Wellness Benefits

The need for workers to have access to a workplace wellness program has been touted as an essential component in the drive to combat obesity. The 2007/2008 Staying@Work survey released last week by Watson Wyatt indicates that employers are listening. According to its findings, nearly half (46 percent) of employers surveyed currently offer financial incentives to encourage workers to monitor and improve their health or plan to offer incentives next year and by 2009 that number is expected to surpass 70 percent. The survey also found that a healthier workforce makes for a healthier company. Companies with effective health and productivity programs demonstrate superior performance, achieving 20 percent more revenue per employee. They also have 16.1 percent higher market value and deliver 57 percent higher shareholder returns (2004 to 2006 data). Those companies that invest in improving the health and productivity of their workforce also have cost increases that are five times lower for sick leave; four and one-half times lower for long-term disability; four times lower for short-term disability; and three and one-half times lower for general health coverage. Check out further I.I.I. information on obesity and workers comp.

Charitable Wildfire Response

In response to the recent wildfires in California, the Insurance Industry Charitable Foundation (IICF) has established an industry-wide campaign to provide needed support to the American Red Cross Southern California Wildfires Fund. The IICF is kicking off the campaign with a $25,000 contribution and is asking everyone from the insurance industry to make a contribution. Contributions can be made online at the IICF Web site or via mail. All proceeds will be presented to the American Red Cross to be used solely for the California firestorm relief effort. Check out further I.I.I. facts and stats on the insurance industry’s charitable contributions.

Subprime Professional Impact

We’re in D.C. today at the Professional Liability Underwriting Society (PLUS) International Conference. Much to talk about for professional liability lines, especially given recent headlines on the subprime market turmoil. Reinsurance broker Guy Carpenter just released a briefing on this very topic titled: “Credit Market Aftershock Threatens Professional Lines Profits.” In its analysis Guy Carp notes that estimates of the insurance impact range from $1 billion to $3 billion, but when the dust settles total insured losses are likely to be at the top end of that scale. Most of the credit crunch’s impact will affect the D&O product line, although E&O suits, ERISA actions and other suits have been filed and could lead to substantial further insurance losses, according to the briefing. Guy Carp puts the potential D&O loss at in excess of $2 billion, but cautions that the full impact will not be known until 2008 or 2009. For our take on the subprime issue, check out a paper authored by Dr. Steven Weisbart, I.I.I. vice president and chief economist.

Market Barometer

Yesterday we took the temperature of the aviation insurance market. Today we bring you the latest gauge on the condition of the U.S. commercial property-casualty market from online insurance exchange MarketScout. Its data indicates a continuing soft market, with an average property-casualty rate decrease of 15 percent in October, compared with a year ago. According to MarketScout, the market is likely to remain extremely competitive through the remainder of 2007 and well into mid-2008. By line of coverage, general liability led the pack with a rate decline of 17 percent in October. Commercial property, business interruption, umbrella/excess, professional liability, and D&O liability experienced the second largest drop in rates of 16 percent. Surety saw the smallest rate decline of 7 percent. Check out the I.I.I.’s latest industry outlook.

Airline Insurance Review

As aviation aficionados know, the last quarter of the year traditionally is when many of the world’s major airlines renew their insurance programs. Broker Aon has just published its Airline Insurance Market Pre-Renewal Season Review 2007 which offers a good barometer of the market and where it is headed. According to Aon, average hull and liability premium prices have fallen by 15 percent in 2007 so far, yet at the same time exposures continue to grow as new larger aircraft come off production lines ready to fly ever increasing numbers of passengers. From the safety standpoint, so far 2007 also stands out in terms of the high number of fatalities, hull losses and liabilities. Aon notes that compared to the same time last year: there have been nearly 80 percent more fatalities; the value of hull losses ($420.7 million) is 18 percent higher; and the value of liability losses ($406.7 million) has doubled. Aon’s airline risk management survey also throws out some interesting results. While attitude to risk and risk priorities remain broadly unchanged, future risk requirements reflect a growing focus among airlines on corporate social responsibility. Environmental pollution has become the highest future risk requirement, jumping from sixth place in the 2005/06 survey. This change knocked computer crime insurance into second place, while business interruption climbed to become the third highest additional risk that organizations will be looking to insure against in the next three years. Check out further I.I.I. facts & stats on aviation.  

ID Theft Rules for Financial Institutions

Financial institutions are prime targets of identity theft because they hold their customers money and store large quantities of personal data, so rules issued by Federal regulators on steps these companies must take to prevent ID theft could increase their potential liability. Under the final rules issued by the Federal Trade Commission (FTC) and other Federal regulatory agencies, all financial institutions will be required to develop and implement a program to prevent identity theft on new and existing consumer accounts. The program must include reasonable policies and procedures for detecting, preventing, and mitigating ID theft and enable a financial institution or creditor to: identify relevant patterns, practices, and specific forms of activity that are “red flags† signaling possible identity theft and incorporate those red flags into the program; detect red flags that have been incorporated into the program; respond appropriately to any red flags that are detected to prevent and mitigate ID theft; and ensure the program is updated periodically to reflect changes in risks from ID theft. The rules, which implement sections of the Fair and Accurate Credit Transactions Act of 2003, take effect January 1, 2008. Covered financial institutions and creditors have until November 1, 2008, to comply. Check out further I.I.I. facts & stats on ID theft.