Archive for March, 2012

Be careful what you say online.

A British court earlier this week awarded libel damages of £90,000 ($140,000) to former New Zealand cricketer Chris Cairns as a result of a tweet posted about him in 2010.

The 24-word tweet, by former Indian Premier League head Lalit Modi, alleged that Cairns had been involved in match-fixing.

According to an Associated Press report, the ruling from London’s High Court determined that Modi “singularly failed” to provide any reliable evidence that Cairns was involved in match-fixing.

Modi was also ordered to pay £400,000 ($635,000) in costs to Cairns’ solicitors within 28 days.

This isn’t the first time a tweet has turned litigious.

In May 2011, singer Courtney Love was sued for alleged defamation on Twitter by former lawyers who had represented her in 2008 in an effort to recover money allegedly stolen from the estate of her late husband, Kurt Cobain.

And in March 2011, Love agreed to pay $430,000 plus interest, to settle a landmark Twitter defamation lawsuit brought in March 2009 by her former designer over comments Love made on her Twitter and MySpace accounts.

A recent I.I.I. paper co-authored by myself and I.I.I. president Dr. Robert Hartwig, notes that the growing use of social media in everyday life is giving rise to a range of evolving liabilities.

The good news is that insurance is available to help both individuals and companies better manage and reduce their potential financial losses from social media and cyber risks in future.

Check out a post on ZDNet blog Social Business for more on recent Twitter defamation cases.

Despite a trebling of the global commercial shipping fleet in the 100 years since the sinking of the Titanic, overall shipping loss rates declined from one ship per 100 per year in 1912 to one ship per 670 per year in 2009.

This telling statistic comes in a new report from specialist marine insurer Allianz Global Corporate & Specialty (AGCS).

The report reveals that while marine safety has vastly improved in the century since the Titanic, the maritime industry now faces new risks driven by the continued growth in world shipping.

Human error risks and the growing trend to super size ships are among the next challenges facing the industry, AGCS says.

Human error is described as the weakest link in the system.

Over 75 percent of marine losses can be attributed to a wide range of human error factors, including fatigue, inadequate risk management and competitive pressures, as well as potential deficiencies in training and crewing levels.

AGCS says:

As technological improvements reduce risk, so does the weakest link in the system – the human factor – become more important. This is where the industry should focus most closely, so that best practice risk management and a culture of safety becomes second nature across the world fleet.”

Other significant safety risks include: increasing bureaucracy on board ships; the continued threat of piracy off Somalia and elsewhere; and the emergence of ice shipping and its associated navigational and environmental complications.

Still, shipping disasters tend to spur marine safety improvements and Costa Concordia is certain to be no different, the report says.

Another key takeaway from AGCS’s research on safety and shipping from 1912-2012:

Marine transport is one of the safest means of passenger transport overall with far lower fatal accident rates than car, motorcycle, bicycle or walking in Europe.

Business Insurance has more on this story.

Check out I.I.I. facts and statistics on marine accidents.

Ahead of the National Hurricane Conference in Orlando next week, Colorado State University’s Tropical Meteorology Project has issued a brief update of the atmospheric/oceanic conditions likely to impact the 2012 Atlantic hurricane season.

The key takeaway, in the words of the CSU team:

The combination of a warming tropical Pacific and a cooling tropical Atlantic are leading us to think that the 2012 Atlantic hurricane season will have less activity than the average 1981-2010 season.”

Despite its forecast for lower activity, the CSU team stresses that there is inherent uncertainty in seasonal tropical cyclone (TC) prediction and that hurricanes can make landfall in inactive seasons and do major damage (e.g. Hurricane Alicia in 1983 and Andrew in 1992).

Their recommendation:

Coastal residents need to prepare the same for every hurricane season.”

The CSU team presents four possible scenarios for the season ahead, based on the strength of the Atlantic thermohaline circulation (THC) and the phase of El Niño – Southern Oscillation (ENSO):

- A 45 percent chance that the THC continues in the above-average condition it has been in since 1995 and a significant El Niño develops resulting in a seasonal average net tropical cyclone (NTC) activity of 85, suggesting 8-11 named storms, 4-6 hurricanes, 1-2 major hurricanes.

- A 25 percent chance of a continuing above-average THC and no El Niño develops, resulting in NTC activity of 130, with 12-15 named storms, 6-9 hurricanes, 3-4 major hurricanes.

- A 25 percent chance that the THC becomes weaker and a significant El Niño develops, resulting in NTC activity of 50, with 5-7 named storms, 2-4 hurricanes, 0-1 major hurricanes.

- A 5 percent chance that THC becomes unusually strong in 2012 and no El Niño develops resulting in NTC activity of 180, with 14-17 named storms, 9-11 hurricanes, 4-5 major hurricanes.

A full discussion of the CSU team’s 2012 Atlantic basin hurricane forecast will follow on April 4.

