Increasing Tornado Activity

Arkansas became the latest state to bear the brunt of tornado damage Friday, with officials reporting seven dead as a result of severe storms. Reports suggest more than 25 tornadoes may have touched down across the  middle of the  country  late Thursday and early Friday. The storms came less than a week after twisters swept through Virginia destroying over 140 homes and several other buildings. The increased activity appears to support a recent A.M. Best study that foresaw high tornado losses in 2008, based on first quarter estimates. The study also noted that losses of $1 billion and higher from single events are becoming more frequent, approaching losses from hurricanes. Check out further I.I.I. facts & stats on tornadoes.

Flood Insurance Necessity

So the official countdown to the start of the 2008 hurricane season has begun. We’re now just 29 days away, but there’s a 30-day waiting period before a flood insurance policy takes effect, so no time like present to underscore the importance of buying flood insurance. This reminds us, the Web site of the National Flood Insurance Program has a neat interactive tool showing the real cost of flood to a home, inch by inch. Just two inches of water can cost a homeowner $7,800, according to the NFIP. Check out further I.I.I. facts & stats on flood insurance.

Climate Change Discussion

A panel discussion organized by the Swiss Society of New York and the Swiss-American Chamber of Commerce, and supported by Swiss Re will take place at Swiss Re’s NYC offices next Tuesday, May 6. Aptly named “Climate Change: From Dialogue to Action†, the discussion will bring together experts from the UN, Harvard Medical School, UBS and Swiss Re to discuss the impact of global climate change and propose possible solutions. The gathering will start at 5.30pm, ET, and will be followed by a moderated Q&A session and cocktail reception.  

Supporting State Economies

A new study by the National Conference of State Legislatures (NCSL) last week found that with few exceptions, state budgets are deteriorating. In fact, William Pound, NCSL executive director, noted that the fiscal situations have declined so much in some states that they appear to be in recession. So it’s perhaps timely to mention again the key contributions the insurance industry makes to state, local and national economies. The I.I.I. recently released updated 2008 state-specific editions of its online publication “A Firm Foundation†. The Web site shows the myriad ways in which insurers support national and state economies, from offering employment and fueling the capital markets, to defraying the cost of catastrophes and providing financial security and income to individuals and businesses through the payment of claims. Check out the updated California, South Carolina and Texas editions online.

Benchmarks on Insurers and Brokers

While we’re on the topic of risk management, insurers attending this week’s RIMS conference might want to stop by the Willis booth to check out a demo of the broker’s new carrier benchmarking tool, the Willis Quality Index. The tool will rate and compare carriers on their performance in underwriting, policy administration, claims performance and service activities. Last June the findings of the inaugural carrier survey from Willis (see our June 22, 2007 posting) indicated that insurers needed to do more to differentiate themselves through service and performance. The latest Spring 2008 survey found evidence that carriers across all parts of the business had scored, on average, better than in their last survey.  Ã‚  

Meanwhile, RIMS and Advisen Ltd have released the Broker Services and Remuneration Study. This study finds that insurance buyers are driving brokers to change their service offerings and the way brokers are compensated. Buyers were surveyed on how their brokers are compensated, how much their brokers receive for their services and what types of services their brokers provide. For the industry’s largest programs, buyers are spending the majority of their broker money on fees instead of commissions, the study reports. It goes on to quantify the differences in average costs to insurance buyers of fee-based broker remuneration, as opposed to traditional commission-based remuneration.

Risk Management Spotlight

The annual Risk and Insurance Management Society (RIMS) conference opens in San Diego today, so expect a flurry of risk management surveys to be released this week.  Amid the fallout from the credit crisis, the risk management and supervision of financial institutions will surely feature among risk managers’ discussions. Check out I.I.I.’s insuring your business Web site for further info on insurance and risk management for businesses.

‘The Best Shot in Golf’

Golfing aficionados among you might want to tune in to a documentary to be aired on CBS Saturday May 3 at 2pm, ET, illustrating how the 1,500-foot aerial shot has become an essential part of how CBS Sports covers the PGA Tour. Presented by MetLife, The Best Shot in Golf, will show how the MetLife blimp, Snoopy One, provides a birds eye view combining both the beauty of the courses with a unique above the ground view of the game. Whether it’s the nomadic journey of the 14-person MetLife Snoopy One crew, or the CBS broadcast team on the ground, it’s a fascinating process. From the rugged beauty of California’s Pebble Beach and Torrey Pines, to the low-lying resorts at Hilton Head Island, South Carolina and Ponte Vedra Beach, Florida, the documentary will take viewers behind the scenes to see how dramatic golf shots are captured.

State Litigation Threat

The U.S. Chamber Institute for Legal Reform (ILR) has released its annual study ranking the best and worst state liability systems across the country. For the third year running, West Virginia’s legal climate ranked as the worst in the country. Louisiana, Mississippi, Alabama and Illinois rounded out the bottom five states. Meanwhile, the states doing the best job of creating a fair and reasonable litigation environment are: Delaware, Nebraska, Maine, Indiana and Utah. The ILR noted that just over half (55 percent) of senior attorneys view the state court liability systems in America as only fair or poor. A majority (63 percent) also report that the litigation environment in a state is likely to impact important business decisions at their company, such as where to locate or do business, up from 57 percent in 2007. Check out further I.I.I. information on the liability system.  

Even Softer Market

Surveys of current policy renewal prices as reported by agents and brokers, and corporate risk managers, appear to confirm that the soft cycle for commercial lines is getting even softer. According to the latest market survey from the Council of Insurance Agents & Brokers (CIAB), the average premium decline for all commercial accounts regardless of size was -13.5 percent in the first quarter of 2008, compared with a -12 percent decline in the fourth quarter of 2007. Although coverage for coastal properties was still problematic, there was more capacity available and rates were down in most areas.

Similarly, the 2008 RIMS Benchmark Survey reports that another year free of major natural catastrophes, combined with abundant insurance capacity contributed to falling insurance costs, leading to lower average total cost of risk (TCOR) per $1,000 of revenue in 2007. Even property premiums began to edge downward, according to RIMS. Meanwhile, online insurance exchange MarketScout puts the average P/C rate decrease at -12 percent in March 2008, with commercial property and general liability experiencing the largest rate decreases of -14 percent.     


CA Wildfire Claims Update

This week marks the six-month anniversary of the October 2007 California fire and wind storms (see our Oct 24, 2007 posting) and we’re pleased to report that a new survey of insurers estimates that nearly 90 percent of claims stemming from the event have been settled. A poll by the Insurance Information Network of California (IINC) of companies representing nearly two-thirds of the California’s homeowners market found that 29,954 of their 33,789 residential claims have been settled. To date, those claims have resulted in more than $1.27 billion in claims settlements among the surveyed companies, a total which is ultimately expected to reach $1.47 billion. By comparison, roughly 86 percent of claims from the 2003 wildfires had been settled by April 2004, according to a previous IINC survey. The survey tallied brushfire and wind-related homeowners insurance claims settled. Check out further I.I.I. wildfire statistics.  

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