Distracted Drivers

A recent survey by Nationwide Insurance shows that driving while distracted (DWD) is quite prevalent among today’s drivers and more dangerous than you might think. As well as talking on a cell phone, the survey found that reading while driving, adjusting music, talking to someone else in the vehicle and eating are also considered dangerous distractions. On the latter distraction, auto insurance agency Insurance.com has just come up with a top 10 list of the most dangerous foods to eat while driving – a level of detail that may surprise hungry drivers. According to its press release here are the top foods to avoid while driving:

  1. Coffee: even with a travel lid, hot coffee can find its way out of the opening when you hit a bump.
  2. Hot soup: many people drink it like coffee and run the same risks.
  3. Tacos: any food that can disassemble itself will leave your car looking like a salad bar.
  4. Chili dogs: huge potential for drips and slops down the front of clothing.
  5. Hamburgers: from the grease to the toppings, it could end up on your hands and the steering wheel.
  6. Ribs and wings: what’s more distracting than licking your fingers?
  7. Fried chicken: more greasy hands. You’ve got to wipe them off while you’re driving.
  8. Jelly donuts: it’s not possible to eat one without watching the center ooze out.
  9. Soda: carbonation, fizz in the nose, lids that leak, disaster.
  10. Chocolate: try to clean melted chocolate off the steering wheel without swerving.

While an amusing read, this focuses attention on a serious problem. Some form of driver inattention was involved in almost 80 percent of crashes and 65 percent of near-crashes, according to a study conducted by Virginia Tech Transportation Institute and the National Highway Traffic Safety Administration (NHTSA). Check out I.I.I. facts and stats on auto crashes.

Age Discrimination: Regulatory Action?

We’ve blogged before about how mounting job cuts amid the economic downturn are resulting in an increase in employee lawsuits. At a public hearing  yesterday the Equal Employment Opportunity Commission (EEOC) focused on recent developments in age discrimination complaints. According to the EEOC, while overall job discrimination complaints were up by 15 percent in 2008, the number of allegations of age discrimination increased by nearly 30 percent, compared with 2007. The EEOC is now considering new regulations to protect older workers from job discrimination in the wake of recent adverse court decisions that have made it harder for older workers to successfully challenge age discrimination under the Age Discrimination in Employment Act (ADEA). For example, just last month in a 5-4 ruling the U.S. Supreme Court ruled that employees bringing federal age-discrimination claims bear the burden of proving their age was a key factor in their reassignment by an employer (Gross v. FBL Financial Services).   Previously, workers had to show that age was just one factor in the employment decision and then the burden of proving there was a permissible reason for the action shifted to the employer. For more on the EEOC hearing, check out today’s Washington Post online article by Steve Vogel. Check out I.I.I. information on specialty lines such as employment practices liability (EPL) insurance.

Piracy Attacks Double in First Half

World piracy attacks more than doubled to 240 during the first six months of 2009, from 114 in the first half of 2008, the ICC International Maritime Bureau’s Piracy Reporting Centre (IMB) said today. The rise in overall numbers was due almost entirely to increased Somali pirate activity off the Gulf of Aden and east coast of Somalia – with 86 and 44 incidents reported respectively. The report noted that attacks off the eastern coast of Somalia had decreased in recent months after peaking in March and April, with no attacks reported in June. However, the decline was due to heavy weather associated with the monsoons that are expected to continue into August, and ships should remain vigilant. Violence against crew members continues to increase. A total of 78 vessels were boarded worldwide, 75 vessels fired upon and 31 vessels hijacked with some 561 crew taken hostage, 19 injured, seven kidnapped, six killed and eight missing. The 2009 attacks can be viewed on the IMB Live Piracy Map.

Recessionary Conditions Hit P/C Industry

Results for the property/casualty industry over the next few years will be driven by the 2009 recession, mixed insurance premium pricing momentum and modestly deteriorating underwriting results, according to the latest Property/Casualty Forecast & Analysis by Conning Research and Consulting. The combination of continued price decreases in most commercial lines of business and the suppression in exposure growth due to the recession continues a period of negative premium growth that began in 2007. However, Conning also notes that recessionary conditions can suppress losses, including reduced frequency as a result of fewer exposure units and reduced loss severity due to deflation in some property loss cost drivers. Looking beyond this year, Conning expects slow economic recovery in 2010 and a return to more robust growth in 2011 leading to an increase in both premium and loss exposures. This may also include the start of an acceleration in inflationary factors that drive loss severity, however. Check out I.I.I. information on financial results and conditions.

Flood Insurance Program Extension

Legislation that would extend the National Flood Insurance Program (NFIP) through March 31, 2010, was introduced in the House late last week. The NFIP is currently set to expire September 30, 2009. Check out  a July 10 online article at Insurance Journal  for more on this story. At the end of 2008, the NFIP had some 5.7 million policies in force. The average premium for an annual flood insurance  policy is around $542, yet a 2008 poll by the I.I.I. found that only 17 percent of Americans have a flood insurance policy. Check out I.I.I. facts and stats on flood insurance.

