Going Gaga For Insurance

Insurers are known for helping us prepare for Mother Nature’s surprises, but did you know that insurers also have to evaluate the risks of Mother Monster, aka Lady Gaga–and other celebrities?

MarketWatch reports that Gaga, due to headline the Super Bowl halftime show on February 5, wants to perform on the top of the dome that covers the NRG Stadium in Houston.

Event organizers are working on how to keep the performer safe as well as securing insurance for the spectacle, according to the New York Post. Reports suggest such a stunt could cost over $100,000 to insure.

Specialist insurers (see our earlier post here) have a long history of protecting the stars — and the companies that promote and sponsor them — by providing appearance/event cancellation coverage, celebrity body parts insurance, and death and disgrace policies.

The Lloyd’s insurance market has insured a long line of celebrities and celebrity body parts. For example, Rolling Stones guitarist Keith Richards’ hands were insured for $1.6 million and Marlene Dietrich insured her voice for $1 million.

Insurance Insider recently reported  that the death of Star Wars actress Carrie Fisher is likely to trigger a $50 million “contract protection” policy underwritten in the Lloyd’s market that would cover Disney in the event that Fisher was unable to fulfil her obligations to act in the new Star Wars films.

Each celebrity risk profile comes with its own unique set of risks, according to the individual’s occupation, health, lifestyle and associated risks.

So, next time you go to see your favorite band, sports star or top chef perform, just think: there’s probably celebrity insurance for that.

Diverse Strategies As Insurers Embrace Digital Innovation

The routes to a digital future are many and varied, but for insurers the question is how to get there?

A new survey by Willis Towers Watson of 200 senior-level insurance executives offers some insight into the way forward.

The findings suggest that M&A and partnerships are likely to trump internal investment as insurers look to deliver digital transformation.

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Almost half (45 percent) of respondents to the survey signaled a clear preference for acquisitions as the way forward to gain digital capabilities.

By contrast, fewer than one in five insurers (17 percent) said they have a preference for internal development.

That’s not to say that internal innovation efforts have no place at these insurers, according to Willis Towers Watson, it’s more about getting the balance right between organic and inorganic growth.

Well over one-third (38 percent) of survey respondents say they have no preference between the two routes. In other words, they will use both acquisitions and internal innovation as the circumstances suit.

As insurers embrace a more outwards-looking approach to innovation, the survey suggests that traditional M&A deals are not the only option.

As Willis Towers Watson says:

“Many insurers are investing in a disparate range of technologies via venture capital funds – either through their own in-house venture capital arms, or third-party funds. This may be an attractive way to make a number of small bets on nascent innovations, rather than betting the house on an as-yet unproven technology.”

The survey found that one-third (31 percent) of respondents from the property/casualty insurance sector have set up a corporate venture arm already, while another third (32 percent) are considering doing so.

Innovation was a key topic of discussion at the Insurance Information Institute Property/Casualty Insurance Joint Industry Forum held yesterday in New York. For coverage of the forum go to the I.I.I. website.

WEF: Collaboration Imperative On Global Risks

The World Economic Forum (WEF) is calling for a redoubling of efforts to protect and strengthen systems of global collaboration in the face of increasingly disruptive risk trends.

In its just-released Global Risks Report 2017, the WEF warns that risk drivers such as income inequality, polarization of societies, and climate change need to be addressed collaboratively if solutions are to be found to the world’s most complex problems.

Nowhere is cooperation more urgent than in addressing climate and environmental risks, the WEF said. While important strides have been made in the past year, the pace of change is not fast enough and more needs to be done.

The WEF cited the Paris Agreement on climate change now ratified by 110 countries, and the landmark agreement to curb CO2 emissions from international aviation as important examples of global cooperation in 2016.

But political change in the United States and Europe is putting this progress at risk.

“This is a febrile time for the world. We face important risks, but also opportunities to take stock and to work together to find new solutions to our shared problems. More than ever, this is a time for all stakeholders to recognize the role they can play be exercising responsible and responsive leadership on global risks.”

The environment dominates the global risks landscape outlined in the WEF report, with extreme weather events emerging as the single most prominent global risk and climate change the number two underlying trend this year.

Society is also not keeping pace with technological change, the WEF noted. While new and emerging technologies can provide solutions they also exacerbate risks.

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Artificial intelligence and robotics were identified as having both the highest potential for negative consequences and also the greatest need for better governance in this year’s risk survey.

The private and public sectors need to work together and collaborate to address the challenges of the Fourth Industrial Revolution, the WEF said.

“It is critical that policy-makers and other stakeholders – across government, civil society, academia and the media – collaborate to create more agile and adaptive forms of local, national and global governance and risk management.”

Women’s Marches And Insurance

The Women’s March on Washington has inspired a grassroots movement of tens of thousands who will show their solidarity in sister marches held in cities across the country on January 21, the day after the inauguration of U.S. president-elect Donald Trump.

All 50 states and Puerto Rico are confirmed to have at least one grassroots-led march on that day, with more than 500,000 people expected to march across the U.S. and in 55 cities around the world.

For volunteer organizers of sister marches, what began with a simple Facebook posting in many cases has grown into a much bigger event for which organizers have taken on not just leadership responsibility, but potential liability consequences too.

Notwithstanding the rights of individuals to come together in peaceful protest, there’s the potential for claims for bodily injury or property damage in the event a march becomes less peaceful than expected.

