Archive for May, 2009

We’ve blogged before about the increase in phishing attacks in recent years and over at the personal technology blog Gadgetwise at the New York Times there’s an interesting post about how phishers are now hitting Twitter. Phishing is a form of online identity theft where emails and Web sites masquerading as official businesses are created and used to deceive Internet users into disclosing their personal data. The latest attack at Twitter appears to have involved the creation of bogus Twitter accounts which the scammers used to follow other users. If these users then clicked on the profiles of their new followers they were redirected to a fake Twitter site and prompted to hand over their passwords. Gadgetwise includes a list of handy tips on how to avoid such phishing scams. All of which is not to discourage you from following us on Twitter. Check out I.I.I. info on identity theft.

 

A bill that would create a federal Office of Insurance Information within the Treasury department has been reintroduced in the House by Rep. Paul Kanjorski, D-PA. The Insurance Information Act of 2009 (H.R. 2609) calls for the new office to collect and disseminate data and information relating to insurance, advise the Treasury secretary on major international and domestic policy issues and report to Congress every two years. An advisory group comprised of state regulators, consumer groups and others associated with the insurance industry, would also be established to help inform and advise the head of the office on the setting of U.S. policy in international insurance matters and in connection with determinations related to preemption. Check out I.I.I. information on regulatory modernization and optional federal charter.

The official start to the 2009 Atlantic hurricane season is less than a week away and Accuweather.com and the National Oceanic and Atmospheric Administration (NOAA) have just released updated forecasts for the season. NOAA puts the probability of a near-normal hurricane season at 50 percent, the probability of an above-normal season at 25 percent and a 25 percent probability of a below-normal season. Meanwhile Accuweather.com chief long-range and hurricane forecaster Joe Bastardi expects the number of hurricanes to be below average this season, but warns that the area in which they can impact the United States has expanded in comparison to previous years. The Texas coast early in the season and East Coast from Carolinas northward during the heart of the season are particular areas of concern. “The larger potential area of impact could make it more difficult for businesses and government agencies to proactively prepare and allocate resources for the upcoming 2009 hurricane season. This could result in an increased financial burden on government agencies and businesses that are unprepared in the event of a landfalling hurricane,” he says. Bastardi expects three storms to deal at least tropical-storm-force winds to the U.S. coast, two of which could be hurricanes and perhaps one major hurricane. Check back with us June 2 for an updated forecast of 2009 hurricane activity from Colorado State University’s Tropical Meteorology Project. Check out I.I.I. facts and stats on hurricanes.

Ratings agency Fitch is cautioning that the state of the economy and the financial market make it unclear as to whether the insurance industry would be able to reload capital losses should 2009 be a major loss year. If new capital does not flow into the market should a major loss occur, Fitch says the result would be a much harder market than usually follows a loss. Consequently, Fitch believes that risk selection, diversification and mitigation are even more important in the current environment because insurers suffering large losses may be unable to recapitalize and be forced into run-off as the result. Those insurers surviving the loss would be extremely well positioned to benefit from the resulting hard market, it adds. The commentary comes in Fitch’s annual hurricane season reference guide for insurance investors. For further information on financing catastrophes, check out I.I.I. president Dr. Robert Hartwig’s presentation Financing Catastrophe Losses Amid a Financial Catastrophe.

The rising incidence of text messaging among drivers has again been highlighted in a survey from mobile application vendor Vlingo Corporation. The findings come just weeks after text messaging led to a Boston trolley collision, injuring 50 people. Despite driving while texting (DWT) bans in seven states and the District of Columbia as well as reports of accidents caused by DWT the survey reveals that one in four mobile phone users continue to text behind the wheel. The report also indicates that text messaging has increased steadily over the past 12 months across all age groups, with nearly 60 percent of mobile phone users now texting, compared to 54 percent in 2008. Almost 60 percent of those aged 16-19 admit DWT and 49 percent of those aged 20-29. While older drivers do not drive and text as much, still 13 percent of those in their 50s admit to doing so. Drivers in Tennessee are the worst offenders, with the highest percentage of respondents (42 percent) who admit to DWT, while Arizona has the lowest percentage (18.8 percent). Interestingly, there is a general consensus among survey respondents that DWT should be legally banned (more than 83 percent think DWT should be illegal). Check out I.I.I. information on cell phones and driving.