Meanwhile, check out I.I.I. facts and statistics on hurricanes.

The magnitude 7.4 earthquake that hit Mexico yesterday may not have resulted in any tsunamis for the U.S., but this does not diminish the tsunami threat.

Major tsunamis are produced by large earthquakes (greater than magnitude 7 on the Richter scale) and those with shallow focus (<30km depth), according to NOAA.

Since 1850 tsunamis have been responsible for the loss of over 420,000 lives and billions of dollars of damage to coastal structures and habitats, NOAA says. Most of these casualties were caused by local tsunamis that occur about once per year somewhere in the world.

Tsunamis also result from distant earthquakes. Last year’s magnitude 9.0 Japan earthquake and the 2010 Chile earthquake caused tsunami strikes in Hawaii, Alaska, Washington, Oregon, and California, for example.

Next week is National Tsunami Preparedness Week, so now is a good time to remind ourselves of the risk and what to do if a tsunami happens.

By the way, catastrophe modeler EQECAT estimates that yesterday’s Mexico quake will result in insured losses of less than $100 million.

Check out this I.I.I. release for more information on earthquake insurance Mexico and a chart of the most costly world earthquake/tsunamis.

Tomorrow marks the official start of spring and typically the arrival of flood season as the snow melts.

However, given the unseasonably warm temperatures in many parts of the country, you could be forgiven for thinking that spring had already sprung.

Largely due to the limited winter snowfall, this year for the first time in four years, no area of the country faces a high risk of major to record spring flooding, according to NOAA’s annual Spring Outlook.

NOAA says:

The Ohio River basin including portions of Illinois, Indiana, and Kentucky, along with parts of Louisiana and Mississippi are the only areas with an above-normal risk of flooding as soil moisture and river levels are currently above normal. Additionally, odds favor above-average April rainfall for the Ohio River basin.

River and stream water levels are normal to below normal for most of the country and there is less snow pack than in previous years. As a result, there is a normal flood risk from the Northeast, through the mid-Atlantic, across most of the northern Plains and into the Northwest.”

However, the mild winter does not entirely eliminate the risk of spring flooding.

NOAA adds:

Heavy spring rainfall can lead to flooding at any time, even in areas where overall risk is considered at or even below normal.”

And:

Although flooding risks have subsided it is important to remember that weather can change quickly – from drought to flooding to severe weather, including outbreaks of tornadoes.”

In other words, don’t put your umbrella away and don’t let your flood insurance policy lapse.

The top 10 most costly flood events in U.S. history are associated with hurricanes and tropical storms, according to facts and statistics from the Insurance Information Institute (I.I.I.).

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

Some of our readers may know that March is Women’s History Month. In celebration of the event, the Insurance Information Institute (I.I.I.) has developed facts and statistics that provide information on the number of women employed in the industry today and the percentage of women workers in selected insurance occupations.  In addition, the I.I.I. has posted pictures and historical facts on its Women in Insurance Pinterest board. 

Today, Insurance Information Institute (I.I.I.) vice president of communications Loretta Worters tells us more about women’s history in insurance:

Did you know that married women in the 1840s could not buy life insurance policies on themselves, a stumbling block to growth of the life industry?  Or that the Insurance Standard was the only insurance paper actively managed by a woman, Emily Ransom in 1897? Did you know that in 1910, out of 9,386 managers in insurance, only four were black women?

There is much we can be proud of as women in the insurance industry and what we’ve accomplished since those early days.  Today, for example, 49.4% of insurance sales agents are women, 57.4% are claims adjusters, appraisers, examiners and insurance investigators and 59.3% are underwriters.  In fact, women have comprised about two-thirds of the insurance industry workforce in each year from 2002 to 2011, according to the Current Employment Statistics Survey (CES). In 2011, there were 1.5 million women employed in the insurance sector, accounting for 66.1 percent of the 2.3 million workers in the insurance industry.

There have been a lot of firsts for women in the insurance industry.  The first woman insurance commissioner in West Virginia was Virginia Mae Brown.  In May 1961 she took office, making her also the first woman insurance commissioner in the United States.  The first recorded women’s insurance industry organization was the Women Leaders Round Table founded in 1936.  Today, we have similar organizations such as the Association of Professional Insurance Women started in 1976 which provides assistance to women with career development.

While the insurance industry is “doing the right thing,” still more can be done.  In 2010, less than 25,000 women were insurance actuaries, too few to calculate a percentage. In 2010, the ratio of women’s to men’s earnings was 81.2% for all insurance occupations; for insurance sales agents it was just 66.7%.

Bina West Miller, founder of one of the first organizations in the country to offer life insurance to women said something in 1892 that still applies today:  “Insurance is the coming work for intelligent, energetic women in the South, North, East and West.”

