Archive for March, 2013

For many children and their parents Sesame Street is synonymous with childhood as characters like Big Bird, Elmo, Ernie and Bert deliver education and entertainment to the pre-school set.

So the launch of an early literacy education initiative for underserved children via a partnership between the Insurance Industry Charitable Foundation (IICF) and Sesame Workshop, the nonprofit educational organization, is a notable development.

The IICF has pledged $750,000 to Sesame Workshop over the next three years, to create a literacy skills program that helps parents and caregivers support young children’s development of conversation, reading and writing.

The program will launch in the fall of 2013 and will include video segments, downloadable materials and a dedicated section on the Sesamestreet.org website and mobile site.

This is the IICF’s largest single grant pledge to-date since the organization was established in 1994.

The initiative will target low income communities within IICF’s four regional divisions; Midwest, Northeast, Texas/Southeast, and the Western United States and will also engage volunteers in all of these regions.

William Ross, chief executive officer of the IICF, says:

It’s an honor and privilege to be working with the Sesame Workshop, an organization that is passionate about making an educational impact for children in the communities in which we work and serve. Through this program, we are hoping to create a meaningful difference by creating an impactful literacy foundation for the underserved children in this country.”

 

As the United States braces for another drought in the coming months, Swiss Re reports that record heat and extremely dry weather conditions in the United States in 2012 led to one of the worst droughts in recent decades and the highest ever recorded loss in agriculture insurance.

Thomas Holzheu, Swiss Re’s Chief Economist in the U.S., says:

Severe crop failures in the U.S. Corn Belt resulted in insured agricultural losses of $11 billion. This makes the 2012 drought the highest ever recorded loss in agriculture insurance history.”

Swiss Re’s latest sigma study reveals that worldwide natural catastrophes and man-made disasters in 2012 caused insured losses of $77 billion – making 2012 the third most costly catastrophe year on record. Still, this is significantly lower than 2011 when record earthquakes and flooding in Asia Pacific caused insured losses of over $126 billion, the highest ever recorded.

Overall economic losses from natural catastrophes and man-made disasters in 2012 reached $186 billion, with approximately 14,000 lives lost.

Hurricane Sandy was the most costly event for the year, causing $70 billion in economic losses and $35 billion in insured losses (of which $20 billion to $25 billion was covered by private insurers and the remainder by the National Flood Insurance Program (NFIP)).

In fact, nine of the 10 most expensive insured loss events happened in the U.S. in 2012. Fortunately, the high insurance penetration in North America meant that $65 billion – over half of the $119 billion in economic losses in the region – were covered by insurance.

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

The number of countries with upgraded political risk ratings has increased, according to Aon’s 2013 Political Risk Map.

After several years of greater downgrades due to the Arab Spring, the political effects of the global financial crisis and persistent strains in South Asia, political risk has eased in 13 countries, Aon says.

Despite the upgrades this year, Aon warns that businesses operating in emerging markets still face significant political risks.

The 2013 map shows that 13 countries were upgraded in 2013 compared to just three in 2012. The 2013 map also shows only 12 countries experiencing downgrades, compared to 21 in 2012.

An upgrade is where the overall country or territory risk is rated lower than the previous year.

After dominating the downgrades in 2012, three Middle Eastern countries (Bahrain, Oman and UAE) were upgraded in 2013, reflecting a stabilization and differentiation of political risk in the MENA region.

Several Central Asian and Caucasus countries – Azerbaijan, Armenia, for example, showed improvement, though admittedly from a low base.

In Western Africa, Cameroon, Chad and Mali all were downgraded, along with adjoining Algeria, reflecting the spillovers from difficult regime changes in North African which destabilized these countries.

The 2013 map measures political risk in 163 countries and territories to assess the risks associated with exchange transfers, sovereign non-payment, political interference, supply chain disruption, legal and regulatory regimes, political violence, ease of doing business, banking sector vulnerability and governments’ capability to provide fiscal stimulus.

The map is now online and interactive and can be accessed here.

PC360 has more on this story.

Odds favor above-average spring temperatures across much of the continental United States, including drought-stricken areas of Texas, the Southwest and the Great Plains, according to NOAA’s Annual Spring Outlook.

NOAA says spring promises little drought relief for most of these areas, as well as Florida, with below- average spring precipitation favored there.

Right now 51 percent of the continental U.S.—primarily in the central and western regions—is in moderate to exceptional drought.

NOAA says drought conditions are expected to persist, with new drought development, in California, the Southwest, the southern Rockies, Texas, and Florida.

Meanwhile, river flooding is likely to be worse than last year across the country, with the most significant flood potential in North Dakota.

