Texting While Driving

Strange but true that even though the majority of Americans (89 percent) believe sending text messages or emails while driving is distracting, dangerous, and should be outlawed, 57 percent admit to sending text messages from behind the wheel. These are the key findings of a new survey conducted by Harris Interactive and commissioned by mobile messaging service Pinger, Inc. According to its results, 91 percent of adults thought that drivers distracted by texting or email were as dangerous as drivers who had a couple of drinks. Yet two in three adults (66 percent) who drive a car and have used text messaging said they had read text messages or emails while driving. Even more compelling, 64 percent of adults who admitted to sending text messages while driving were between the ages of 18 and 34, while only 6 percent were 55 or older. On a separate but perhaps not completely unrelated note, we  understand that motor vehicle crashes are the leading cause of death among 15- to 20-year olds. According to the U.S. Department of Transportation, 3,467 drivers in this age group died in motor vehicle crashes in 2005 and an additional 281,000 were injured. As the Harris Interactive survey indicates, state governments have begun to address the dangers of drivers distracted by text messaging. In May 2007, Washington became the first state to ban texting while driving. A number of other states are considering similar legislation. Check out further I.I.I. info on cell phones and driving.  

Katrina Two Years On

Much has been written about the post-Hurricane Katrina litigation facing insurers, so last week’s decision by the U.S. Court of Appeals for the Fifth Circuit in favor of insurers was an extremely important one. As the second-year anniversary of Hurricane Katrina approaches, it’s worth revisiting some of the numbers from the single largest loss in the history of insurance. Firstly, the overwhelming majority of the claims have been settled. In fact, despite the focus on litigation following the storm, the actual number of claims in litigation accounted for a tiny percentage of the total number of claims filed, and most of those are no longer in contention. The I.I.I. estimates that fewer than 2 percent of homeowners claims in Louisiana and Mississippi were disputed through mediation or litigation. Insurers have paid an estimated $40.6 billion to policyholders on 1.7 million claims for damage to homes, businesses and vehicles in six states. Louisiana ($25.3 billion) and Mississippi ($13.6 billion) received by far the most insurance claims dollars to aid in their recovery. Check out further I.I.I. Katrina-related facts online.  

Two Sides to Workers Comp

The saying that there are two sides to every story really resonates in workers compensation and the latest research brief from the National Council on Compensation Insurance (NCCI). On the one hand workers, employers and their insurers can take comfort from the fact that the decline in claim frequency for workers compensation injuries continued into 2006 and continues to be widespread. For example, NCCI notes that all geographic regions of the country experienced significant declines over the last five years and despite some variation the decline in claim frequency occurred in all major industry groups across almost all occupations. But while workers comp claim frequency is down, NCCI cautions that indemnity and medical severities continue to rise. Indemnity severity increased by an estimated 5.5 percent in 2006, while the estimated rise in medical costs for 2006 is 7.5 percent. Medical price inflation and the utilization of medical services (including prescription drugs) are significant drivers of this trend, according to NCCI. What do you think? Check out further I.I.I. facts and stats on workers comp.  

Aging Infrastructure

As the recovery process continues following the Minneapolis Interstate 35W bridge collapse Wednesday night, many of us have given it more than a passing thought during our commutes via roads, rails, bridges and tunnels. Naturally the collapse is prompting questions concerning the quality of the nation’s transportation infrastructure. The insurance industry plays a vital role in helping individuals and businesses recover from an event like this. It underpins the economic security of individuals and businesses and helps sustain a number of related industries across the country. But maintaining and strengthening the existing outdated transportation infrastructure is a mammoth task that will require public and private input. For insurers, the potential liability exposure is enormous and certainly something to think about. Check out I.I.I.’s publication “A Firm Foundation† for further information on how insurers support the economy.

Back Pains Large States

Employee back problems are frequent and costly. That’s the upshot of a new study from the Workers Compensation Research Institute (WCRI). The report analyzes data from 14 large states (AR, CA, FL, IL, IN, LA, MA, MD, MI, NC, PA, TN, TX, and WI) from claims with an average of three years’ experience. WCRI found that nearly 14 percent of medical costs were paid to treat workers with back conditions involving disc conditions or radicular symptoms (e.g. radiating pain into the limbs). Nonspecific low back pain accounted for about one in seven claims and 11 percent of medical payments. Conditions involving the neck accounted for nearly 4 percent of claims and nearly 8 percent of medical payments. WCRI also found that shoulder or arm conditions – both inflammation due to overuse as well as sprains and strains – accounted for a significant share of medical costs and claims. For example, sprains and strains represented close to 7 percent of medical payments and nearly 6 percent of costs. Another interesting stat, carpal tunnel conditions were diagnosed in about 1 percent of cases, but accounted for more than 3 percent of medical costs. We’re wincing just thinking about it. Check our further I.I.I. information on workers compensation and workplace safety.  

