An interesting announcement by the worldÃ¢â‚¬â„¢s largest cereal maker today. Kellogg Co. is raising the nutritional value of the cereals and snacks it markets to children and will no longer promote foods in TV, radio, print or online ads to children under age 12 unless a single serving of the product meets the following standards: no more than 200 calories; no trans fat; no more than 2 grams of saturated fat; no more than 230 milligrams of sodium; no more than 12 grams of sugar. The company is also introducing new front-of-pack nutrition labeling. The move, which comes amid growing concerns on childhood obesity, effectively averts a lawsuit that had been threatened by parents and nutrition advocacy groups in January 2006. A recent Federal Trade Commission (FTC) study found that highly sugared cereal accounts for 84 percent of childrenÃ¢â‚¬â„¢s exposure to ads for cereal, while candy accounts for 52 percent of childrenÃ¢â‚¬â„¢s exposure to ads for desserts and sweets. Check out I.I.I.Ã¢â‚¬â„¢s report on Obesity, Liability and Insurance and info on the liability system.Ã‚ Ã‚
Since we blogged a few days ago about terrorism insurance take-up rising in the U.S. two further reports have been published confirming the trend of improving availability and affordability of coverage under the Terrorism Risk Insurance Act (TRIA). First, a RAND Corp study finds that TRIA effects are most positive for a conventional attack, with expected costs to taxpayers in this scenario lower with TRIA than without. Then a study from Guy Carpenter points to an emerging global aviation market issue Ã¢â‚¬“ whether losses to aircraft hulls, passengers and third parties arising from weapons of mass destruction (WMD) should be government risks or commercial market risks. As airlines are required to have passenger and third-party liability insurance cover to receive landing rights, the cancellation of coverage could threaten to bring about a complete shutdown of the aviation industry. While the U.S. government currently provides U.S. air carriers with passenger and crew liability, hull war risk and third-party liability cover, the report notes that since 2002 most other government schemes have been withdrawn and replaced by commercial cover. I.I.I. has further aviation information available online.Ã‚ Ã‚
As public health officials in the U.K. continue to investigate an outbreak of the lesser strain of Avian flu (H7N2) on a farm in north Wales, we bring you I.I.I.Ã¢â‚¬â„¢s update on this topic from our resident bird flu expert and economist Dr. Steven Weisbart. His latest report indicates that some 186 people have died from the H5N1 flu virus and 307 have been confirmed infected since December 2003, the start of the current outbreak. Further, in the four months since his January 30, 2007 update (see ourÃ‚ Jan 31Ã‚ posting), 37 more people have been confirmed infected with Avian flu, of which 22 have died. In 2007 alone there have been 44 infections and 28 deaths (64 percent). This is roughly the same pace of infections and deaths as in 2006 (69 percent death rate). Human infection is still believed to be mainly from birds to humans, basically from very close contact with infected chickens and similar birds in home environments. Virtually all of the cases continue to be under 40 years old. There are still no cases of birds or people in the U.S. with this flu virus.
So for the second year running Miami drivers have been found to be the least courteous in the country, followed by New York and Boston drivers, according to a survey by national auto club AutoVantage. The other two cities with the worst road rage were Los Angeles and Washington, D.C. Talking on cell phones, running red lights and slamming on the brakes were some of the frequent behaviors noted by commuters of their fellow drivers. The most frequent cause of road rage cited in the survey was impatient and/or speeding motorists. Drivers also cited poor driving in fast lanes, talking on the cell phone and driving while stressed, frustrated or angry. The most courteous city is Portland, OR, followed closely by Pittsburgh, Seattle/Tacoma, St. Louis and Dallas/Ft. Worth. The obvious link withÃ‚ our businessÃ‚ is that drivers’ safety habits are just one of the factors that can affect the cost of auto insurance. The cost and crashworthiness of vehicles is another.Ã‚ This survey also highlights the emerging risk posed by cell phone use whileÃ‚ driving. Check out further data from the I.I.I. on driver behavior and auto crashesÃ‚ and cell phones and driving.
Late last week NCCI Holdings released its annual “State of the Line” workers compensation market analysis showing that the 2006 calendar year combined ratio was 96.5 percent, the best underwriting result in at least 30 years and the first underwriting profit for the line since 1995. Although the underwriting results are the best in decades, NCCI did flag some critical issues that continue to face the sector in the long-term. Among them, skyrocketing medical costs, low investment returns, a changing political landscape and the projection that the underwriting cycle is likely at its peak. On a day in which illnesses suffered by Ground Zero workers have again made the headlines, weÃ¢â‚¬â„¢d like to flag another emerging issue — the latent illnesses and disease among first responders to the September 11, 2001 terrorist attack. New York City officials estimate the treatment costs for those suffering respiratory illnesses is already in the hundreds of millions of dollars and that other illnesses such as cancer may eventually be linked to the disaster. For more information on workers compensation check out I.I.I.’s update.
