Archive for September, 2011

Once again food safety is in the news. This time it’s cantaloupe.

The current outbreak of listeria infection linked to cantaloupes grown at Jensen Farms in Colorado, so far has caused at least 13 deaths and left 72 people ill.

According to reports, this makes it the deadliest foodborne outbreak in the United States in more than a decade. And the number of illnesses and deaths are expected to rise, officials say.

It comes just months after a deadly E. coli outbreak in Europe.

The Food and Drug Administration (FDA) earlier issued a press release announcing that Jensen Farms issued a voluntary recall of its Rocky Ford-brand cantaloupes after being linked to a multi-state outbreak of listeriosis.

According to Centers for Disease Control and Prevention (CDC) estimates, each year roughly one in six Americans (or 48 million people) gets sick, 128,000 are hospitalized, and 3,000 die of foodborne diseases.

CDC also notes that some 3 or 4 outbreaks of listeria-associated foodborne illness are diagnosed each year in the U.S. The foods that typically cause these outbreaks have been deli meats, hot dogs, and Mexican-style soft cheeses made with unpasteurized milk.

Produce is not often identified as a source, but sprouts caused an outbreak in 2009 and celery caused an outbreak in 2010.

Listeria, along with other pathogens such as salmonella, toxoplasma, and norovirus are the leading cause of foodborne deaths, according to CDC statistics (see chart via CDC website below).

Meanwhile, check out this Q+A at Businessweek about listeria in fruit.

A report from Aon last year noted that the increasing frequency and severity of food contamination incidents is prompting greater awareness among food system, agribusiness and beverage companies to insure against such events.

 

According to a report by PC360, U.S. Senate approval of a plan expected to prevent a government shutdown will also keep the National Flood Insurance Program (NFIP) in business, at least through November 18.

The NFIP was scheduled to expire this Friday September 30.

An Insurance Information Institute (I.I.I.) issues update on flood insurance notes that Hurricane Irene and the Mississippi floods of 2011 caused widespread physical and economic damage, much of it uninsured, reigniting the debate on how to handle the risk of flooding.

The building of levees and other artificial barriers, and how to reform the NFIP, including the possibility of some form of privatization, are some of the key issues being considered.

Latest available data show that in 2010, the NFIP had more than 5.7 million policies in force, compared with 5.0 million in 2005, the year of Hurricane Katrina.

Still, many people don’t buy flood insurance and many of those who purchase it don’t keep it for long, as noted in a recent article in the Washington Post by Erwann Michel-Kerjan, managing director of the Wharton Risk Management Center:

Many people buy flood insurance when they buy a new house because the bank requires flood insurance proof to authorize a federally backed mortgage if the residence is in a flood plain. But they cancel it fairly soon after. Then, they suffer a flood and regret not having kept that coverage longer.”

A Wharton study of flood insurance tenure under the NFIP published earlier this year found that in the period 2001-2009 the number of years that people keep their flood insurance policy before letting it lapse is on average only three years.

The same Wharton analysis found that during the 20th century in the United States, floods accounted for the most lives lost and the most property damage of all natural disasters.

Over the period 1950-2010, about two-thirds of all U.S. Presidential Disaster declarations were for flood-related events, Wharton found.

Indeed, a 2011 I.I.I. poll revealed that just 14 percent of American homeowners had a flood insurance policy, below the 17 percent who said they purchased flood insurance in 2008.

Check out I.I.I. facts and stats on flood insurance.

The international community needs to rethink how it will reduce risk and prepare for and respond to future humanitarian disasters, according to the 2011 World Disasters Report just-released by the International Federation of Red Cross and Red Crescent Societies.

The report notes that three mega-disasters in 2010 and 2011 – the January 2010 earthquake in Haiti, massive flooding in Pakistan in July 2010, and the recent earthquake and tsunami in Japan –  underscore the exponential change in crisis scale and impact and the increasingly interconnected nature of disasters.

Whatever the characteristics of past vulnerabilities, it is increasingly apparent that the dimensions and dynamics of humanitarian crises are changing exponentially and that those concerned with reducing disaster risks and their impacts will have to take both into account.”

Data included in the report show that natural disasters resulted in 297,752 deaths in 2010, making it the deadliest year of the decade. The majority of deaths in 2010 (222,570) were attributable to the January 2010 Haiti earthquake, which was the second deadliest natural disaster of the decade (after the 2004 Indian Ocean tsunami).

Of the 304 million people reported affected by natural disasters in 2010, more than 60 percent were victims of floods, according to the Center for Research on the Epidemiology of Disasters (CRED).

The most severe occurred in China (134 million people affected) and in the Indus river basin in Pakistan (more than 20 million). Six other floods affected one to nine million people for a total of 23 million.

