All posts by Maria Sassian

Opioid abuse by auto insurance claimants — a serious problem

 

Auto insurance may become an inviting target for people seeking opioids, as Medicare is implementing  controversial restrictions on painkillers’ prescriptions.

Opioids were already the largest category of drugs paid for by auto insurers in 2017, according to a recent Auto Insurance Report article citing data from Optum, a pharmacy benefit management firm.  The narcotic represented 19 percent of medications paid for by auto insurance, down from nearly 24 percent in 2016. There were 7.5 opioid prescriptions per claim in 2017 up from 6.7 in 2016.

Tron Emptage, Optum’s chief clinical officer for the Workers Comp and Auto No-Fault division, notes that auto related prescriptions have been rising where workers comp related prescriptions have been falling. The auto related prescriptions also tend to be of a higher dosage than workers compensation.

It’s useful to compare the two types of claims, says Emptage, because injury types tend to be similar. But unlike workers compensation, which has many rules and fee schedules regulating prescription drug use, auto insurers have been on the receiving end of medical cost shifting as well as the abuse of the medical system to support lawsuits and general fraud, says the article. Challenging medical bills can be problematic when first-party claimants are involved, not to mention third-party claimants.

The article concludes that auto insurers in PIP states can establish pharmacy management programs to gain at least a small degree of control over what they pay for.

 

Fatal crashes increase 12 percent on National Weed Day

Marijuana retailers are expected to see a spike in sales on this 4/20 National Weed Day, but on a less high note, car crashes are also expected to increase today. A recent study published in JAMA Internal Medicine found that traffic fatalities were 12 percent more likely on April 20 after 4:20 pm, the time the  celebration traditionally begins, than on the same day one week before or one week after.

The marijuana related increase in accidents has not yet been perceived by most Americans.  A new survey by Property Casualty Insurers Association of America (PCI), found that over two thirds of Americans (68 percent) see no difference in road safety on April 20.

National Weed Day is particularly dangerous for young people according to the JAMA study. Fatal crashes were 38 percent more likely for drivers under the age of 21 years old. But the PCI survey found that over 50 percent of parents with teenagers at home said they have not spoken to their children about the dangers of driving high in the days leading up to April 20.

Americans rank marijuana use at near the bottom of potentially dangerous driving activity, the PCI poll found. However, 70 percent think the government should establish driving impairment standards for marijuana, and the same percentage support a field sobriety test for law enforcement to determine marijuana use.

The I.I.I.’s chief actuary, James Lynch gave a talk on public attitudes towards driving while high. The presentation can be found here.

 

From the I.I.I. Daily: Our most popular content, April 12 – April 19

Here are the 5 most clicked on articles from the I.I.I. Daily newsletter.

  1. These childhood hobbies may have helped Warren Buffett become a billionaire, CNBC
  2. Geico ordered to pay $23M to Southern California motorist, Seattle Times
  3. Blockchain Panel Part 1: How Blockchain Will Link a New Insurance Value Chain, A.M. Best Video
  4. Retirement Insurance Products Are Disappearing. And That’s Dangerous, The Wall Street Journal blog
  5. Legal Industry Targets Insurance Employers, Insurance Business Magazine

 

 

 

To subscribe to the I.I.I. Daily email daily@iii.org.

The Week in a Minute, 4/19/18

The III’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights. 

 

One passenger was killed, and seven others were injured, after a Southwest Airlines plane engine blew apart about 20 minutes after leaving New York City’s LaGuardia Airport on Tuesday, April 17.  U.S. commercial airlines had not had an accident which led to a passenger’s death since February 2009.

A winter-like April storm brought to Green Bay, Wisconsin its second-highest snow total ever.  Minnesota, Michigan, and Illinois were also hit by heavy snowfall over the past week.

The U.S.’s January 3-5 and March 1-3 snowstorms, as well as the nation’s tornadoes and hail storms of March 18-21, each generated $1 billion-plus in economic losses, according to the National Oceanic and Atmospheric Association (NOAA).

 

Small Florida insurers survive hurricanes and “Judicial Hellhole”

Florida’s small P/C insurers have withstood losses from Hurricane Irma and a legal environment that’s dubbed a “judicial hellhole” by the American Tort Reform Association, a recent article in S&P Global Market Intelligence reports.

The financial ratings firm Demotech affirmed the financial strength of over 50 companies in late March, a decision found “encouraging” by the CEO of the state-run Citizens Property Insurance Corp, Barry Gilway.

Gilway said that Demotech’s March actions is evidence of the resilience that smaller carriers showed during a year in which Hurricane Irma caused insured losses of about $8.61 billion, according to the latest Florida Office of Insurance Regulation tally.

Florida insurers face both weather-related risk and costs stemming from litigation on non-weather-related water-loss claims with an assignment of benefits (AOB) and other legal matters.  To combat the AOB problem, Citizens has drawn-up changes in policy language, increased efforts to fight fraud and grew its managed repair program. In January, Citizens said it expects AOB and litigation costs would account for about 23 percent of its 2018 operating expenses, up from 16 percent in 2017 – an increase of $17 million.

