law firm in Calgary is working on the first known personal injury case that will use activity data from a Fitbit to help show the effects of an accident on their client.

According to the report, the young woman in question, who used to be a personal trainer, was injured in an accident four years ago. While Fitbits weren’t on the market back then, her lawyers believe they can use data from her Fitbit to show that her activity level has significantly decreased and is now below where it should be for someone of her age and profession.

The article suggests that “cases like this could open the door to wearable device data being used not just in personal injury claims, but in prosecutions.”

The young woman’s lawyer is also quoted saying that such data could be useful to insurers assessing questionable claims and that just as courts requisitioned Facebook for information several years ago a court order could compel disclosure of that data.

Sounds like another case where digital information has an unintended use in the courtroom.

As Congress meets in its “lame duck” session, we’re delighted to host Cavalcade of Risk #221, bringing you a flock of posts from around the insurance and risk-related blogosphere.

In our opener, Rubber, Road and Lyft: Insurance Crisis? Hank Stern of InsureBlog takes another look at the important topic of ride-sharing. Now that Lyft’s had its first fatality, he considers the insurance issues the service (and its drivers and customers) will face.

CVS Caremark is slapping an extra co-pay on members who fill their prescriptions at stores where tobacco is sold (i.e., CVS’ competitors). In CVS: Drugs, tobacco… and guns? David Williams of Health Business Blog makes the point that CVS is unlikely to extend that policy to stores that sell guns, even though it would be logically consistent.

Talking of taxing issues, in Who will pay the Cadillac Tax? Jason Shafrin of Healthcare Economist investigates a coming tax on high-cost health insurance plans. Beginning in 2018, many individuals will face the “Cadillac” tax. Will you pay it?

Meanwhile, the growing waistline of America is not only having an impact on our health, but on workers’ compensation programs. In Impact of Obesity on Workers Compensation, Michael Stack of reduceyourworkerscomp.com notes that this impact can increase the costs of common work injuries.

How risky is your job? At Workers’ Comp Insider, Julie Ferguson posts a video showing how high voltage cable inspectors work – as she says: “not a job for a hot duck.” Trigger warning for acrophobes!

Another hot topic comes from Nancy Germond of insurancewriter.com in her post Tips to avoid a dryer fire. According to the U.S. Fire Administration (USFA), about 2,900 dryer fires occur each year in the United States, causing five deaths, about 100 injuries and over $35 million in property losses annually.

Finally, there’s no ducking the importance of the TRIA issue with our own post on the future of terrorism risk insurance. The imminent expiry of the Terrorism Risk Insurance Act (TRIA) December 31 means the clock is ticking for lawmakers to find a solution before year-end.

That’s it for now. Van Mayhall at http://www.insreglaw.com hosts the next Cav.

Despite regulatory challenges, privacy concerns and a lack of capabilities that could stall their widespread use, drones could have a significant impact on the property/casualty industry.

recent report from IT firm Cognizant suggests that commercial and personal lines insurers that cover property risks are likely to be early adopters of drone technology. Hat tip to Claims Journal which reports on this story here.

For example, a property adjuster or risk engineer could use a drone to capture details of a location or building, and obtain useful insights during claims processing or risk assessments, Cognizant says.

Drones could also be deployed to enable faster and more effective resolution of claims during catastrophes.

Crop insurance is another area where drones could be used – not only to determine the actual cultivatable land, but also during the claims process to understand the extent of loss and the actual yield, reducing the potential for fraudulent claims.

The findings come amid recent reports that several home and auto insurers are considering the use of UAVs.

The Association for Unmanned Vehicle Systems International predicts that within 10 years (2015 to 2025) drones will create approximately 100,000 new jobs and around $82 billion in economic activity, the report notes.

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Cognizant believes now is the time for insurers to consider the opportunity that drone technology presents, especially in the areas of claims adjudication, risk engineering and catastrophe claims management:

With drones poised for commercial use, insurers could use them specifically to help reduce operational costs and gather better-quality information. This could help improve the productivity, efficiency and effectiveness of field staff (e.g. claims adjusters and risk engineers), and improve the customer experience by resolving claims faster, especially during catastrophic events.”

