Winter Storm Damage? Insurers Have You Covered

Most likely snowfall for #Blizzard2017 in the NY/NJ metro area now looks like this, per the National Weather Service New York:

While major cities in the Northeast may have been spared blizzard conditions, a strong winter storm is still unfolding and inland areas are watching the snow pile up.

Wondering if you’re covered for winter storm damage? Here’s the lowdown from the Insurance Information Institute:

Auto Policies

  • Vehicle crashes between two or more drivers caused by snowy and slippery roads are covered by liability insurance, which is required by most states. A car that crashes into an object would generally be covered under the optional collision portion of an auto policy.
  • Physical damage to a vehicle caused by heavy wind, flooding or fallen ice or tree limbs is covered under the optional comprehensive portion of an auto policy.

Homeowners Policies

Standard homeowners insurance covers:

  • Wind-related damage to a house, its roof, its contents and other insured structures on the property. Also, wind-driven snow or freezing rain that gets into the home because the home was damaged by wind.
  • Tree limbs that fall on a house or other insured structure on the property—this includes both the damage the tree inflicts on the house and the cost of removing the tree, generally up to about $500.
  • Damage from ice and other objects that fall on the home.
  • Damage to the house and its contents caused by weight of snow or ice that creates a collapse is covered.
  • Freezing conditions such as burst pipes or ice dams, a condition where water is unable to drain properly through the gutters and seeps into a house causing damage to ceilings and walls. However, there is generally a requirement that the homeowner has taken reasonable steps to prevent these losses by keeping the house warm and properly maintaining the pipes and drains.
  • Additional living expenses (ALE)—in the event that a home is severely damaged by an insured disaster. This would pay for reasonable expenses incurred by living elsewhere while the home is being fixed.
  • Damage caused by flooding is not covered by standard homeowners or renters insurance policies. Melting snow that seeps into a home from the ground up would be covered by flood insurance, which is provided by FEMA’s National Flood Insurance Program, and a few private insurers. Flood insurance is available to both homeowners and renters.

Ready For First Flakes In Northeast Blizzard?

In the words of the National Weather Service (NWS): “Things get interesting for the East Coast beginning Monday night.”

A strong nor’easter will cause a late season winter storm stretching from the central Appalachians to New England, with impacts for many of the big cities in the Northeast like New York City, Boston, Philadelphia.

Widespread winter storm warnings are now in effect for heavy snow accumulations. Blizzard conditions are expected for the NY/NJ metro areas, in addition to damaging wind gusts and coastal flooding, per NWS New York.

How much snow?

Via NWS NY blizzard briefing this morning:

Key preparation stats for New York alone, include:

  • The New York State Emergency Operations Center is activated with stockpiles of sandbags, generators, pumps and vehicles on standby.
  • New York City’s Department of Sanitation is pre-deploying 689 salt spreaders across the five boroughs. PlowNYC is activated (where you can track the progress of city spreaders/plow vehicles) and more than 1,600 plows will be dispatched when more than 2 inches of snow accumulates.
  • New York City Transit will monitor conditions for subways and buses via its Incident Command Center situation room, with 13,000 personnel on duty for subways during the storm, including more than 9,700 snow-fighting personnel.
  • Port Authority of New York and New Jersey has hundreds of pieces of snow equipment at the airports, including melters able to liquefy up to 500 tons of snow an hour and plows that can clear snow at 40 mph.

And insurers, too, are well-prepared and ready to respond to the needs of their policyholders.

Are you prepared? Check out Insurance Information Institute facts and statistics: winter storms and winter weather preparation tips.

Flaming Insurance

No, we’re not talking insurance for damage or loss to property because of fire. This type of flaming insurance helps businesses recover when unflattering information that hurts their brand or image goes viral online.

Asia Insurance Review reports that Sompo Japan has started selling “enjo” insurance (flaming insurance) coverage to compensate a target of “enjo” (widespread flaming of a target due to negative rumors or scandals.)