Natural disaster costs ($123.3 billion) were the fourth highest of the decade, after 2005 ($240.4 billion, 2010 prices), 2008 ($193.3 billion, 2010 prices) and 2004 ($155.8 billion, 2010 prices).

The London Guardian’s Datablog has more on the findings.

Check out I.I.I. facts and stats on global catastrophes.

Sometime this afternoon, NASA’s Upper Atmosphere Research Satellite (UARS) is expected to re-enter earth’s atmosphere.

While us earthlings are watching with great anticipation to see where pieces of the satellite will land, NASA assures us we have nothing to worry about as the risk to public safety or property is extremely small:

Since the beginning of the Space Age in the late-1950s, there have been no confirmed reports of an injury resulting from re-entering space objects. Nor is there a record of significant property damage resulting from a satellite re-entry.”

Despite NASA’s reassurances, many can’t help but wonder what would happen if space debris did hit a house or car.

Insurance Journal reminds us that the United States is a party to the 1972 Convention on International Liability for Damage Caused by Space Objects.

Under the Convention, the U.S. is internationally liable to pay compensation for damage caused by its space object on the surface of the earth or to aircraft in flight.

Slate goes a step further and poses the hypothetical question of whether, in the absence of government compensation, a standard U.S. homeowners or auto insurance policy would cover damage from space debris.

While most standard homeowners policies do cover damage due to falling objects, it’s always a good idea to check what’s covered in your individual policy. Cars damaged or destroyed by space debris would be covered under the optional comprehensive portion of a standard auto insurance policy.

Even better news is that North America does not appear to be in the target re-entry zone for UARS.

For the space buffs out there, a recent Swiss Re paper on space debris considers the insurance impact of debris colliding with operational satellites in space.

Blogging about insurance, or on any subject come to that, takes time and commitment from both the writer and the reader.

So we’re honored to announce that Terms + Conditions has received a nomination to be considered one of the LexisNexis Insurance Law Community’s Top 50 Insurance Blogs for 2011.

Each year, LexisNexis honors a select group of blogs that set the online standard for a given industry. The Top Blogs campaign on the LexisNexis Insurance Law Community starts with a comment period that runs through September 30.

An initial list of nominees for this year’s Top 50 includes some of our favorites such as the excellent Tim Dodge’s Ask Tim, Guy Carpenter’s GCCapitalIdeas.com, InsureReinsure published by Edwards, Angell, Palmer & Dodge, the Lloyd’s blog, Risk Management Monitor published by RIMS, and The D&O Diary published by Kevin LaCroix.

To talk up or nominate your favorite insurance blog, just register and log in as a community member at this link.

Regular readers of our blog will remember a previous post on a public nuisance lawsuit brought by the Alaskan coastal town of Kivalina against 24 energy and utility firms.

Now a state appeals court has decided what is being described as the first climate change liability insurance coverage case – a case that arose out of the underlying public nuisance lawsuit – in favor of an insurer.

Late last week the Virginia Supreme Court upheld a lower court ruling that Steadfast Insurance has no duty to defend and indemnify the energy company AES Corp.

Basically the decision hinged on the definition of occurrence in the commercial general liability (CGL) insurance policies that AES purchased from Steadfast.

In the opinion, Justice S. Bernard Goodwyn noted that under the CGL policies in question, “occurrence” is defined as “an accident, including continuous or repeated exposure to substantially the same general harmful condition.”

Justice Goodwyn wrote:

The relevant policies only require Steadfast to defend AES against claims for damages for bodily injury or property damage caused by an occurrence or accident.”

However, the Kivalina complaint had alleged that AES intentionally emitted carbon dioxide and other greenhouse gases into the atmosphere.

Justice Goodwyn further noted:

Kivalina alleges its damages were the natural and probable consequence of AES’s intentional actions. Therefore, Kivalina does not allege that its property damage was the result of a fortuitous event or accident, and such loss is not covered under the relevant CGL policies.”

According to an article in the New York Times by Lawrence Hurley of Greenwire, legal experts caution that this initial opinion in favor of insurers is just one decision that applies to only one state and one insurance policy.

A post at the ClimateLawyers blog states:

This is the first skirmish of what is certain to be a protracted battle between insurers and insureds. There are 50 other jurisdictions (including the District of Columbia) and this is only one issue based on one complaint and one insurer’s policy language. There is a long way to go before we will have clarity here.”

Check out the I.I.I. backgrounder on Climate Change Insurance Issues.

As fans of “Project Runway” know, one day you’re in, the next day you’re out.