Med Mal Alternatives

Two reports published yesterday by ratings agency A.M. Best on U.S. captives and risk retention groups (RRGs) point to continuing growth in these alternative market mechanisms, even amid soft market conditions. A number of trends are highlighted, but one interesting  nugget is that medical malpractice accounts for a significant portion of business for both captives and risk retention groups. According to the reports, medical malpractice continues to be the dominant line of business for domestic captives (close to 40 percent), while medical malpractice (claims made) accounted for 43 percent of RRG business in 2006. Which leads us to conclude that despite greater stability in the price of medical malpractice insurance and some improvement in the tort environment, doctors are not looking to return to the traditional market in a hurry. Check out I.I.I. updates on captives and alternative risk transfer mechanisms and on medical malpractice online.

Refusing Evacuation

With the most active period of the Atlantic hurricane season fast approaching, a poll out of the Harvard School of Public Health Project on the Public and Biological Security is a reminder of the continuing need to get the message out on disaster preparedness. According to the survey of people in high-risk hurricane areas, one-third (31 percent) said if government officials said they had to evacuate due to a major hurricane this season, they would not leave. Of more concern, that number has increased from 2006 when 23 percent said they would not evacuate. Top reasons people give for not evacuating involve issues of safety and security. Some 75 percent said their home is well-built and they would be safe there, while over half (56 percent) felt that roads would be too crowded, and 36 percent felt that evacuating would be dangerous. The survey covered eight states: AL, FL, GA, LA, MS, NC, SC and TX – and only included residents of counties within 20 miles of the coast. The poll included a special sample of the New Orleans metropolitan area. Check out I.I.I.’s disaster insurance information site for more info on disaster preparedness.

Regulating Nanotech

New technologies always bring with them inherent benefits as well as risks. Nanotechnology is one such example. From sun-tan lotions to tennis racquets, it’s estimated the number of consumer products on the market incorporating nanomaterials totaled 475 as of May 2007, more than double the 212 products on the market in March 2006. The ever-increasing array of products and procedures using nanotechnology challenges insurers, as enablers of scientific advances and new technologies, to better understand this emerging exposure going forward. A report released this week by the U.S. Food and Drug Administration’s (FDA) Nanotechnology Task Force therefore makes for interesting reading. Specifically, the FDA’s Nanotechnology Task Force report addresses regulatory and scientific issues and recommends the agency consider developing guidance to address the benefits and risks of drugs and medical devices using nanotechnology. The report also says the FDA should work to assess data needs to better regulate nanotechnology products, including biological effects and interactions of nanoscale materials. Something to think about.  

Flood Accumulations

A month ago we blogged about flood events in the U.S. and U.K. (see June 28 posting) and pointed to the fact that flooding is not just a coastal issue. Now severe flooding of major rivers in England, including the Thames and Severn, has re-flooded some of the previously-hit areas, resulting in what has been described as the worst flooding to hit Britain in 60 years. In early July, the Association of British Insurers (ABI) estimated the insured losses from the June floods at  £1.5 billion ($3.1 billion). Taking into account the fresh floods, that total could now reach  £3 billion ($6.2 billion). The event illustrates how critical it is for insurers to identify and manage accumulation risk. With that in mind, we note that Guy Carpenter has announced the development of a new London flood catastrophe model for insurers. As GC’s press release states: “For insurers and reinsurers, London represents the greatest accumulation of exposure and thus the ability to accurately determine maximum potential flood loss has become an imperative for risk managers.† Check out further I.I.I. info on catastrophe modeling and flood insurance in the U.S.  Ã‚  

Manhattan Explosion Lawsuit

The filing of a lawsuit against Con Edison less than a week after the New York City steam pipe explosion underscores the importance of liability insurance for businesses everywhere. According to reports, the woman’s lawsuit accuses Con Edison of negligence, saying the utility failed to properly maintain the pipe that ruptured outside her offices in mid-town Manhattan and is seeking unspecified damages. At least 30 people were injured and one died as a result of the July 19 explosion. Litigation risk is one of the major exposures facing U.S. businesses. A recent study by the Pacific Research Institute put the total annual cost of tort litigation to the economy at $865.37 billion, or $9,800 per family. It’s worth noting that this figure includes direct as well as indirect costs. The study also estimates that America wastes $589 billion each year on excessive tort litigation. Check out further I.I.I. info on the liability system.  

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