What this means is that local volunteer organizers may want to explore their insurance options.

For example, many (but not all) municipalities require individuals or groups using public property to purchase liability insurance as part of the application process for a permit to hold an event.

This issue is already a hot topic in Phoenix, Arizona, where under state regulation, organizers of the sister march are required to secure some $2 million in liability insurance, per this AZCentral.com report.

A number of municipalities also offer tenant user liability programs (so-called TULIP programs) that enable organizers of certain public events on city property to more easily obtain event liability insurance.

Latest On Employment Trends

What are the latest employment trends for P/C, life/annuity, health insurers, reinsurers, agents & brokers, independent claims adjusters and third-party administrators?

The U.S. Labor Department’s Bureau of Labor Statistics (BLS) just published data as of November 2016 on detailed insurance industry employment and the Insurance Information Institute (I.I.I.) website contains updated multi-decade trend data in chart form.

Some of the key takeaways:

—In November 2016, on a year-over-year basis, employment in most segments of the insurance industry was up to varying degrees. Commentary by Dr. Steven Weisbart, chief economist for the I.I.I.:

“For the 12 months ending in November 2016, P/C carrier employment rose by 9,600 (+1.9 percent) to 523,500. However, this result does not echo longer-term trends. Over the last four years, for example, P/C carrier employment has risen and fallen in a narrow range of 510,000 to 530,000.”

—The agent/broker segment gained 900 jobs in November 2016 vs. November 2015 (up 0.1 percent) to 778,400. Employment growth in this category in the last three years has been extremely strong.

—Among smaller industry segments, reinsurance carrier employment in the U.S. fell in November 2016 vs. November 2015 (down 700, or -2.7 percent) to 24,900.

—Employment at independent claims-adjusting firms on a year-over-year basis for November 2016 rose by 2,400 (4.2 percent) to 59,200—the highest employment level seen for this segment in at least 25 years.

Looking Ahead: Commercial Insurance Pricing

Where are U.S. commercial insurance rates headed in the coming year?

Latest analysis from online insurance exchange MarketScout gives some insight.

This from Richard Kerr, CEO MarketScout:

“We expect more moderate rate reductions for the coming year for all but a few lines of business. If interest rates increase, rate reductions could accelerate.” 

December closed out the year at a composite rate reduction of 1 percent, according to MarketScout.

Employment practices liability insurance and crime were the only coverages with rate increases in December, with increases of 1 to 2 percent.

Workers’ compensation rates decreased from down 1 percent to down 2 percent in December. Commercial property rate decreases moderated from down 3 percent to down 2 percent.

The soft market is now 16 months old, but seems longer because the composite rate in 2015 was flat or plus 1 percent for the first eight months before dipping into negative territory.

Kerr noted that generally the soft or hard market cycles last at least three years.

Most industries are cyclical to some extent and the Insurance Information Institute offers further explanation of the property/casualty insurance market cycle here.

Style Over Substance? Not when it comes to insurance

Can style trump substance? Not when it comes to the business of insurance, according to new regulations issued by the China Insurance Regulatory Commission (CIRC).

The Financial Times reports that China’s insurance regulator has banned “exotic” insurance products as part of a broader push to restrict the sale of non-traditional products.

The new regulations cover products “where the insured event will not result in any loss to the customer” and “products with no real content, where the purpose of the product is for creating marketing hype.”

Smog insurance, overtime insurance that pays out if the insured is at the office after 9pm, and so-called gourmets’ insurance that provides cover against indigestion are among the non-traditional products now banned by China’s regulator.

Insurers have sometimes used these exotic products as promotional tools, with attention-grabbing advertisements that aim to go viral, the FT reports.

The new regulations come one month after the CIRC cracked down on insurers that sell short term investments called universal insurance products, proceeds of which were used to fund acquisitions.

CIRC chairman Liu Shiyu warned insurers not to become “barbarians” and “robbers” by aggressively acquiring companies in leveraged buyouts.

Insurance Information Institute’s daily members bulletin has more stories like these. Email daily@iii.org for info.

Distracted Driving? There’s An App To Prevent That

Is Apple liable over a fatal car crash involving FaceTime? That’s the question being asked in a lawsuit filed against Apple by the family of a five-year-old girl killed in a Texas car crash.

Moriah Modisette was killed and her father seriously injured when driver Garrett Willhelm plowed into their car at 65 mph on a Texas highway on Christmas Eve 2014.

As reported by Fortune, Willhelm was chatting on FaceTime at the time of the crash, and the app was still running as rescue workers tried to extricate the injured passengers from the mangled car.

In the lawsuit, the family claims that Apple had failed to install a “lock-out” feature on FaceTime that would prevent drivers from using the app while on the road.

The lawsuit underscores why liability insurance and product liability insurance are important for businesses.

After years of decline in road fatalities, numbers were up 8 percent in 2015. Many believe the rise is due at least in part to distracted driving.

In 2014, 3,179 people were killed in distraction-affected crashes, and 431,000 people injured, according to National Highway Traffic Safety Administration data.

But apps are not all bad. Several app developers are working to create ways to help make your cellphone a tool in the fight against distracted driving, rather than a cause of it.

Check out DMV.org for distracted driving apps that incentivize safe driving by keeping your attention off your phone and on the road.

USA Today reviewed other apps aimed at preventing distracted driving here.