Archive for May, 2012

In the lead-up to the holiday weekend, perhaps you missed a new report from J.D. Power and Associates that measures online customer experiences with insurer websites while shopping for auto insurance.

The study found that shoppers who have a highly satisfying website experience are more likely to return to that insurer’s website and are also more likely to recommend the site to friends, relatives or colleagues.

Among shoppers who indicate being delighted (satisfaction scores of 900 and above on a 1,000-point scale), 63 percent are more likely to shop the insurer after visiting their website, compared with 14 percent of shoppers who indicate being disappointed with the website (satisfaction scores of less than 550).

Also, some 50 percent of delighted shoppers say they “definitely will” recommend the insurer to others, while only two percent of disappointed shoppers say the same.

Five factors contribute to shoppers’ overall satisfaction, according to J.D. Power:
- Ease of navigating the website
- Appearance of the website
- Clarity of information provided on the website
- Range of services that can be performed on the website
- Speed of the website

In the words of Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates:

Insurers have a fantastic opportunity to gain shoppers, and their referrals, by providing a website that is easy to use, has a professional and engaging appearance, and is a great resource for the shopping process.”

An earlier study from JD Power found that 52 percent of auto insurance customers start the shopping process online.

The National Oceanic and Atmospheric Administration (NOAA) yesterday stressed the need for residents of hurricane-prone areas to prepare every year, despite its prediction of a near-normal 2012 Atlantic hurricane season.

NOAA Administrator Jane Lubchenco said:

NOAA’s outlook predicts a less active season compared to recent years. But regardless of the outlook, it’s vital for anyone living or vacationing in hurricane-prone locations to be prepared. We have a stark reminder this year with the 20th anniversary of Hurricane Andrew.”

Andrew, the category 5 hurricane that devastated South Florida on August 24, 1992, was the first storm in a late-starting season that produced only six named storms.

NOAA’s outlook for the 2012 season which begins June 1, says there’s a 70 percent chance of nine to 15 named storms, of which four to eight will strengthen to a hurricane (with top winds of 74 mph or higher) and of those one to three will become major hurricanes (with top winds of 111 mph or higher, ranking Category 3, 4, or 5).

It also cited Hurricane Irene in 2011 as a reminder that tropical systems can affect the Northeast and bring the threat of inland flooding.

NOAA’s outlook does not predict how many storms will hit land, but earlier this week, London-based consortium Tropical Storm Risk predicted two hurricanes would make U.S. landfall in 2012, close to the 1950-2011 norm.

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

Here’s an animation of the 2011 season, courtesy of NOAAVisualizations:

This week is National Small Business Week (NSBW) and as the people of Joplin, Missouri mark the one-year anniversary of the deadliest tornado in U.S. history since modern-record keeping began, we’re reminded of the importance of disaster planning for businesses.

The Joplin Globe reports on the remarkable recovery rate that of the 553 businesses destroyed or severely damaged in the Joplin tornado a year ago, nearly 81 percent have reopened.

Businesses that are forced to close down following a disaster run the risk of never being able to open their doors again.

The Insurance Information Institute (I.I.I.) notes that while there’s no way to lower the risk of a natural disaster, there are critical measures that can be taken to protect a company’s bottom line from nature’s fury.

A disaster plan and adequate insurance are keys to recovery.

Check out this I.I.I. video for info on insurance for the small and medium-sized business owner:

Another great resource is the IBHS Open for Business® toolkit.

While you were out running errands Saturday, the first named storm of the 2012 Atlantic hurricane season was forming off the coast of South Carolina.

The early formation of Tropical Storm Alberto, 13 days before the official start of the season is a reminder that coastal residents need to be prepared.

A list of preparedness and safety tips at the FEMA blog can help you do just that.

Over at Wunderblog Dr. Jeff Masters places Alberto in historical context:

- Alberto is the earliest-forming tropical storm in the Atlantic since Ana in 2003, which formed on April 21.

- Alberto is one of only three Atlantic tropical storms to form in May in the past 31 years. The others were Tropical Storm Arthur of 2008 and Tropical Storm Arlene of 1981.

Does an early storm point to an active season?