The majority of fatalities in the New Orleans metropolitan area following Hurricane Katrina in 2005 were caused by the direct physical impacts of flooding, according to a new study in the journal Risk Analysis published by the Society for Risk Analysis. The study findings are reported in a May 18 online article at Insurance Journal. “Loss of Life Caused by the Flooding of New Orleans After Hurricane Katrina: Analysis of the Relationship Between Flood Characteristics and Mortality” found that the overall mortality among the exposed population for the event was approximately 1 percent which is similar to findings for historical flood events. Mortality rates were highest in areas near severe levee breaches and in areas with large water depths. The majority of the victims were elderly with nearly 60 percent of fatalities over 65 years old, according to the study co-authors from the University of Delft in the Netherlands and Louisiana State University. A recent paper by the Institute for Business & Home Safety (IBHS) underscored the importance of considering vulnerable populations including the poor and elderly in disaster planning and property loss prevention initiatives in high-risk areas. Check out I.I.I. information on flood insurance.

Health and product safety issues associated with imported drywall will come under Congressional spotlight at a hearing scheduled this Thursday (May 21) by the U.S. Senate Committee on Commerce, Science and Transportation. The hearing will be held at 10:30 am by the Subcommittee on Consumer Protection, Product Safety, and Insurance. The issue of toxic drywall is a growing concern in Florida and other states including Alabama, California, Louisiana, Mississippi and Virginia. First imported from China after Hurricane Katrina because so much of it was being used in reconstruction, it is estimated that between 60,000 and 100,000 homes nationwide may contain tainted drywall. It has been suggested that defective drywall releases sulfuric gases that corrode metal, particularly air conditioning components along with speculation about potential health risks. Already a number of lawsuits are reported to have been filed by homeowners in Louisiana and Florida. Senator Bill Nelson (D-FL) (a member of the Senate subcommittee) and Senator Mary Landrieu (D-LA) recently introduced legislation aimed at initiating a recall and ban on tainted building products from China by the U.S. Consumer Product Safety Commission (CPSC). A revamp of leadership of the CPSC was announced last week by President Obama. Check out I.I.I. facts and stats on litigiousness. 

With just over two weeks to go before the start of the 2009 Atlantic hurricane season, the National Hurricane Center (NHC) has confirmed it has removed storm surge risk from the Saffir-Simpson scale that ranks a storm based on its wind speed (see our recent April 1 posting). The NHC said the move is to help reduce public confusion about the impacts associated with the various hurricane categories as well as to provide a more scientifically defensible scale. Hopefully, it will also help homeowners understand why they need to buy a separate flood insurance policy from the National Flood Insurance Program (NFIP). A separate probabilistic storm surge product is available on the NHC Web site showing where storm surge is likely when there is a hurricane watch or hurricane warning in effect for any portion of the Gulf or Atlantic coasts. Aimed primarily at emergency managers, the Tropical Cyclone Storm Surge Probabilities graphic shows probabilities in percent, of storm surge exceeding various thresholds. In 2009, the thresholds will include data at 1-foot intervals with a minimum value of 2 feet and a maximum value of 25 feet. The graphic is based on the Sea, Lake and Overland Surge from Hurricanes (SLOSH) model run by the NHC and takes into account pressure, size, forward speed, track and winds. Check out further I.I.I. information on flood insurance.

How should the federal government oversee insurance is the subject of a hearing today before the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises. The hearing comes as some form of federal regulation of insurance in the United States looks increasingly likely. As with many issues in our industry, this is one that elicits a wide range of viewpoints. A recently published U.S. Government Accountability Office (GAO) report noted that insurance regulation should be more uniform and reciprocal. Check out I.I.I. information on optional federal charter and regulation modernization.

The news that hundreds of cargo ships are sitting unemployed off the coast of Singapore due to the sharp decline in world trade makes for an illuminating read in this May 12 New York Times article by Keith Bradsher. Among the takeaways from the piece are rising concerns about near misses and collisions in the Malacca Straits – one of the world’s most congested waterways – that separate Malaysia and Singapore from Indonesia. Coincidentally the top causes of decline in international trade and marine exposure trends are discussed in a new presentation by Dr. Robert Hartwig, I.I.I. president, titled “The Global Financial Crisis, International Trade & Piracy: Impacts on Marine Insurance Markets”. A section on economic threats to marine insurance markets notes that as much as 11.3 percent of global shipping fleet is idle and that as much as 45 percent of new containership capacity scheduled for delivery in 2010 will be delayed or cancelled. Dr. Hartwig points to concerns that rising protectionism could increase tariffs and quotas, further hurting trade and ultimately deepening the global recession. The growing number of piracy attacks against ships is also discussed.