Hall of Shame

The Coalition Against Insurance Fraud (CAIF) has released its annual Insurance Fraud Hall of Shame, listing the year’s most brazen insurance scams. We read that a glass-eating gypsy, a teacher who faked cancer, and an insurance agent who killed the homeless are among the top insurance swindlers of 2007 and have been duly inducted into the Insurance Fraud Hall of Shame. According to the Coalition, insurance fraud is an $80 billion-a-year crime and has grown more violent and invasive in recent years, as indicated by this year’s Hall of Shame swindlers. Check out further I.I.I. info on insurance fraud.  

Changed Energy Risk Landscape

Sharp increases in the price of commodities such as oil, steel, building materials and contractor day rates have had a significant impact on the energy industry risk management landscape. That’s the analysis from Willis in its latest Energy Market Review. Willis notes that superheated commodity prices have resulted in increased replacement cost valuations and provided extra scope for longer and costlier delays in the event of an accident. This means the energy industry is facing significantly increased exposures and the potential for higher losses. While the energy sector has benefited from a benign loss environment over the last two years, Willis questions whether the market is really prepared for more expensive future losses that are the inevitable result of these developments. In such a market, it urges clients to re-examine their risk exposures and asset valuations in order to make sure they are adequately insured.  

Online Privacy Concerns Increase

We all value our privacy, and the 2008 survey from the University of Southern California’s Center for the Digital Future finds that privacy and security continue to be a major concern when shopping online. The study also underscores the significant threat businesses face from breaches in data security. According to its findings, the percentage of respondents who were very or extremely concerned when they buy on the Internet increased in 2007, and overall concern was the highest since the first study was published seven years ago. Concerns about credit card security when or if buying online also continue to remain high but stable, with 57 percent of respondents very or extremely concerned in 2007. Check out further I.I.I. info on identity theft.

Stoneridge Decision

Yesterday the U.S. Supreme Court issued its  decision in the much anticipated securities litigation case of Stoneridge Investment Partners LLC v. Scientific Atlanta Inc. In a 5-3 opinion, the Court held that  shareholders cannot sue third parties (such as accountants and lawyers) charged with aiding a corporation that has defrauded its investors. The ruling upholds two lower court decisions. As we have discussed before (see our October 9, 2007 posting), a decision in favor of investors would have exposed U.S. companies as well as those doing business with them to the likelihood of significant additional costly shareholder suits. Further commentary on the Stoneridge case can be found at The D&O Diary, a blog focused on D&O liability issues.  

Social Network for Insurance

Could it be the next Facebook or MySpace? In a release yesterday, Dynamia Interactive announced the launch of what it claims to be the world’s first social network for the insurance industry, Sexy Insurance. Found at www.sexyinsurance.com the site is designed to provide a niche space for professionals in our industry to meet, network and job search. Users simply sign up, log-in, and meet other users – similar to other popular social networking sites. With 42 members so far, Sexy Insurance has a way to go before rivaling Facebook’s 60 million members. Still, the site does fill a gap in the otherwise insurance-less social networking web. We’ve taken a quick look and welcome your thoughts on this or other web initiatives in insurance.  

Financial Innovation

A new report on global risks from the World Economic Forum (WEF) highlights the growing role the financial markets are playing in the transfer of risk. For example, the WEF notes that the market in insurance-linked securities is broadening from natural catastrophe bonds to credit securitizations and mortality bonds. Besides insurance-linked securities, it points out that a wide variety of derivatives and other financial instruments are now being used to transfer insurance risks.  

Just how financial innovations could reshape the future of the insurance industry is the timely topic of a discussion being held tomorrow evening in New York City. Organized by the Columbia Business School Alumni Club of New York (CBSAC/NY), the panel will feature experts from Swiss Re, Zurich, Deloitte and UBS. The event will take place from 6-8pm at the UJA Federation of New York, 130 East 59th Street, 7th floor conference center. For further information, contact Sepp Ruchti at jpr2115@columbia.edu

Auto Future

This week has been an interesting one in the auto manufacturing world. First we had General Motor’s announcement that driverless cars will be on the roads within the decade. Then, yesterday Tata Motors of India unveiled the world’s cheapest car, the Nano, which will go on sale in India later this year for 100,000 rupees (that’s around $2,500). Apparently GM plans to test its driverless car technology by 2015 and have cars in production by 2018. Imagine being able to switch to driverless mode on highways and instead send that email? GM claims the technology could improve congestion and safety, as well as addressing energy and emissions. Tata’s Nano is more of a no-frills concept, with no trunk, airbag or passenger-side mirror. The cheapest versions of the vehicle will forego air-conditioning and power steering. Such technological developments could transform our driving future, but obviously they raise issues related to regulations, liability laws, privacy, the environment and insurance. What do you think?  

Market Softening To Continue

The latest gauge on the condition of the U.S. commercial property/casualty market from online insurance exchange MarketScout points to a continued softening market in 2008. Rates for the December p/c market index fell 16 percent, a continuation of the softening market of the past three years. Steeper rate reductions in the latter part of the year contributed to an average rate reduction of 13.25 percent for calendar year 2007, according to MarketScout. By line of coverage, general liability and umbrella/excess led the pack with a rate decline of 18 percent in December 2007. Professional liability and D&O liability experienced the second largest drop in rates of 17 percent. Surety saw the smallest rate decline of 8 percent. Check out the I.I.I. Earlybird Forecast 2008 for another take on the market.  

I.I.I. Online Store

Holiday shopping season may be over, but have you visited the I.I.I. online store? Whether you’re looking for the latest edition of the Insurance Fact Book, the Insurance Handbook for Reporters, or the I.I.I.’s popular Know Your Stuff – Home Inventory Software, the I.I.I. store is the one-stop shop for our publications. For a complete listing of I.I.I. publications and ordering options, visit the store at: http://www.iii.org/media/publications/Â  

NV Levee Rupture

Pictures of the extensive flooding in Fernley, Nevada, after a canal levee ruptured due to heavy rainfall gave us pause for thought. Hundreds of homes are reported damaged and while many homeowners were expected to be able to return to their properties, up to 8 feet of flooding was reported in some areas. The canal rupture came amid a winter storm system that hit the West hard over the weekend. Last February (see our February 1, 2007, posting) we cited a list from the Army Corp of Engineers showing that 127 levees across the U.S. are at risk of failing. The ill-maintained levees are spread across 26 states, the District of Columbia and Puerto Rico. The weekend’s events underscore the importance of flood insurance. Check out I.I.I.’s flood statistics for more information.  

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