Sompo’s new product – a first of its kind in Japan – will compensate any target of “enjo” whether or not the rumors are groundless or based on fact.

In the event of a viral outbreak, Sompo will cover expenses for a positive media campaign, research into why the negativity began, and the cost of public apologies if needed.

Coverage could be useful for businesses suddenly the target of unwanted social media attention. For example, as RocketNews24 reports, McDonald’s Japan had to deal with a long-burning enjo after a tainted chicken scandal.

What’s the cost of this coverage? Premiums will run from JPY500,000 to JPY600,000 ($4,343-$5,213).

Whither the Grand Bargain?

Insurance Information Institute chief actuary James Lynch reports from the final session of #WCRI17:

The Workers Compensation Research Institute’s annual conference saved the best for last, a provocative look at comp and the Grand Bargain.

That bargain, that workers sacrifice the right to sue for workplace injuries in exchange for a predictable set of benefits irrespective of fault, is threatened, some say, by a decades-long winnowing of those benefits. The rebuttal: comp is a resilient system changing with the times.

John Ruser, WCRI president and CEO, led the discussion. Panelists were Dr. David Michaels, a former assistant secretary of labor at OSHA; Bruce Wood, former general counsel at the American Insurance Association; Emily Spieler, a Northeastern University professor specializing in workers comp and labor issues; and David Deitz, a consultant with more than 20 years’ experience designing claims management systems in both workers comp and group health.

I have some background on the debate, presenting at a symposium on the Grand Bargain last year in Camden, N.J. I’ll oversimplify a bit here by calling it a faceoff between lawyers and insurers.

The lawyers say that reforms over the past 20 years or so have continually whittled away at worker benefits, so much so that the Grand Bargain is, from the workers’ point of view, no bargain. Insurers note that both medical and indemnity benefits have been rising faster than inflation for decades and that many of the supposed benefit cuts are controls on medical costs that have little if any effect on the actual treatment that the injured worker receives.

That debate is of long standing, but Wood pointed out that the discussion used to be fairly narrow.

Several states have debated whether employers should be able to opt out of the workers comp system entirely and provide a supposedly parallel set of benefits. Opt out passed in Oklahoma (but was found unconstitutional last year) while at least two other states (Tennessee and South Carolina) have kicked the idea around.

Wood compared the changes in the debate to a football game. The old discussion shuttled between the 45-yard lines, he said. Opt out “takes the debate between the goal lines.”

 

 

Diversity And Inclusion In Insurance

Insurers are committed to recruiting to create a diverse and inclusive culture and as we celebrate International Women’s Day our industry is one of many striving to attract, develop and retain female talent.

Some 78 percent of large organizations around the world are actively trying to recruit more women, according to PwC, and we’re now seeing competition for female talent escalate to a whole new level.

“As employers enter this talent battle, they need to recognize they won’t just face competition from other would-be employers when hiring female talent. As employer demand for female talent rises over time, it will be critically important not only to attract female talent, but also to be able to develop, engage, progress and retain female talent once inside the organization.”

Establishing gender diversity recruitment targets is a key practice at employers whose diversity efforts led to increased levels of female applicants and hires, PwC found.

The Insurance Information Institute (I.I.I.) reports that in 2015, there were 1.6 million women employed in the insurance sector, accounting for 59.4 percent of the 2.7 million workers in the insurance industry, according to the Bureau of Labor Statistics.

To find out more about diversity and inclusion efforts across the insurance industry, check out the I.I.I.’s new webpage.

Some Facts About Medical Marijuana

Insurance Information Institute chief actuary James Lynch reports from last week’s Workers Compensation Research Institute (WCRI) conference: 

I shock no one, I hope, by saying the nation’s attitude toward marijuana has loosened. More than half the states allow marijuana use, either as a medicine or just for fun. The federal government still forbids its use.

It’s a tough spot for insurers. Auto insurers worry that high drivers will cause auto accidents. Workers compensation workers are concerned that high employees will cause work accidents. Insurers want to obey the law, but federal law conflicts with the law in most states.

