ID Theft Concerns Remain

It looks as if greater vigilance on the part of consumers and improvements in systems and practices by companies that manage personal information are paying off – at least according to the 2008 Identity Fraud Survey Report from Javelin Strategy & Research. It confirms a decline in identity fraud in most parts of the U.S., with some 8.1 million U.S. adults falling victim to identity fraud in 2007, down from 8.4 million in 2006. The annual cost of identity fraud also dropped by nearly 12 percent to $45 billion in 2007, down from $51 billion in 2006.

Despite the declines, a troubling trend. For the third consecutive year, the cost per consumer (total out-of-pocket expense consumers incur when falling victim to ID fraud, not the costs borne by businesses) increased by 25 percent, averaging $691 in 2007, compared to $554 in 2006. The findings also confirm that low-tech traditional theft methods still pose the greatest risk, rather than online. Access via mail and telephone transactions rose from 3 percent of theft in 2006, to 40 percent in 2007. Oh, and in case you were wondering, California, Illinois, Idaho, West Virginia and Delaware are the five states whose residents are most at risk of identity fraud. Check out further I.I.I. info on identity theft.  

Excess Liability Limits

Marsh’s latest annual Limits of Liability report is out. The report surveys the excess liability insurance buying patterns of a huge number of firms (7,265) from 58 countries. Perhaps not surprisingly, the historical results of the report suggest that companies buy higher limits when prices are down, and lower limits when prices are up. But as Marsh notes, it’s all a question of balance: managements need to weigh the cost of average coverage against the company’s realistic exposure to a catastrophe.

This year’s study reveals that for the third consecutive year, the average price for $1 million of liability coverage among U.S. firms declined, falling by 4.6 percent to $11,348 in 2007, compared to $11,895 in 2006. After three years of price decreases, costs in 2007 fell to 2003 levels, providing some relief from the steady price increases of previous years. The largest U.S. firms in the study – those with revenues exceeding $10 billion – purchased limits of $288 million on average, the greatest amount of coverage of all firms. Check out further I.I.I.  facts  & stats  on litigiousness.

California Charitable Dinner

We’ve blogged before about the great works of the Insurance Industry Charitable Foundation and a new date to mark in the calendar is Thursday March 6, 2008, when the Foundation will hold its fourth annual Southern California Club 100 Dinner at the Getty Center in Los Angeles. The event, which brings together top insurance executives throughout California, provides the ideal opportunity to meet and network and enjoy an evening of fine food, wine and fine art while enjoying the unique architectural statement of the Getty Center grounds. Foundation Board member Gary C. Petrosino, managing director, Chubb Group, will serve as the Dinner Chairman. Proceeds from the event will benefit the Los Angeles Metro YMCA. Registration can be completed online at http://www.iicf.org/club100/. Check out further I.I.I. facts and stats on the insurance industry’s charitable contributions.  

The Nature of Obesity

It’s proving to be quite a week for obesity news headlines. First there was the news out of Mississippi of proposed legislation that would make it illegal for restaurants to serve obese customers. For more on that nugget, we suggest taking a look at the commentary from fellow insurance bloggers over at InsureBlog. Then today, a study in the American Journal of Clinical Nutrition finds that a child’s risk of becoming overweight is down to nature, rather than nurture. Researchers analyzed the Body Mass Index (BMI) and waist circumference in a U.K. sample of 5,092 pairs of twins aged 8 to 11 years old. Their findings indicate that the variation in both BMI and waist circumference, was 77 percent attributable to genes, and just 23 percent to environmental factors. The idea that genetic influence is such a strong factor in childhood obesity means that targeting the family may be vital for obesity prevention in the earliest years, the researchers conclude. They go on to note the importance over the longer-term of society-wide efforts to modify the environment, especially for children at high genetic risk. Check out further I.I.I. information on obesity risk.  

Market Adjusts

For the first time in a long while a survey of the condition of the U.S. commercial property/casualty market appears to indicate a slight easing of the soft market. Online insurance exchange MarketScout reports that the average property/casualty rate decrease was 15 percent in January 2008, compared with a year ago. MarketScout attributes the moderation largely to D&O prices related to the subprime crisis. D&O rates adjusted 3 percent to post a rate drop of 14 percent in January, compared to a decrease of 17 percent the prior year. Nevertheless, MarketScout warns not to mistake this as a trend towards a hardening market, referring to it simply as “a normal adjustment during the course of the current soft market”. By line of coverage, umbrella/excess led the pack with a rate decline of 18 percent in January 2008. Commercial property and general liability experienced the second largest drop in rates of 17 percent. Surety and workers’ compensation saw the smallest rate decline of 8 percent. Check out the I.I.I.’s latest industry outlook.  