This year Heidi Klum’s in and Cameron Diaz is out – at least if you’re looking at the list of the most dangerous celebrities in cyberspace, just-released by Internet security firm McAfee.

Klum, the former Victoria’s Secret model and current producer of “Project Runway” moved up from No. 10 on last year’s list to No. 1 today, replacing Diaz as the most dangerous celebrity in cyberspace. Searching for Klum results in a nearly one in 10 chance of landing on a risky site, McAfee said.

Fans searching for Klum screensavers, pictures and downloads are at risk of running into online threats such as viruses and malware designed to steal their personal information.

Cameron Diaz fell to second place this year, followed by Piers Morgan – a new addition to the top 10 list and the most dangerous male celebrity in cyberspace.

While slightly safer than last year, searching for top celebrities continues to generate risky results, as Paula Greve, director of Web security research at McAfee says:

Consumers should be particularly aware of malicious content hiding in ‘tiny’ places like shortened URLs that can spread virally in social networking sites, or through e-mails and text messages from friends.”

Movie stars and models top the most dangerous list this year, while singers and sports stars are among the safest.

Check out I.I.I. facts and stats on identity theft and cyber security.

Commercial insurance prices are showing a small increase for the first time in nearly eight years, according to Towers Watson’s latest Commercial Lines Insurance Pricing Survey (CLIPS).

It showed that commercial insurance prices in aggregate increased by nearly 1.5 percent during the second quarter of 2011 – the first uptick since the fourth quarter of 2003.

The findings are consistent with preliminary results of a soon-to-be-released Towers Watson survey, which reveal that 75 percent of CFOs believe standard property market prices are at the bottom or turning upward. Further, 80 percent of CFOs believe the casualty market is within two years of hardening.

While it’s too early to definitively call this a hardening market, Towers Watson said all the signs are pointing in that direction.

Findings from CLIPS indicate the increase was led by workers compensation, which continued the trend of pricing increases that began in the first quarter of this year, and commercial property, which increased for the first time in more than a year.

Directors and Officers (D&O) liability was the only line that continued to show significant pricing declines.

Towers Watson’s survey follows online insurance exchange MarketScout’s report that the composite rate for U.S. property and casualty insurance was minus 2 percent in August, matching the rate set in July.

Richard Kerr, CEO of MarketScout said:

Property rates are continuing to firm. In July 2011, the composite rate for all property placed in the U.S. adjusted from minus 2 percent to flat. This includes new and renewal business on both cat and non-cat exposed property.

This notable movement could be temporary due to the psychological impact of Hurricane Irene and the fact we are right in the midst of hurricane season.”

Check out I.I.I. information on industry results and market conditions.

Catastrophes cost the global insurance industry an estimated $70 billion in insured losses in the first half of 2011, more than double the $29 billion in the first half of 2010, according to Swiss Re sigma.

This means 2011 ranks already as the second costliest year for insured catastrophe losses in history, behind 2005 when total catastrophe claims amounted to $120 billion of which $90 billion was caused by hurricanes Katrina, Wilma and Rita, sigma says.

In the words of Thomas Hess, Swiss Re’s chief economist:

Additional claims from the ongoing U.S. hurricane season or expensive winter storms in Europe have the potential to bring figures for the full year even closer to the record claims of $120 billion experienced in 2005.”

Based on first half events, 2011 will be the year with the highest insured earthquake losses in history, sigma says. Approximately 26,000 people lost their lives in catastrophes in the first six months of 2011, most of them in the Japan earthquake and tsunami.

Claims from natural catastrophes alone reached $67 billion in the first half of 2011, compared to $27 billion in the same period of 2010, according to sigma.

Total economic losses (insured and uninsured) for the first half year’s disasters amounted to almost $278 billion.

Swiss Re’s figures are in line with Munich Re’s latest catastrophe loss estimates. Check out I.I.I. facts and stats on global catastrophes for more on this.

In the course of the last few weeks and months we’ve highlighted a number of reports and updates related to the impact of the September 11 attacks.

Here are a few of our recent 9/11 related blog posts: September 11 Report Card; Mapping Out a Future Anti-Terror Path; Terrorism Risk In Light of Bin Laden Death.

Additional I.I.I. resources on this topic can be found here. A New York Times special report also has some interesting perspectives on the costs and consequences of 9/11.

As we look to the 10th anniversary of 9/11 this weekend we pause to remember those who lost their lives on that day.

The 9/11 Memorial in New York City will be dedicated on Sunday and open to the public on Monday. The website www.911memorial.org has images and details for planning your visit.

On a separate note, the latest edition of Cavalcade of Risk, which features relevant and timely blog posts on a variety of risk management and insurance topics, is hosted this week by our friends over at Risk Management Monitor.