There are also questions about using marijuana to treat pain, as an alternative to opioids.

Not surprising that weed was the topic of conversation several times at last week’s WCRI conference in Boston.

Alex Swedlow of the California Workers Compensation Institute noted the following:

  • Six states require workers comp insurers to reimburse injured workers who use medical marijuana: Connecticut, Maine, Massachusetts, Minnesota, New Jersey and New Mexico.
  • Six states forbid insurers from reimbursing for medical marijuana: Arizona, Colorado, Michigan, Montana, Oregon and Vermont.
  • The federal laws against marijuana mean it is illegal to use the banking system to purchase marijuana. So an insurer can’t write a check against to pay for the drug. They use cash.

Dr. Dean Hashimoto of the Massachusetts Department of Industrial Accidents provided these facts. They are taken from a National Academy of Sciences report published in January, which is itself a summary of all research on the issue:

  • There is conclusive evidence or substantial evidence that marijuana:
    • Improves the lot of adults in chronic pain.
    • Increases the risk of motor vehicle crashes.
    • Increases the risk of developing schizophrenia and other psychoses.
  • There is moderate support suggesting that marijuana:
    • Improves short-term sleep outcomes for people with fibromyalgia or chronic pain.
    • Increases impairment of learning, memory and attention span.
    • Increases dependence on alcohol, tobacco and illicit drugs.
  • It is not possible to determine whether marijuana use is statistically correlated with occupational injuries.

The California WC report is here www.cwci.org/document.php?file=3090.pdf. The National Academy of Sciences report is here.

Minimizing Human Error At The Oscars

One week since we were left scratching our heads following the botched best picture announcement at the 89th Academy Awards ceremony, the liability ripples from an apparent act of human error continue to spread.

Just to recap: the mix-up occurred after a PricewaterhouseCoopers partner mistakenly handed presenter Warren Beatty the wrong envelope for the best picture award.

As the LA Times reported early on, the mistake instantly turned into a public relations nightmare for the accounting firm which has handled the balloting process for the Academy Awards for 83 years.

For its part, PwC quickly moved to mitigate damage to its brand, issuing an apology and accepting full responsibility for the mixup.

Brian Cullinan and Martha Ruiz, the two PwC partners involved, have been permanently removed from all Academy activities. PwC said the partners did not follow through protocols for correcting the error quickly enough.

Whether or not the Academy will terminate its contract with PwC, industry lawyers say there are a number of potential liability issues that could arise, per this article by The Hollywood Reporter.

Others say public perception and doubts about PwC’s expertise could be a costly risk factor going forward.

As the fallout continues, the two PwC accountants involved now need security protection due to the public backlash.

While this human error did not happen in the process of crunching the numbers, it does highlight how important it is for businesses to manage their professional liability risks.

Insurers have developed professional liability policies to meet the unique needs of a wide range of industries. Crisis response and helping businesses to protect their reputation are among the services insurers provide.

Insurers Innovating To Prevent Driver Distraction

The distracted driving epidemic, and its impact on highway accidents and the cost of auto insurance, continues to be all over the news.

A 2016 underwriting loss of $7 billion for State Farm’s auto insurance business, announced earlier this week, prompted the latest wave of headlines (see Bloomberg report).

Smartphones and gadgets and screens installed in new cars are two major sources of distraction, the Wall Street Journal recently reported.

While technology is part of the problem, it is also part of the solution (see earlier T+C post). A number of insurers are already partnering with technology companies to offer solutions to prevent distracted driving.

Digital Insurance features some of the latest technologies introduced by insurers here. The list includes a distracted driving simulator brought into schools as part of Arbella Insurance’s Distractology program, as well as apps that integrate with usage-based insurance programs to curb distracted driving (see here and here).

An Insurance Information Institute (I.I.I.) white paper on how more auto accidents and larger claims are driving costs higher is available here.

I.I.I. advice on how to keep your auto insurance affordable here.