Cognizant goes on to note that drone enhancements such as artificial intelligence, augmented reality and integrating audio, text and video already exist in some shape or form. Insurance carriers should expect to see the adoption of drones increase significantly as these features are integrated into standard drones, and as regulations for commercial use of drones are defined.

It concludes:

As insurance carriers build business and technology use cases and the necessary architecture and services, they must consider not only how and where drone technology fits into their digital roadmap but also how the operating model can be enhanced to deliver optimal benefits for the business and its customers.”

It’s Election Day and as you head to the polls the insurance issue that remains at the top of mind for most is the future of the Terrorism Risk Insurance Act (TRIA).

In a new paper the Insurance Information Institute (I.I.I.) says the question of what happens if the federal act is not renewed by Congress is no longer a theoretical one:

Since insurance policies negotiated during 2014 extend beyond the imminent December 31 expiration date of the program, the negative consequences of non-renewal are already being experienced by businesses across America and their insurers.”

The private sector simply does not have the capacity to provide insurance or reinsurance for terrorism risk to the extent currently provided by the federal program, the I.I.I. says. As a result, in the absence of the act, terrorism risk insurance would be less available and less affordable.

Over at WGA InsureBlog, David Bardelli, senior vice president and casualty practice leader for William Gallagher Associates, notes that with Congress not back in session until mid-November, the clock is ticking for lawmakers to come up with a solution before the end of the year.

Bardelli writes:

A lame duck Congressional session could pass an extension, which has been the case with previous versions of the bill. With House Democrats and Republicans at odds over the latest version of the House Committee’s proposal, it looks like the November elections will have the biggest impact on what happens with TRIA.”

Insurers are not alone in their concerns over the future of terrorism risk insurance. Just on Friday, the Real Estate Roundtable reported that while senior commercial real estate executives see a continuing recovery in the markets, they remain concerned about the lack of clear direction in many federal policies, primarily terrorism risk insurance.

Roundtable President and CEO Jeffrey D. DeBoer, said:

Without a long-term reauthorization of TRIA when policymakers return in November, financing for CRE projects will be directly threatened, job creation will suffer as it did after 9-11, and businesses can expect a general slowdown as many financing contracts will be found to be in technical default without terrorism insurance.”

Congress will return November 12 for the “lame duck” session.

As you prepare to welcome a throng of Frozen Elsas and Olafs to your front door, you may not be thinking about insurance but we’re here to tell you, you’re covered.

The Insurance Information Institute (I.I.I.) points out that standard homeowners and renters insurance will provide coverage for the following:

Vandalism: In the event your home or your personal possessions are damaged by neighborhood tricksters, homeowners and renters insurance policies provide coverage for vandalism and malicious mischief. You are on your own, however, when it comes to removing the toilet paper from your front yard….

Fire: If a jack-o-lantern, or other decoration, goes up in flames and damages your property, your homeowners or renters policy will cover fire-related losses. And, should the blaze make your home uninhabitable, additional living expenses (ALE) coverage will pay for alternate accommodations, such as a hotel, while your home is being repaired.

Injuries: The liability portion of a homeowners or renters policy comes into play if a Halloween party guest, or a trick-or-treater is injured while at your house or apartment. These policies also include no-fault medical coverage so the injured person can file their claim directly with your insurer. And if Fido gets a little skittish from all the commotion and accidently nips a trick-or-treater your liability coverage includes damages or injuries caused by pets.

Have a safe and happy Halloween!

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Despite an increase in the number of more complex physical damage claims, auto insurers are doing a better job of handling these types of claims.

The just-released J.D. Power 2014 U.S. Auto Claims Satisfaction Study finds that overall customer satisfaction with the auto insurance claims process has improved steadily during the past five years to 857 on a 1,000-point scale in 2014, up from 842 in 2010.