The frequency and severity of water-loss claims over the past 2.5 years shows “extremely negative trends,” and that deteriorating trends have begun to spread northward within the state, said Gilway.

Citizens is reopening approximately 37 percent of claims related to Hurricane Irma as part of its ongoing work to help its policyholders, who have been frustrated by a shortage of contractors, the Insurance Journal reported. A spokesperson for Citizens said that it’s common for claims to be reopened, and that the majority of those reopened are non-AOB Irma claims.

Insurance Information Institute Releases 2018 Fact Book

This week the Insurance Information Institute (I.I.I.) has published its 2018 Insurance Fact Book, the industry’s go-to resource for businesses, journalists, policymakers, researchers, and students. Providing comprehensive statistics indexed by state and insurance categories, the Insurance Fact Book allows its readers to understand the industry at a glance.

“The 2018 I.I.I. Insurance Fact Book was developed for use by anyone needing in-depth knowledge of the power that is the insurance industry,” says Sean Kevelighan, Chief Executive Officer of the Insurance Information Institute. “For nearly six decades, the Fact Book has been the essential reference resource on insurance. After record natural catastrophe losses in 2017, it’s more important than ever for audiences to have objective, fact-based content—and know that the insurance industry will emerge from these challenges stronger and better prepared to serve the public.”

The 2018 Insurance Information Institute Fact Book may be purchased by ordering copies via email at publications@iii.org or from the I.I.I.’s online store at www.iii.org/store. A PDF of the publication may also be downloaded online and is complimentary to I.I.I. member companies.

The digitized customer claims journey – a roadmap to success

Competition for customers is fierce, so incumbent property/casualty (P/C) insurers must hustle to integrate digital technologies into their operations. Digitizing the claims experience holds great promise for the P/C industry both in terms of customer experience and cost savings.

McKinsey and Company has recently released a report about planning for a successful claims digitization process. The essential elements needed to digitize and transform claims include developing a new value proposition that sets a high-level aspiration (and getting managers to buy in) and pursuing an end-to-end digitization of the claims customer journey.

A truly innovative customer journey can be achieved by integrating with three other areas—AI and digital technologies, the digital integration of the claims ecosystem, and a new digital operating model.

The figure below shows what an aspirational future state of a customer journey would look like, and the digital assets needed to achieve that state.

The need for sustainable and resilient infrastructure: lessons from Puerto Rico

Puerto Rico is still suffering the devastating aftereffects from 2017 hurricanes Irma and Maria. Rebuilding the island will cost up to $50 billion according to a recent statement by FEMA head, William “Brock” Long.  Many residents are still without power and the new hurricane season is just around the corner.

The situation in Puerto Rico is a warning to North America of what could happen If we fail to address our outdated and crumbling infrastructure, according to a new report from Zurich North America.

The report, Rebuilding Infrastructure: The Need for Sustainable and Resilient Solutions, points out that during the years leading up to Hurricane Maria, Puerto Rico’s infrastructure had been in increasing need of routine maintenance. The island’s power grid had fallen into a particular state of disrepair as a result of declining revenues and political corruption.

While the U.S. mainland infrastructure may not be in as bad a shape, the increased frequency and severity of extreme weather events makes the issue of resilient and sustainable building impossible to ignore.

The report stresses the importance of planning to rebuild BEFORE a disaster strikes and of anticipating future needs. On the positive side, over the past few years, use of reinsurance and catastrophe bonds by governments and government agencies have been increasing. Several South and Central American countries have obtained bonds that would pay for damage caused by earthquakes, and FEMA has begun obtaining reinsurance for its National Flood Insurance Program.

Tips for engaging millennials to volunteer

April is National Volunteer month, and in time with this event State Farm® has conducted an interesting survey which reveals key insights into what motivates people to volunteer.

The study found that that only 23 percent of younger millennials currently volunteer, compared to 46 percent of older millennials (those who are married, have kids, or own a home). State Farm research confirms what others have found, that younger people are looking to align their giving opportunities with their life goals.

Millennials have supplanted Baby Boomers as the largest population group in the United States, and as a result they have the biggest potential to influence volunteerism.  With that in mind the study offers several useful tips for engaging young professionals in volunteer activities:

  • Show the impact: People want to know their work was worth it. Forty-three percent of older millennials and 34% of younger millennials say seeing the impact of their time and talent reaffirms their commitment to give back.
  • Career development: Forty percent of older millennials and 35% of younger millennials said offering opportunities to help their career or job search would boost their willingness to volunteer.
  • Knowledge is power: The prospect of gaining expertise in a certain area or learning a new skill inspires more people to get involved. Forty percent of older millennials and 31% of younger millennials say this opportunity would make them more likely to volunteer.
  • The more the merrier: Both groups agree, being able to participate with friends (44% older millennials, 35% younger millennials) or meet new people (28% older Millennials, 22% younger millennials) plays a large role in their decision to volunteer. In fact, one in five millennials reported finding a significant other through volunteering!

 

For more about how the insurance industry is committed to our communities read the latest issue of I.I.I.’s Impact magazine