Energy companies with offshore rigs and platforms in the Gulf of Mexico have started evacuating personnel in anticipation of Tropical Storm Gustav, currently hovering to the west of Jamaica and expected to regain hurricane status later today or tomorrow. The National Hurricane Center (NHC) says Gustav could become a major hurricane before reaching western Cuba. The respite of the past two years may have dulled memories, but major hurricanes in the Gulf are one of the key threats facing the energy insurance market. Meanwhile, Tropical Storm Hanna, while poorly organized at this time, could be a factor next week with its current forecast track taking it towards the Bahamas. For more on the energy market, check out a recent presentation by I.I.I. president Dr. Robert Hartwig that includes a catastrophe loss review for the sector.
Archive for August, 2008
Thursday, August 28, 2008
A plan outlined yesterday by the Securities and Exchange Commission (SEC) could lead to the use of International Financial Reporting Standards (IFRS) by publicly listed U.S. companies, including insurers, beginning in 2014. The Commission said it would make a decision in 2011 on whether adoption of IFRS is in the public interest and would benefit investors. For decades, publicly owned U.S. companies have reported to the SEC using Generally Accepted Accounting Principles (GAAP). However, more than 100 countries around the world, including all of Europe, currently require or permit IFRS reporting. Approximately 85 of those countries require IFRS reporting for all domestic, listed companies. The SEC says a common accounting language around the world would give investors greater comparability and confidence in the transparency of financial reporting worldwide. However, some U.S. experts believe that the new standards will be more complicated and less useful to investors. For more on this story, check out todayâ€™s article in the Wall Street Journal by reporters Kara Scannell and Joanna Slater. The I.I.I. update on accounting provides further information.Â
Gustav is a Tropical Storm once more, but the National Hurricane Center (NHC) is forecasting a slow strengthening that could see Gustav regain hurricane strength tomorrow. By early Sunday, Gustav is expected to be in the Gulf of Mexico and headed towards the U.S. coastline. In an ominous sign with this week marking the third anniversary of Hurricane Katrina, Gustavâ€™s current forecast track through the Gulf looks somewhat similar. London-based consortium Tropical Storm Risk is forecasting that on this track Gustav may reach Category 3 â€“ major hurricane status (winds of 111-130 mph) â€“Â from Saturday. Keep in mind that Hurricane Katrina was a Category 3 storm when it struck the U.S. Gulf Coast in 2005. As we know, Katrina was the single largest natural disaster loss in the history of the insurance industry. Check out I.I.I. info on insuring against hurricanes.Â
The National Hurricane Center (NHC) has warned that Hurricane Gustav, the third hurricane and seventh named storm of the 2008 season, could reach Category 2 strength before its landfall in Haiti later today. Gustav earlier was moving to the north west at 9 miles per hour and located about 75 miles south-southeast of Haiti. The NHC said Gustav is expected to produce significant rainfall accumulations that may result in life-threatening flash floods and mud slides forÂ several Caribbean islands, including Jamaica. On its current track, the hurricane would enter the Gulf of Mexico on Sunday. Check out I.I.I. hurricane facts and stats.Â
Monday, August 25, 2008
Data quality can directly impact reinsurance pricing and capacity extension when it comes to property catastrophe exposure. Thatâ€™s the key finding of a new survey from Ernst & Young. According to its results, nearly all reinsurers (90 percent) acknowledge that they apply surcharges to compensate for data quality deficiencies, and among these 70 percent say they would include a 20 to 25 percent premium penalty. Additionally, more than one third say they would be willing to offer a minimum 10 percent premium credit for cedants with high quality data. Ernst & Young reports that the vast majority of reinsurers (92 percent) agree that if the cedant used strong collection, enhancement and data maintenance controls, the risk would be more attractive to them. Indeed, seven in 10 companies would consider extending additional capacity and 75 percent would consider offering premium credits of 5 percent to 15 percent to a cedant who could demonstrate strong controls and policies via an independent report. Check out further I.I.I. information on reinsurance.
Friday, August 22, 2008
This weekâ€™s news that school teachers in a Texas school district will soon be allowed to carry guns in the classroom is understandably sparking debate across the nation. The Harrold school district (in north Texas) apparently changed its policy to allow district employees to carry concealed guns on school property for their protection due to concerns over the schoolâ€™s proximity to a state highway and its 30-minute distance from the nearest sheriffâ€™s office. Check out this August 18 article in the Dallas Morning News for more information. HarroldÂ is reportedÂ to be the first district with such a policy. Teachers and staff members would have to meet requirements such as: be licensed to carry a concealed handgun; be authorized to carry by the district; and receive training in crisis management and hostile situations. Pause for thought on what the liability and risk management implications of such a policy could be for educational establishments and their employees? Check out further I.I.I. info on the liability system.Â
Wednesday, August 20, 2008
The potential link between granite countertops and increasing indoor radon levels is the subject of an August 15 online article at Lawyers USA by staff writer Justin Rebello. The article notes that the Environmental Protection Agency (EPA) has received several complaints that claim the countertops (popular in high-end kitchens) can decay and emit radon. Radon is the second leading cause of lung cancer in America and claims about 20,000 lives annually. While to-date there has been no confirmed litigation, the article says that plaintiffsâ€™ attorneys have already begun advertising for potential clients. For its part, the EPA at this time does not believe sufficient data exist to conclude that the types of granite commonly used in countertops are significantly increasing indoor radon levels. However, the U.S. Surgeon and the EPA recommend that all homes be tested for radon in indoor air.
RAND Corp has celebrated its 60th anniversary by publishing 11 essays from its staff on important policy issues that it anticipates will likely become front-burner issues within the next five years. Published in the Summer edition of the RAND Review, the essays touch on a range of topics on the horizon of interest to insurers. From the problems posed by Social Security and Medicareâ€™s looming budget shortfalls, to corporate income tax avoidance becoming corporate Americaâ€™s next big scandal, to supporting our aging infrastructure with innovative technology solutions, the essays highlight some major policy problems and possible solutions. These issues also point to emerging risks that insurers will be monitoring closely.Â
The National Hurricane Center (NHC) this morning warned that Tropical Storm Fay, the sixth named storm of the season, is forecast to be approaching hurricane strength in the Florida Keys and to become a hurricane before it reaches the Florida peninsula. Early today Fay was over the northern coast of western Cuba and moving in a north westerly direction at 12 miles per hour. It is expected to be very near the Florida Keys tonight. With tropical storm warnings and hurricane watches in effect, insurers, along with Florida residents will be closely monitoring the stormâ€™s progress. Check out I.I.I. hurricane facts and stats.Â
Latest crash statistics from the U.S. Department of Transportation’sÂ National Highway Traffic Safety Administration (NHTSA) highlight two contrasting tales. The good news is that safer vehicles and aggressive law enforcement appear to be paying off, with the overall number of traffic fatalities in the U.S. in 2007 declining by 3.9 percent to 41,059. This reduction is the largest in terms of both number and percentage since 1992. In addition, the fatality rate per 100 million vehicle miles traveled fell to a historic low of 1.37. However, motorcycle safety continues to be a problem. According to NHTSA, motorcycle fatalities now account for 13 percent of all fatalities. In 2007 alone, the number of motorcycle riders or passengers killed on the nationâ€™s roads increased 6.6 percent over the previous year while the number of injured increased by 17 percent. Check out further I.I.I. info on motorcycle crashes.Â