What’s more, customer satisfaction with more complex claims – those in which vehicles have significant structural damage and need to be towed – has also increased.

Satisfaction with total loss claims in 2014 averages 829, while satisfaction for towed vehicle claims averages 851. Satisfaction with each claim type was up 12 points from 2013.

J.D. Power notes:

Those improvements in satisfaction with insurers’ handling of complex claims are largely due to insurers managing customer expectations with respect to the timing of the claim and moving the claim along more quickly—key metrics of communicating the settlement, repair time, and paying the customer (if applicable) are all performed faster in 2014.”

The fact that customer satisfaction continues to rise is even more noteworthy when you consider that auto insurers are handling a growing number of more complex claims.

Total loss claims and claims in which vehicles have significant structural damage and need to be towed accounted for 37 percent of all auto claims in 2014, up 5 percentage points from 2011 when complex claims accounted for 32 percent of the total.

However, the study finds the rise in more complex claims has pushed up the average severity of claims (based on the dollar amount of loss) for the third consecutive year.

Check out I.I.I. facts and statistics on auto insurance.

I.I.I. chief actuary Jim Lynch offers his perspective on how insurers are responding to climate change:

The insurance industry got a report card this week on a test I’m not sure they knew they were taking. And the grading curve was, in my opinion, harsh.

Ceres, a nonprofit group that promotes sustainable business practices, rated 330 insurers – life, health and property/casualty – on how well they are responding to climate change.

Before I wade further into the topic, it is important to acknowledge that insurance companies and their managers have a range of opinions on global warming that is as wide as the opinions of Americans overall on the topic. There is no insurance industry position, though there are individuals and companies with strong opinions – just as with all Americans.

On a four-point scale, nine companies got the highest mark (“leading”): Ace, Munich Re, Swiss Re, Allianz, Prudential, XL Group, The Hartford Financial Services Group, Sompo Japan and Zurich. Matthew Sturdevant of the Hartford Courant does a nice job rounding up how these firms earned their grade.

Ceres gave “minimal” or “beginning” rankings to 276 insurers, 84 percent on my calculator. The New York Times played up that aspect. But the analysis may be skewed because of the source of the rankings and how Ceres adapted that source.

Ceres took a National Association of Insurance Commissioners (NAIC) survey that six states require on climate change. The survey consists of eight yes-or-no questions, each of which follows up with why the insurer answered as it did. The follow-up questions are open-ended – companies can respond with as little or as much information as they like.

The questions help regulators when they assess a company’s enterprise risk management, specifically how hard a company looks for potential problems that might not hit them until years from now. Climate change certainly has that potential.

Ceres took those answers and graded them on its own criteria, resulting in six scores from 1 to 4, which it then re-summarized into a single grade.

Boiling a complex set of open-ended answers is tricky enough, but Ceres has, in my opinion, misused the NAIC survey, which is supposed to help regulators understand how well insurers are considering climate change in their risk management, not whether insurers are acting as stewards of the environment.

So it doesn’t seem like Ceres is giving a fair test. Insurers are answering questions on how climate change might affect their business then being rated on how their actions will reduce carbon emissions. It’s like being told to write an essay, then being graded on penmanship.

How could this skew results? Some insurers are minimally exposed to climate change, so it would not be prudent risk management for them to devote valuable resources to the issue. Medical malpractice writers are an obvious example. Climate change might be important to the world at large, but how relevant is it to the operation of a medical malpractice writer?

Property insurers are in a different boat, pardon the irresistible pun. Rising sea levels and growing weather extremes are important developments, and it would seem a prudent coastal writer would consider whether those trends will continue, abate or accelerate. A company that writes worldwide has still more to think about, as climate trends would affect other countries more than our own.

Seen that way, it makes perfect sense that some large, multinational insurers are concerned about climate change while small writers not exposed to property insurance are less so.

On the life/health side, there is a signal-to-noise problem. Climate change appears to have an impact on mortality, but it’s really small. A 2011 Brookings study suggested that climate change will increase U.S. age adjusted mortality rates by about 3 percent over the next 85 years or so. That rate has declined by 1 percent per year over the past 35 years. So the impact of climate change on mortality is likely to be overwhelmed by other forces at work.