The news that tentative settlement has been reached in the Katrina case between Senator Trent Lott and State Farm Fire & Casualty Co is good not just for State Farm, but for the industry as a whole. Litigation remains one of the top risks facing our industry and imposes billions of dollars of costs annually on the broader economy, so to the extent that it can be avoided, curtailed or mitigated, everyone benefits. Last week the U.S. Chamber Institute for Legal Reform (ILR) released a study ranking the best and worst state liability systems across the country. For the second year running, West Virginia came in last place. Other states at the bottom of the list included Mississippi, Louisiana, Alabama, Illinois and California. A broader analysis of the survey data revealed an overall improvement in state legal climates and in a number of states this trend correlates with legal reforms enacted over the same period. However, as U.S. Chamber of Commerce president and CEO Tom Donohue said: Ã¢â‚¬Å“Even though weÃ¢â‚¬â„¢re seeing some improvements, from the perspective of global competitiveness, weÃ¢â‚¬â„¢re only as good as our worst states. So we need to keep working.Ã¢â‚¬ I.I.I. has further information on the liability system online.Ã‚
The 45th annual Risk and Insurance Management Society (RIMS) conference opens in New Orleans this weekend so itÃ¢â‚¬â„¢s no surprise that a rash of risk management surveys are being released this week. Two of the highlights are from leading brokers Marsh and Aon. A study by Marsh reveals that the majority of national oil companies do not fully understand the emerging risks they face and how to manage them. Among the top five risks identified by the oil companies one in particular stands out: environmental impact of operations. At last it appears the climate change issue is on the radar screen. Meanwhile, AonÃ¢â‚¬â„¢s first Global Risk Management Survey reveals that damage to reputation is the number one risk faced by multinationals today. Business interruption is cited as the second key risk, with 30 percent of survey respondentsÃ‚ reporting they are unprepared. Third party liability risk comes in at number three, as the U.S. compensation culture spreads. For more information on insurance and risk management for businesses, check out I.I.I.Ã¢â‚¬â„¢s insuring your business website.Ã‚
ItÃ¢â‚¬â„¢s well-documented that the health consequences of overweight and obesity are serious. For example, individuals who are obese have a significantly increased risk of premature death and chronic conditions like heart disease and type 2 diabetes. The growing economic and social costs of obesity also have direct consequences for insurers. A study out of Duke University this week focuses on the impact on workers comp insurers. It notes that obese employees lost many more workdays and filed twice as many workers comp claims as other workers. Even more concerning, the claims filed by obese workers cost nearly seven times as much as those filed by other workers. The average workers comp medical claims cost per 100 employees was $51,019 for obese workers, compared with $7,503 for other workers. Check out further information from the I.I.I. on obesity and workers comp.Ã‚
A landmark environmental decision out of the Supreme Court today may have significant potential implications for our industry over the long-term. In a 5-4 decision, the court said that greenhouse gases fit well within the Clean Air ActÃ¢â‚¬â„¢s definition of air pollutant and that the Act gives the Environmental Protection Agency (EPA) the authority to regulate emissions of carbon dioxide and other greenhouse gases from cars. The upshot of all this is that the federal government will now have to reconsider its refusal to regulate greenhouse gas emissions. While itÃ¢â‚¬â„¢s too soon to draw any conclusions, clearly for insurers this opinion raises the threat of increasing environmental exposures and liability-related claims going forward.
Today another company, this time in the retail sector, revealed details of a breach in data security that saw hackers access information from at least 45.7 million customer credit and debit cards. A further 455,000 customers who returned merchandise without receipts also had their personal data stolen, according to news reports. Indeed, a recent risk survey conducted by the Economist Intelligence Unit (EIU) and sponsored by ACE European Group (ACE) found that one in three global businesses see loss of data as a significant threat and the key issue to address in operational risk management planning. Some 43 percent of survey respondents identified reputational damage as the main threat arising from data loss. Yet only 19 percent of respondents saw loss of revenue as a concern. These latest developments are a reminder of the potentially enormous liability facing corporations, if and when a breach in data security occurs, and the apparentÃ‚ growth opportunity for insurers.