Dr. Masters says not:

Formation of an early season tropical storm from an old frontal boundary, like occurred with Alberto, is not a harbinger of an active hurricane season—it’s more of a random occurrence.”

Had Alberto formed in the Caribbean though, the story may have been different indicating instead a busy hurricane season.

Check out I.I.I. facts and statistics on hurricanes and hurricane fact files and market share by state.

Many dog owners do not consider the possibility that their friendly Fido could bite a friend, relative, or even a stranger. But dog bites do happen and irresponsible dog owners endanger others and their assets, according to the Insurance Information Institute (I.I.I.)

For example, State Farm, the largest writer of homeowners insurance in the U.S., paid out more than $109 million as a result of its nearly 3,800 dog bite claims in 2011.

The I.I.I. reports that dog bites accounted for more than one-third of all homeowners insurance liability claim dollars paid out in 2011, costing nearly $479 million.

An analysis of homeowners insurance data by the I.I.I. found that the average cost paid out to dog bite claims was $29,396 in 2011, up 12.3 percent from $26,166 in 2010. In fact, from 2003 to 2011, the cost of the average dog bite claim increased by 53.4 percent.

These increases can be attributed to higher medical costs as well as the size of settlements, judgments, and jury awards given to plaintiffs, which have risen well above the rate of inflation in recent years, according to the I.I.I.

Most standard homeowners insurance policies provide policyholders with anywhere from $100,000 to $300,000 in dog bite liability coverage. If the claim exceeds those limits, the dog owner is personally responsible for all damages above that amount, including legal expenses.

Most insurers will cover homeowners with dogs. However, once a dog has bitten someone, your insurance company may charge a higher premium or exclude the dog from coverage.

Of course, the best way to protect yourself is to prevent your dog from biting anyone in the first place.

Check out this I.I.I. video for tips on preventing dog bites:

Next week is National Dog Bite Prevention Week so now is a good time to review tips on how to be a responsible dog owner.

More brokers said demand for insurance was up in the first quarter of 2012, according to the latest Commercial P/C Market Index survey from the Council of Insurance Agents & Brokers (CIAB).

Some 59 percent of respondents said demand was up in the first quarter, compared to 53 percent who said demand did not improve in the previous quarter, the CIAB said. This increase in demand may be an indicator that the economy is improving.

The broker comments came as the Council’s analysis showed prices hardened and underwriting toughened in the U.S. commercial property/casualty market in the first quarter of 2012.

On average, small, medium and large account pricing rose 4.4 percent compared with 2.7 percent in the fourth quarter of 2011.

Large account pricing realized the biggest increase quarter-to-quarter – 4.1 percent compared with 1.6 percent in the fourth quarter of 2011.

Council president/CEO Ken Crerar commented:

We’ve been cautious up to now about declaring a market turn, but I think it’s reasonable to say that the market has made a hard turn after two quarters of price increases and tighter underwriting. It’s difficult to predict length and severity, but the market has turned.”

The Council’s analysis comes after MarketScout reported rates for U.S. commercial lines continued their upward trend in April 2012.

Check out latest I.I.I. information on financial and market conditions.

There were some positives and negatives for the workers compensation insurance market in the annual “State of the Line” report from NCCI Holdings Inc.

On the plus side, written premiums saw growth for the first time since 2005, indicating that the worst of the recession is over.

Net written premiums (including state funds) increased by 7.4 percent to $36.3 billion, a welcome shift following the cumulative 27 percent decline in premium from 2006-2010, NCCI said.

However, for the third straight year, workers compensation holds the distinction of having the highest combined ratio of all the major commercial lines.

NCCI reported that the workers compensation calendar year combined ratio was 115 in 2011, the same number as in 2010.

In a release, NCCI Chief Actuary Dennis Mealy observed:

Workers compensation, because of its direct connection to employment and the labor markets, has been the property/casualty line most significantly impacted by the continued difficult economic environment. Combined ratios remain at unsustainably high levels, and investment returns are not sufficiently high to generate operating returns near the cost of capital.”

Despite the challenges, NCCI added that the industry is well-capitalized for the future.