After a year of reprieve, the Red River of the North between eastern North Dakota and northwest Minnesota, and the Souris River in North Dakota have the potential for moderate and major flooding, NOAA says.

The melting of late-season snow may also cause minor to moderate flooding in the upper Mississippi River basin, including southern Wisconsin, northern Illinois and northern Missouri.

Areas along the middle Mississippi, lower Missouri and Ohio River basins have already experienced minor flooding this year and the threat of minor flooding will continue through the spring, NOAA adds.

A 2012 poll by the Insurance Information Institute found that 13 percent of American homeowners had a flood insurance policy, virtually unchanged from the 14 percent of homeowners in 2011, but well below the 17 percent who said they purchased flood insurance in May 2008.

Flood damage is excluded under standard homeowners and renters insurance policies. Residential flood insurance is available in the form of a separate policy primarily from the National Flood Insurance Program (NFIP).

The directors and officers liability insurance market is firming, with increased pricing being experienced in many sectors, according to an annual survey conducted by Towers Watson.

Towers Watson’s 2012 Directors and Officers Liability (D&O) Survey found that 41 percent of respondents in the private/not-for-profit space, and nearly 30 percent of public companies indicated that their premiums had increased in 2012.

In a press release Larry Racioppo, vice president, executive liability group, Towers Watson, and author of the survey, says:

Increasing claim activity, including D&O and employment litigation, coupled with inadequate pricing and retentions in the private and nonprofit space, are all driving insurers’ need for pricing increases.”

In 2012, directors and officers were more likely to ask about the amount and scope of their D&O coverage than last year, perhaps due to concern over the litigious environment, Towers Watson said.

This was particularly true of private companies, where 70 percent of respondents reported receiving an inquiry as to the amount and scope of their D&O coverage, up from 58 percent in 2011.

Regulatory actions continued to be a significant source of concern among directors and officers in 2012, with 83 percent ranking it as a top three concern.

In fact the biggest jump in directors and officers liability insurance claims in 2012 was brought about by regulatory actions, increasing to 23% of responses from 19% in 2011 and 16% in 2010.

Towers Watson noted the increased concern over regulatory litigation may reflect new laws put in place since the financial crisis, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as an increase in whistleblower bounties.

Check out I.I.I. facts+stats on D&O liability insurance here.

It was hard to miss the recent Florida story of a sinkhole fatality. This tragic event made news headlines in part because fatalities due to sinkholes are such a rare occurrence.

The story also prompted questions about sinkholes and insurance coverage.

Over at Straight Talk, the Insuring Florida blog, a post by Lynne McChristian explains that Florida has a sinkhole law requiring every property insurer to provide coverage for “catastrophic ground cover collapse”.

This is defined as:

1. Abrupt collapse of the ground cover,
2. A depression in the ground cover clearly visible to the naked eye,
3. Structural damage to the insured building, including the foundation, and
4. The insured structure being condemned and ordered vacated by the governmental agency authorized to do so.

However, a separate optional comprehensive sinkhole policy is needed to cover any other type of sinkhole damage.

Florida is one of only two states that require home insurers to offer sinkhole coverage. The other is Tennessee. In other states most homeowners insurance policies exclude coverage for sinkhole damage.

The Insuring Florida blog has further background info on sinkhole insurance here.

More info on sinkhole claims is in the I.I.I. facts+stats on homeowners and renters insurance.

March is Women’s History Month, an important time to empower women about their finances, and one area women underestimate their contribution to their families’ economic well-being is by lacking sufficient life insurance, says the Insurance Information Institute (I.I.I.).

The I.I.I. raises an important point. A national poll by wholesaleinsurance.net found that 43 percent of adult women have no life insurance and among those that are insured, many are severely underinsured, carrying just one-fourth of the amount that would likely be needed by their life insurance policies’ beneficiaries.

Indeed, women who are a family’s primary breadwinner carry 31 percent less life insurance than their male counterparts, even as a growing number of women earn as much, if not more, than their husbands, says the I.I.I.

Loretta Worters, vice president with the I.I.I., notes:

Ironically, 100 years ago women weren’t even able to buy life insurance. Today, women can protect their finances, but they aren’t buying the coverage or, if they are, it isn’t enough.”

This leads us to wonder why more women don’t buy adequate life insurance.

Metlife’s 2012 Protecting a Diverse Workforce report offers some interesting perspective on this issue. Its findings confirm that women are less insured with only twice their income in life insurance coverage, compared to men, who are covered for nearly three times their earnings.