Wildfire Catastrophe Risk

The insurance industry could find itself paying more in claims as wildfires join the growing list of frequent and severe events that have been adding to catastrophe losses in recent years, according to a new report from A.M. Best. It observes that warmer temperatures and drier conditions are making wildfires a year-round affair. While the 2008 wildfire season in the United States wasn’t as severe as in recent years, insurers face the prospect of further property losses from wildfires in 2009 with persistent drought conditions raising the potential for wildfire activity across parts of California, Nevada and the Northwest. A.M. Best reports that when adjusting for inflation into 2009 dollars, wildfire catastrophe losses have averaged nearly $215 million each year from 1964 through 2008. Since 2000, though, annual losses have averaged about $484 million, based on figures from the Property Claim Services (PCS) unit of the Insurance Services Office (ISO). Five of the most severe wildfire events have also occurred this decade, and although the frequency of wildland fires tracked by the National Interagency Fire Center has fallen since the early 1980s, there is an overall rising trend in severity as measured by acres per fire. Check out I.I.I. wildfire statistics.

Obesity Problem Getting Worse

As the debate on health care reform continues, a couple of new reports point to the growing cost of the obesity epidemic in the United States both in terms of pounds and dollars. First the proportion of U.S. adults who are obese increased to 26.1 percent in 2008, up from 25.6 percent in 2007, according to latest data from the CDC’s Behavioral Risk Factor Surveillance System (BRFSS). Not one state showed a significant decrease in obesity prevalence from 2007 to 2008. In six states – Alabama, Mississippi, Oklahoma, South Carolina, Tennessee and West Virginia – adult obesity prevalence was 30 percent or more, while 32 states (including those six) had obesity prevalence of 25 percent or more. Only one state, Colorado, had a prevalence of obesity less than 20 percent. Meanwhile, the Agency for Healthcare Research and Quality reports that total healthcare expenditures for obese U.S. adults rose from $166.7 billion in 2001 to $303 billion in 2006 – an increase of 82 percent.  When comparing 2001 with 2006, the proportion of total healthcare expenditures for obese adults also increased from 28.1 percent to 35.3 percent while the proportion of total expenditures for adults that were normal weight decreased from 35 percent to 30.3 percent.  A July 8 posting on the LA Times Health blog has more on this story. A person is considered obese if they have a body mass index (BMI) of 30 or above. BMI is calculated using height and weight measurements. Check out I.I.I. information on obesity.

P/C Rate Moderation Slow But Steady

Online insurance exchange MarketScout said that rate declines for U.S. property/casualty insurance placements continue to moderate at a slow but steady pace. The comments came as MarketScout reported the average property/casualty rate decrease was 6 percent in June 2009, compared to a double-digit rate decrease of 11 percent a year ago. “June renewals show rate declines that continue to moderate with many insurers waiting to determine how the July 1 reinsurance renewals will impact capacity†¦Expect significant market movement in the next 12 months with clear winners and losers,† said Richard Kerr, founder and CEO of MarketScout. Rates either remained the same or moderated further in all classes with the exception of workers’ compensation, where rates decreased 8 percent in June, compared to an average rate reduction of 7 percent in May. Coverage classes experiencing the smallest decreases were D&O liability and fiduciary with an average rate reduction of 3 percent. Check out I.I.I. information on the industry’s financial outlook.

Climate Change Presents Opportunity

Climate change is changing both the economic and the natural environment and in both cases the insurance industry can turn these changes into opportunities, according to a new report by the Geneva Association. Release of the report comes as leaders from the Group of Eight (G8) industrialized nations and the main developing economies are due to meet in Italy this week to try to find solutions to  key  issues, including how to tackle climate change. The Geneva Association says that insurers have a key role to play in encouraging the general economy and society to develop solutions to minimize climate change impacts by: designing insurance products that incentivize actions to raise resilience; creating innovative products and adapting existing insurance policies to climate change; and as underwriters of, and investors in, future technology. To seize the opportunities to these changes insurers should proactively discover the risk at an early stage, work on the risk control, and offer the preventive measure, the report suggests. At the same time, it notes the importance of increasing awareness of the role of insurance on climate change issues among the general public. Check out I.I.I. information on climate change and insurance.

Aviation Market News

Total claims for aviation insurers are likely to be significantly higher than the average by year-end, even if there are no further major accidents, according to Aon’s July 2009 Airline Insurance Market News. With just over half of 2009 gone, claims including an estimate for minor losses are already around 11 percent higher than the average for a full year. Overall losses (including minor losses) have cost aviation insurers $1.59 billion so far in 2009, compared to $715 million in 2008. Aon projects that total claims for the year could exceed $2.2 billion, nearly 60 percent higher than the long term average of $1.4 billion. With the Air France and Yemeni losses, June looks set to be the most expensive month in the aviation insurance market since September 2001. “In an already hardening market, this means price rises are likely to be universal for the rest of 2009,” Aon notes. It also means that even with half the year still to go, 2009 is already the third most expensive year ever in terms of hull and liability claims (excluding 2001). “Any further major losses will simply make the position worse, and would potentially extend the expected hard market conditions well into 2010,† Aon adds. Check out I.I.I. aviation facts and stats.