Business Insurance has more on this story.

Check out I.I.I. information on workers compensation.

A new report from the Institute of Medicine (IOM) has much to say on the obesity epidemic in the United States and the urgent need to strengthen prevention efforts.

“Left unchecked, obesity’s effects on health, health care costs, and our productivity as a nation could become catastrophic,” the report said.

This infographic sums up the IOM’s key findings:

Earlier research from the Insurance Information Institute (I.I.I.) found that insurers and reinsurers are just one of many industries affected by the obesity issue.

 

The composite rate for U.S. commercial lines – commercial property, casualty and professional lines coverage – was up 3 percent in April 2012 compared to a year ago, according to the latest analysis from online insurance exchange MarketScout.

Workers’ compensation and property coverage rates rose the most at plus 4 percent, the same as in March 2012. BOP and general liability were up 3 percent.

While historically there has been a considerable difference in the underwriting approaches among the various types of insurers, recently MarketScout has noticed that both admitted and non-admitted insurers are pricing similarly.

Richard Kerr, CEO of MarketScout, suggested this could mean a boost in business for non-admitted insurers in future:

The recent similar pricing strategies could ultimately lead to more business for the non-admitted insurers as admitted insurers begin to restrict their risk appetite and simply decline to write tougher accounts.”

 

The I.I.I. defines admitted insurers as those licensed to do business in a particular state. Non-admitted insurers are licensed in some states, but not others. States where an insurer is not licensed call that insurer non-admitted. They sell coverage that is unavailable from licensed insurers within the state.

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

A new ranking of the top ten most costly hurricanes just released by the Insurance Information Institute (I.I.I.) puts 2011′s Hurricane Irene in tenth place, replacing 2004′s Hurricane Jeanne.

Hurricane Irene made landfall near Cape Lookout, North Carolina, on August 27, 2011 as a Category 1 storm and a second landfall in New Jersey and New York City as a tropical storm the next day.

In all, Irene affected 14 states and resulted in $4.3 billion in insured damages, according to the Property Claim Services unit of ISO, and was directly responsible for 41 fatalities.

The insured damages tally does not include flood damage that is covered by the federally administered National Flood Insurance Program (NFIP).

Irene caused major flooding as it headed northward up the Atlantic seaboard. The I.I.I. notes that Irene caused catastrophic flooding in New York and New England, especially Vermont.

Here’s the ranking:

TOP TEN MOST COSTLY HURRICANES IN THE UNITED STATES (1)
($ millions)
Estimated insured loss (2)
Rank Date Location Hurricane Dollars when
occurred
In 2011
dollars (3)
1 Aug. 25-30, 2005 AL, FL, GA, LA, MS, TN Katrina $41,100 $46,591
2 Aug. 24-26, 1992 FL, LA Andrew 15,500 22,939
3 Sep. 12-14, 2008 AR, IL, IN, KY, LA, MO, OH, PA, TX Ike 12,500 13,050
4 Oct. 24, 2005 FL Wilma 10,300 11,676
5 Aug. 13-14, 2004 FL, NC, SC Charley 7,475 8,755
6 Sep. 15-21, 2004 AL, DE, FL, GA, LA, MD, MS, NJ, NY, NC,
OH, PA, TN, VA, WV
Ivan 7,110 8,328
7 Sep. 17-22, 1989 GA, NC, PR, SC, VA, U.S. Virgin Islands Hugo 4,195 6,835
8 Sep. 20-26, 2005 AL, AR, FL, LA, MS, TN, TX Rita 5,627 6,379
9 Sep. 3-9, 2004 FL, GA, NY, NC, SC Frances 4,595 5,382
10 Aug. 26-28, 2011 CT, DC, DE, MA, MD, ME, NC, NH, NJ, NY, PA, RI, VA, VT Irene 4,300 4,300

(1) Includes hurricanes occurring through 2011.
(2) Property coverage only. Does not include flood damage covered by the federally administered National Flood Insurance Program.
(3) Adjusted for inflation through 2011 by ISO using the GDP implicit price deflator.

Source: The Property Claim Services (PCS) unit of ISO, a Verisk Analytics company.