Online Flood Monitoring

As the 2008 hurricane season approaches, we’re seeing the launch of a number of Web-based initiatives designed to enhance flood monitoring and assessment for forecasters, emergency managers, scientists and the general public. For example, a new online map that tracks flood conditions has been developed by the U.S. Geological Survey (USGS). The new system incorporates real-time water data collected by USGS crews out in the field and is part of the USGS WaterWatch suite of Web-based streamflow products. It can be accessed at the map of flood and high flow conditions Web site. In another development, just a couple of weeks ago, the National Hurricane Center said that it is working with Google to develop a tool that will allow residents in hurricane danger zones to enter their location and see their exposure to storm surge resulting from various hurricanes. We expect to hear more on these initiatives as the hurricane season gets underway. Presumably  these tools  may help people make a better-informed decision  about whether to purchase flood insurance. Check out further I.I.I. info on flood risk.

Journalism Award Hoax?

For those of you who read us regularly, you may remember last August we outlined a detailed rebuttal from I.I.I. president Dr. Robert Hartwig to the September 2007 Bloomberg Markets cover story “The Insurance Hoax† that had claimed insurers use secret tactics to avoid paying claims (see our August 30, 2007, posting). Since then, we’ve noted many times that the article’s premise and facts were unsound and that the insurance industry has an excellent claims-paying track record. The I.I.I. is therefore dismayed to learn that the same Bloomberg Markets article has been named a finalist for the Deadline Club Daniel Pearl Award for Investigative Reporting sponsored by the New York City chapter of The Society for Professional Journalists. It seems unfitting for an article replete with so many factual and arithmetic errors to be up for an award named after a courageous journalist. The I.I.I. has written a letter to the Deadline Club expressing its concerns. Fellow insurance blogger Sam Friedman of National Underwriter takes a similar view.  

Business Insurance Book

Of all businesses that close down following a disaster, more than 25 percent never open their doors again. Having adequate insurance and a disaster plan  is therefore key. For businessowners trying to decide what kinds of insurance they need for their business, the I.I.I. has just published the print version of Insuring Your Business: A Small Businessowners’ Guide to Insurance. Whether it’s property insurance, liability protection, life insurance for key employees or workers compensation, the book has a wealth of information for small businessowners. There are also chapters focused on insurance for specific types of business such as construction contractors, food service businesses, home-based businesses, nonprofit organizations and small retail stores. To purchase a copy of Insuring Your Business check out the I.I.I. online bookstore.  

Hurricane Preparations

With just two months to go until the start of the 2008 hurricane season, insurers are being warned to make preparations. EMB, a global actuarial consulting firm, has issued a reminder that hurricanes pose the greatest ‘act of nature’ risk to the U.S. insurance industry for 2008. Despite the relative calm of the past two years, EMB cautions insurers not to be lulled into a false sense of security. While 2006 and 2007 saw a drop in land-falling hurricanes, it notes that both years experienced higher-than-average hurricane activity in the North Atlantic. Further, even though hurricanes top the list of property/casualty insurance risk, EMB says that other ‘acts of nature,’ including tornadoes, earthquakes, winter storms, fire and hail must also be accounted for when insurers assess pricing strategies. Check out the I.I.I.’s U.S. catastrophe facts for more information. For hurricane preparedness tips check out the I.I.I. disaster information site.  

Securities Class Action Settlements Update

Despite a rise in the number of securities class action cases settled last year, the total value of those settlements plummeted 60 percent from the all-time high of $17.2 billion reported in 2006, to $7 billion in 2007. That’s the latest analysis from Cornerstone Research in its 2007 Securities Class Action Settlements Report. More than 70 percent of this drop was due to the largest settlement in history, the $7.2 billion Enron settlement, the majority of which was approved in 2006. Cited in the Cornerstone press release, Stanford Law School professor Joseph Grundfest, director of the Securities Class Action Clearinghouse (sponsored in cooperation with Cornerstone Research), says: “It seems clear that the aggregate dollar value of settlements over the next two or three years is likely to decline significantly because the inventory of large cases in the pipeline just isn’t there. The interesting open question is whether the subprime crisis will cause an uptick in securities fraud settlement activity that might, given settlement cycles in the litigation industry, only become apparent three to five years from now.† Further commentary on the Cornerstone Research study can be found at The D&O Diary, a blog focused on D&O liability issues.