American Dream Alive

With Super Tuesday underway, it’s only appropriate we cite a new study showing that the American Dream is alive and well. The MetLife study finds that 86 percent of individuals believe the U.S. economy is headed in the wrong direction, up from 64 percent just one year ago. Despite this collective pessimism, 85 percent of individuals expect their own financial situation to be about the same or even better this year, compared to last year – a sign that the American spirit of personal optimism and self-reliance is holding strong, MetLife says. Still, the findings reveal Americans have growing concerns about energy costs, healthcare costs, and rising levels of personal debt, as well as shrinking government-sponsored benefits.

In fact, more than three-quarters (77 percent) of Americans say they are planning to build their own personal safety nets to protect their family’s financial future. Exactly which products they think should comprise a personal financial safety net differ by generation. Health insurance that continues through retirement and retirement savings plans such as a 401(k) are the top priorities of both Baby Boomers and GenYers. But Boomers rank income annuities and long-term care insurance next, whereas GenYers would include life insurance followed by income annuities in their personal safety net. To help put your financial house in order the I.I.I. has free downloadable personal finance software. Check it out at http://www.myfinancialhouse.org  

Complaints Decline Again

The National Association of Insurance Commissioners (NAIC) has just released its top insurance complaints for 2007. Given the media’s tendency to focus on the negative, we shouldn’t overlook the fact that consumer complaints against insurers declined for the fourth consecutive year by 3.6 percent to 222,814 in 2007. Delays (16 percent), denial of claims (14.7 percent) and unsatisfactory settlement offers (9.8 percent) were the top three reasons consumers filed formal complaints against their carriers during the course of the year. Policy cancellations (4.6 percent) and premium/insurance rating issues (4.4 percent) rounded out the top five, the regulators noted. Meanwhile, accident & health (36.4 percent), auto (34.4 percent) and homeowners (12.5 percent) were the top three complaints by type of coverage in 2007. It would be remiss of us not to mention that the NAIC collected the data via its centralized electronic Complaint Database System (CDS), through which states voluntarily report “closed† complaints. A closed complaint is one that has been investigated and resolved to the satisfaction of the state or jurisdiction in which it is filed.  

Risking the Super Bowl

We can’t let the week go by without mentioning this weekend’s Super Bowl game. Whether your money is on the Patriots or the Giants, a few risk management tips appear to be in order. Before you head out to the game or switch on the TV Sunday, bear in mind that a study just published in the New England Journal of Medicine finds that viewing a stressful soccer match more than doubles the risk of an acute cardiovascular event. Researchers examined the relation between emotional stress and the incidence of cardiovascular events during the FIFA World Cup held in Germany in the summer of 2006. The findings suggest the risk is higher in men, than in women, and particularly in men with known coronary heart disease. In view of this excess risk, researchers say preventive measures are urgently needed. Meanwhile, for those throwing a Super Bowl party, the I.I.I. offers tips for being a responsible host. The day of the big game is also one of the most dangerous days to be on the road as too many impaired drivers make their way home after the party. Making sure your gathering includes a number of designated drivers is the way to go.  

Internet Key to Growth

Just how important a role the Internet will play in the sale of insurance in coming years is a question that elicits a range of viewpoints. The latest World Insurance Report from consulting group CapGemini and the European Financial Management & Marketing Association (EFMA) signals a startling shift in Internet usage among customers. According to its findings, in mature markets such as North America and Western Europe, some 28 percent of customers said they intended to buy their life insurance policies online in three years, while 34 percent said they would buy non-life policies online. The report suggests the rise of the Internet will clearly put some existing distribution networks at risk. Insurers prepared to embrace and leverage these changes and to adopt a structured multi-distribution strategy could benefit from significant growth opportunities, it says. Check out online insurance  sales facts & stats from the I.I.I.

Financial Risk Outlook

We head across the pond today, where the U.K. financial regulator has published its annual Financial Risk Outlook. Amid the continuing slowdown in the economy, the FSA’s 2008 report focuses on the risks arising from the events of the second half of 2007 and specifically warns firms and consumers of the risks that could impact them in a less benign economy. Among the risks identified as priority, the FSA notes that tighter economic conditions could increase the incidence or discovery of some types of financial crime or lead to firms’ resources being diverted away from tackling financial crime. An interesting point, given last week’s  revelation concerning a rogue trader who defrauded French bank Socià ©tà © Gà ©nà ©rale of $7.2 billion. Check out  further I.I.I. info on financial  and market  conditions for insurers.

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