That’s not to say that life expectancies outside the U.S. won’t be affected more. But a life insurer that only writes U.S. risks might not want to incorporate climate change-induced mortality changes from, say, Australia, into its business model.

Regardless, life insurers have a built-in mortality hedge in pairing annuity sales with life insurance. People who die sooner drive life insurance profits lower. But they push annuity profits higher, and vice versa. Combine that with the small impact of climate change on U.S. mortality and it makes perfect sense that a great many U.S. life insurers have decided that climate change doesn’t form a central part of their risk management strategy.

Health insurers are in a similar situation. Gradual changes in health have small effects on their business, and those changes can be easily adjusted to year by year. Pandemics are a bigger risk, so risk management efforts focus there.

That helps explain why health and life insurers didn’t score as high as property/casualty insurers. They have less at stake.

California’s insurance department doesn’t sound too concerned. Ceres relied on CA DOI information to compile its report, so there’s a good chance the Ceres researchers saw a 2013 press release that said this:

The results of this year’s survey are a positive sign for the insurance industry and the environment,” said Commissioner Jones. “It is encouraging to see that insurers are aware of the risks that a changing climate brings, and moreover they are taking steps to ensure their responses to these risks are sufficient to protect their business.”

More than 1,000 companies [Duplicates and multi-company insurance groups account for the difference between Ceres’ total and California’s.] were required to respond to the survey. The survey revealed that roughly 75 percent of insurers have a plan for identifying climate change-related risks that could affect their business, and are taking actions to mitigate these risks. Responses to the eight survey questions reveal that nearly every insurer is aware of the risks posed by a changing climate, and an overwhelming majority of insurers have incorporated mitigating practices into their business model.”

That sounds like an industry that is handling the issue prudently, even if it is not the way an environmental group would prefer.

As the number of companies suffering a data breach continues to grow – with U.S. retailer Staples now reported to be investigating a breach – so do the legal developments arising out of these incidents.

While companies that have suffered a data breach look to their insurance policies for coverage to help mitigate some of the enormous costs, recent legal developments underscore the fact that reliance on traditional insurance policies is not enough, notes the I.I.I. white paper Cyber Risks: The Growing Threat.

A post in today’s Wall Street Journal Morning Risk Report, echoes this point, noting that a lawsuit between restaurant chain P.F. Chang’s and its insurance company Travelers Indemnity Co. of Connecticut could further define how much, if any, cyber liability coverage is included in a company’s CGL policy.

Collin Hite, partner and leader of the insurance recovery group at law firm Hirschler Fleischer tells the WSJ that whatever the outcome of this case, companies that want to be sure they are protected against cyber-related losses may have to purchase separate cyber liability policies—and make sure those policies are broad enough to encompass the myriad ways an attack could cost the firm money.

P.F. Chang’s confirmed in June that it had suffered a data breach in which data from credit and debit cards used at its restaurants was stolen.

An earlier post in the Hartford Courant Insurance Capital blog by Matthew Sturdevant has the details on the legal action between Travelers and P.F. Chang’s.

To-date the application of standard form commercial general liability (CGL) policies to data breach incidents has led to various legal actions and differing opinions, according to the I.I.I. paper on cyber risks.

One recent high profile – and oft-cited case – followed the April 2011 data breach at Sony Corp. in which hackers stole personal information from tens of millions of Sony PlayStation Network users.

A New York trial court ruled that Zurich American Insurance Co. owed no defense coverage to Sony Corp. or Sony Computer Entertainment America LLC.

In his ruling, New York Supreme Court Justice Jeffrey K. Oing said acts by third-party hackers do not constitute “oral or written publication in any manner of the material that violates a person’s right of privacy” in the Coverage B (personal and advertising injury coverage) under the CGL policy issued by Zurich.

Further expertise and analysis on cyber risks and insurance is available from the I.I.I.

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