However, the tendency for women to be underinsured is not due to a lack of awareness about life insurance. Metlife reported that 50 percent of women who earn $50,000 or more in income believe they don’t have as much coverage as they need, versus 39 percent of men.

Instead, the report found that more women than men find the process of choosing the right life insurance product to be complex. Some 67 percent of women believe that selecting the right life insurance product is a complicated process, compared with 59 percent of men.

MetLife noted that this belief also extends to selecting the right amount of coverage, where some 59 percent of women feel it can be a complicated process, compared to 50 percent of men.

Another key takeaway from the MetLife study is a difference in the perceived purpose of life insurance among men and women.

Not only do men place a higher value on insuring their income and protecting their financial security than women, but about half of women view life insurance primarily for burial and final expenses, compared to 40 percent of men.

As MetLife says:

This presents the opportunity to educate and reinforce the income protection role of this product, especially with women.”

Check out a recent article in Employee Benefit News for further discussion of the psychological and financial barriers to women buying adequate life insurance.

At least four separate winter storms affected the United States during February causing widespread damage, but insured losses resulting from these events were lower than expected, according to Aon Benfield.

In the latest edition of its monthly Global Catastrophe Recap report, Aon Benfield observes that flooding and active winter weather continued to produce the largest global catastrophe loss events during February 2013.

The U.S. was particularly impacted by a series of powerful winter storms. Steve Jakubowski, president of Impact Forecasting, notes:

While the damage was widespread, economic losses across the affected U.S. states were within the expected range for events of this magnitude, and, in some cases, insured losses were actually lower than might have been expected.”

The most deadly of the winter storms was a powerful Nor-easter which killed at least 15 people and affected more than 60 million citizens. A state of emergency was declared in six states.

The storm brought heavy snowfall of 40 inches in Connecticut, and coastal flooding in Massachusetts – including the city of Boston. Total economic losses were estimated at roughly $100 million, with only a modest number of insurance claims filed.

The report also makes mention of the meteor explosion above Russia’s Urals region that injured 1,491 people. Aon Benfield says:

The blast, which had an energy equivalent roughly 30 times stronger than an atomic bomb, damaged 100,000 homes, 3,000 buildings, 700 schools and 200 hospitals in more than six Russian cities and parts of two Kazakhstan provinces.

Economic losses were listed at RUB1 billion ($33 million), it adds.

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

Online insurance exchange MarketScout just reported that the commercial insurance rate index for the United States rose 4 percent in February 2013.

Commercial property insurance led the pack with a rate increase of 6 percent, followed by commercial auto and umbrella/excess with increases of 5 percent.

General liability rates were considerably more competitive with rates up 4 percent, compared to up to 6 percent the previous month.

Richard Kerr, CEO of MarketScout noted:

Over the last year, transportation and energy have led rate increases most of the time. However, for February, transportation was up 4 percent and energy was up 3 percent. The only industry with a lesser rate increase was public entities.

Manufacturing, service and habitational companies led the February industry rate increases at plus 6 percent.”

By account size, rates continue to be more competitive the larger the account, according to MarketScout. Small accounts (premiums up to $25,000) were up 6 percent and jumbo accounts (over $1 million) were up 2 percent.

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

Data on tornadoes can be both unreliable and inconsistent, making it impossible to identify long term trends, according to a new report from Lloyd’s.

Tornado records underreport tornado numbers and changes in classification of tornado strengths adds further uncertainty, making it even more difficult to determine trends in tornado frequency and severity, the report says. Even in the United States detailed records only exist back to 1950.

While the number of officially recorded tornadoes has risen, this can be attributed to better reporting, tracking and more people, homes and infrastructure in the path of a tornado, Lloyd’s says.

The report notes:

Despite the anomalous 2011 season there is no trend in the number of strong to violent tornadoes between 1950 and 2012, evidence that the number of high intensity events has not increased over that period.”

Note: 2011 was an unusually active and deadly year for tornadoes across the U.S., with over 1,600 tornadoes recorded, more than any other year on record except for 2004. Costs were high, with seven individual tornado and severe weather outbreaks recording damages that exceeded $1 billion. Total damage from the outbreaks is estimated at in excess of $28 billion.

But while the number of violent tornado losses may not be increasing, insured losses are.

The report identifies a clear trend of increasing annual aggregate losses to the insurance market and says that billion dollar losses are becoming more common:

As exposure continues to increase, tornadoes represent a more serious threat to the insurance industry. An active tornado season hitting populated areas could result in high damages and it is important that insurers consider modeling and managing potential exposure.”

Check out I.I.I. facts+statistics on tornadoes here. PC360 has more on this story.