For more interesting facts in celebration of Women’s History Month, check out our tweets.

Pictures often speak louder than words and this is most certainly the case as we look at a recent history of commercial lines insurance price changes.

The chart, from Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS), compares the change in prices charged on policies underwritten in the most recent quarter to those charged for the same coverage during the same quarter the prior year.

 

 

As we can see, Towers Watson’s survey shows that commercial insurance prices increased an aggregate 3% in the fourth quarter of 2011 – the fourth consecutive quarter during which prices for all standard commercial lines rose.

Once again, prices for workers compensation and commercial property showed the largest quarterly increases followed closely by general/products liability. Prices for directors & officers liability finally showed signs of stabilizing, Towers Watson said.

Survey data were contributed by 41 participating insurance companies representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds).

CLIPS data confirms the ongoing upward trend in commercial insurance rates observed by other surveys.

By the way, 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 by our friends over at Risk Management Monitor, and includes a link to our most recent post on MarketScout’s latest commercial pricing analysis.

March 11, 2012 will mark the one-year anniversary of the Japan earthquake and tsunami. Together the quake and tsunami caused $210 billion in economic damage, an estimated $35 to $40 billion in insured losses, and 15,840 fatalities, according to Munich Re.

While the disaster hit Japan, its aftermath was felt well beyond that country’s borders. Concerns were raised worldwide over supply chain disruption, nuclear risks and tsunami damage.

Another ongoing issue of concern beyond Japan’s shores is marine debris.

According to NOAA, it’s possible that debris washed into the sea by the tsunami could arrive on shores in Alaska, Hawaii, the West Coast, and Canada over the next few years.

Over at the Marine Debris blog, a post by Nancy Wallace, Director of the NOAA Marine Debris Program, notes:

It is likely that beachgoers on the West Coast and Alaska will start noticing a gradual increase in marine debris items near-shore or on the beaches in 2013. Those on the main Hawaiian Islands might start noticing an increase closer to 2014.”

Despite the alarming news headlines, NOAA’s Wallace assures us there is no scientific estimate of how much debris the tsunami washed into the sea or how much is still floating. It is also highly unlikely any debris is radioactive, while the chance of human remains arriving with it is almost zero.

You can find out more about the Japan tsunami marine debris on the NOAA Marine Debris Program site. Resources include the informative tsunami debris FAQs and fact sheet.

There’s also a marine debris tracker app that allows you to check in when you find trash on U.S. coastlines and waterways. Significant marine debris sightings can also be reported to NOAA via email at DisasterDebris@noaa.gov

A HuffPost piece offers further analysis on the tsunami marine debris story.

The composite rate for U.S. commercial lines was up 2 percent in February 2012, according to the latest analysis from online insurance exchange MarketScout.

Commercial property and workers’ compensation continued to lead the increases at plus 3 percent, followed by BOP, general liability and umbrella/excess with reported rate increases of 2 percent.

All other coverages were up 1 percent, except for fiduciary and surety which were flat.

Richard Kerr, CEO of MarketScout noted:

In September 2011 rates were flat. Since then, we have continued to see evidence of a slowly turning market with the composite rate at 0 percent for October; 1 percent increase for November 2011 through January 2012 and now a 2 percent increase in February 2012.” 

An article on PC360 takes a closer look at the gradual incline in commercial rates.

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

Damage assessments have begun in the wake of Friday’s powerful storm system that brought a massive outbreak of tornadoes across the Midwest and South and left 39 dead.

So far, the National Weather Service (NWS) has confirmed 42 tornadoes from Friday: Indiana – 3; Virginia – 1; North Carolina – 2; Ohio – 5; West Virginia – 2; Kentucky – 8; Tennessee – 8; Alabama – 7; Mississippi – 1; Georgia – 5.

However, this number will rise as NOAA’s Storm Prediction Center (SPC) logged 107 preliminary tornado reports from Friday’s outbreak, according to Dr. Jeff Masters’ Wunderblog.

Dr. Masters notes that these preliminary reports are typically over counted by 15 percent and predicts the total number of tornadoes from Friday’s outbreak will probably finish in the 90 to 100 range.

The severe weather also brought damaging winds and hail.

Friday’s outbreak follows a separate storm system earlier in the week that spawned several tornadoes in the Midwest. The severe weather 28/29 February caused widespread property damage and left at least 12 dead.

NOAA issued 440 tornado warnings and 606 thunderstorm warnings last week alone. USA Today has an interesting article on how tornado forecasts saved countless lives.

The Insurance Information Institute’s facts and statistics are a useful resource on the insurance implications of tornadoes.

Latest information can also be found at Guy Carpenter’s online CAT-i bulletins and catastrophe modeling firm EQECAT’s CatWatch catastrophe reports.

See an animation of Friday’s developing severe weather system via NOAA’s GOES-13 satellite below: