Category Archives: Emerging Risks

Risk Management Flurry

The 45th annual Risk and Insurance Management Society (RIMS) conference opens in New Orleans this weekend so it’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, Aon’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 respondents  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.’s insuring your business website.  

Obesity and Workers Comp

It’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.  

Greenhouse Gases Are Pollutants

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 Act’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 it’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.

Data Loss

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 apparent  growth opportunity for insurers.

Avian Flu Watch

New outbreaks of the H5N1 flu virus are reported to have infected and killed birds and poultry in Russia, Hong Kong, Hungary and Japan this week. Meanwhile, Australia, Singapore, and Japan announced they are stepping up their preparedness efforts. I.I.I.’s latest update from our resident bird flu expert and economist Dr. Steven Weisbart notes that at least 164 people have died and 270 have been confirmed infected since December 2003, the start of the current outbreak. In 2006 alone there were one-third more infections and nearly twice as many deaths as in 2005. 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.  There are still no cases of birds or people in the U.S. with this flu virus.