Regulatory Change

Industry eyes today will be on the news out of the Treasury department, where U.S. Treasury Secretary Henry Paulson is expected to outline the agency’s blueprint for federal regulation of financial services, including insurance. Word on the street is that the Treasury’s plan would endorse optional federal charters (OFC) for both insurers and producers. It would also propose the creation of an interim federal insurance regulator. Check out National Underwriter’s March 31 online article by Arthur Postal and Daniel Hays for more information on the proposal. Check out the I.I.I.’s online update on the OFC.

Retirement Revolution

Is the title of a two-hour PBS documentary on the financial challenges and options facing America’s baby boomers that will debut nationally next Monday (March 31). Dr. Steven Weisbart, I.I.I.’s chief economist, will appear in the program that will be aired in separate, one-hour installments. The first episode, ‘Hazards and Vicissitudes,’ offers a look at the origins of retirement in the U.S. and the creation of Social Security and Medicare. In the second segment, ‘On Our Own,’ the focus shifts to how Americans are more personally involved today than previous generations in planning for their own retirement. The second segment, featuring Dr. Weisbart, airs on Monday, April 7. Check out further I.I.I. info on life insurance, annuities and long-term care insurance.  

Business Continuity Threat

It’s becoming a recurring theme. Climate change has again been identified as a major threat by global businesses, according to a new survey on emerging risks conducted by Business Continuity Expo 2008 and sponsored by Marsh. Its findings reveal that some 87 percent of businesses see climate change as the single biggest threat in terms of risk assessment and the effect it could have on their businesses future growth. Perhaps of more concern, many are at a loss as to what can be done in order to prepare or plan for this eventuality. To embellish the point, the threat posed by climate change to the continuity and long-term success of their business is ahead of terrorism, pandemic flu, flooding, the credit crunch, government red-tape and outsourcing and offshoring. The survey was conducted among 150 major U.K. and European companies.

Hanging by a Thread

Another identifiable impact of climate change on the Antarctic environment has been captured in satellite and video images by the British Antarctic Survey (BAS). The footage shows images of a huge chunk of ice breaking away from the Wilkins Ice Shelf on the Antarctic Peninsula. The BAS press release indicates the scientists’ surprise at the speed with which this has happened. “The ice shelf is hanging by a thread – we’ll know in the next few days or weeks what its fate will be,† said Professor David Vaughan of the BAS. Professor Vaughan predicted in 1993 that the northern part of the Wilkins Ice Shelf was likely to be lost within 30 years if climate warming on the Peninsula were to continue at the same rate. According to the BAS, the Antarctica region has experienced unprecedented warming over the last half century. Several ice shelves have retreated in the past 30 years, six of them collapsing completely (Prince Gustav Channel, Larsen Inlet, Larsen A, Larsen B, Wordie, Muller and the Jones Ice Shelf).

Claims Industry Concerns

Managing claims is a key element of our business, so a Towers Perrin survey of 62 claim officers from property/casualty insurers of various sizes gives some insight into the challenges facing this industry. For example, attracting and retaining top talent is cited as the top priority for 82 percent of companies surveyed. Next up, the effective use of data and analytics as a main driver to meeting business objectives was cited by 52 percent of claim officers, closely followed by an interest in better ways to use technology in general (cited by 50 percent). The survey also focused on emerging trends and issues bringing change to the claims industry, with some surprising results. Nearly two-thirds (65 percent) of respondents chose sophisticated analytics, trumping the perennial issue of escalating claims severity (identified by 50 percent of respondents). Increasing technology needs and reliance on software was the third ranked emerging issue. Both commercial and personal lines companies participated in the survey.  

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