Hurricane Season Wrap-Up

The 2010 Atlantic hurricane season which ends today was one of the busiest on record, but a ‘gentle giant’ for the U.S., according to the National Oceanic and Atmospheric Administration (NOAA).

NOAA reminds us that the extremely active season saw a total of 19 named storms – which ties 2010 with 1887 and 1995 for third place for most number of named storms in a season.

Of those, 12 became hurricanes – tying 2010 with 1969 in second place for the highest number of hurricanes in a season. Five of those reached major hurricane status of Category 3 or higher.

A key takeaway of the 2010 season is that none of the 12 hurricanes in the Atlantic struck the U.S.

Since 1900 there is no precedent of an Atlantic hurricane season with 10 or more hurricanes where none struck the U.S., according to Dr. Jeff Masters’ Wunderblog.

In fact, Dr. Masters observes that the 11 previous seasons with 10 or more hurricanes – 1870, 1878, 1886, 1893, 1916, 1933, 1950, 1969, 1995, 1998, and 2005 – each had at least two hurricane strikes on the U.S.:

To me, this year is most memorable for what didn’t happen – we did not get a full fledged hurricane rip through the Deepwater Horizon oil spill, nor did a devastating hurricane cause massive loss of life in Haiti’s vulnerable earthquake zone.

However, two hurricanes from this year are virtually certain to get their names retired – Tomas and Igor – and two other storms that did billions of damage to Mexico, Karl and Alex, are likely to have their names retired as well.

Here’s  Wunderblog’s visual of the 2010 season:




A USA Today article  has more on this story. Check out I.I.I. hurricane facts and stats.

UN Climate Talks Underway

Delegates from more than 200 countries are gathering today at the opening of the United Nations Climate Change Summit in Cancun, Mexico.

The two-week conference will see discussions on reviving the negotiations conducted at last year’s climate conference in Copenhagen, which ended without an agreement on a UN treaty to slow global warming.

According to  a Reuters article in the New York Times, global economic problems and disputes between the United States and China, the top two emitters, are expected to be major obstacles to any agreements on steps to slow climate change going forward.

Despite the current focus on the economy and related risks, Deutsche Bank recently warned that it expects the number of climate change related court cases in the U.S. to continue growing for the foreseeable future.

In its report, Growth of U.S. Climate Change Litigation: Trends & Consequences, Deutsche Bank noted that the number of climate change lawsuit filings doubled between 2006 and 2007, and already in 2010 these cases are on a path to triple over 2009 levels.

The largest increase in litigation has been in the area of challenges to federal action, specifically industry challenges to proposed Environmental Protection Agency (EPA) efforts to regulate greenhouse gas emissions, according to DB Climate Change Advisors.

Check out I.I.I. info on climate change and insurance.

AAA: Thanksgiving Travel To Rise

Improved economic conditions will boost Thanksgiving travel by more than 11 percent, according to the AAA, with approximately 42.2 million travelers taking a trip at least 50 miles away from home.

Last year, 37.9 million Americans traveled during the Thanksgiving holiday.

AAA said this year’s projected increase in holiday travel appears to be the result of modestly improved economic conditions since last year, including an increase in gross domestic product, real disposable personal income and household net worth combined with a decrease in consumer debt.

While job growth has been minimal and unemployment remains high, the unemployment rate has remained stable, an improvement from 2008 and 2009 when job losses were mounting each quarter.

AAA expects some 39.7 million motorists to hit the road this Thanksgiving, a 12 percent increase on last year. Another 1.62 million are expected to travel by air, up 3.5 percent from last year’s 1.57 million flyers, while another two percent are expected to travel by other modes of transportation such as rail and bus.

If you’re renting a car  for the  Thanksgiving holiday, check out the  I.I.I. podcast on rental car  insurance.

Have a safe and happy Thanksgiving!

Cyber Risks Increase During Holiday Shopping Weekend

Holiday shopping season is almost upon us. A week from today is Cyber Monday which along with Black Friday — the day after Thanksgiving, are the most popular days to shop for the holidays.

Shopping online may be easier than braving the crowds of the mall, but it’s important to make sure that convenience doesn’t come at the price of your identity.

An annual survey by internet security firm Webroot  of more than 2,660 individuals in the U.S., UK and Australia, found that some of consumers’ online habits – including using search engines and public WiFi for online gift buying – may put them at risk.

It also found that one in seven respondents has already become a victim of credit, debit or PayPal account fraud this year.

In addition, 57 percent received phishing emails from bogus sources claiming to be a legitimate company – a risk that increases around Black Friday and Cyber Monday.

Fortunately some online shoppers appear to be growing more vigilant.

A separate poll by the National Cyber Security Alliance (NCSA) found that the majority of Americans (64 percent) report they have not made an online purchase from a specific website because of security concerns.

When asked to explain why they did not make that purchase, 60 percent said it was because they were not sure if the site was secure, 51.4 percent were worried about providing information requested, and 48.4 percent felt a website more requested more information than was necessary for the transaction.

What about insurance? The good news is that identity theft may be covered by insurance. Some homeowners and auto policies include identity theft protection and resolution services at no additional cost.

Check out I.I.I. facts and stats on identity theft  and tips for avoiding  identity theft.

Property Insurers of Last Resort: Still Growing

Five years since Hurricane Katrina and with no major hurricane making U.S. landfall in 2010, the assumption might be that the residual property market in hurricane-exposed states would have reduced significantly in size and regained financial equilibrium.

However, this year’s report by the Insurance Information Institute (I.I.I.), like the reports of the last two years, records the ongoing growth in the exposure base of the residual market property insurers along with the still-precarious financial condition of some plans.

According to the newly updated paper, total exposure to loss in the residual market (FAIR and Beach/Windstorm plans) rose from $419.5 billion in 2005 to $703.0 billion in 2009 – an increase of 68 percent – and since 1990 exposure to loss in the plans has surged by 1,184 percent.

Arguably many of the plans have become home for the most highly exposed, wind-only risks – in other words the least attractive types of business. In some cases, this has left plans with huge concentrations of risk, the I.I.I. study notes.

Consequently, it is not surprising that many of the plans experience severe financial difficulties in certain years.

Further, because most of these plans do not charge rates that reflect the true cost of risk, demand for the coverage they provide remains high.

As long as the plans continue to grow, state finances will remain under threat and ultimately taxpayers, many of whom live nowhere near the coast, will continue to face the prospect of increased assessments in the years ahead, according to the I.I.I.

Motorcycles And Helmets

You may have read yesterday’s USA Today article on the National Transportation Safety Board’s (NTSB) call for mandatory helmet laws for all motorcycle riders in the United States.

Motorcycle rights groups oppose the move by the NTSB, criticizing it for interfering in state affairs and proposing laws that are not needed, while highway safety groups are in favor.

According to the NTSB, motorcycles comprise just 3 percent of vehicles on the nation’s road but are involved in 13 percent of fatalities. Head injury is  a leading cause of death in motorcycle crashes, says the U.S. Department of Transportation.

A map accompanying the USA Today article shows those states that require helmets for all riders, states  that require helmets for some riders and states that have no helmet laws.

This got us thinking about motorcycle helmet laws around the world.

According to the World Health Organization (WHO), motorcyclists wearing a good-quality helmet can reduce the risk of death in a road crash by almost 40 percent and the risk of severe injury by over 70 percent.

Yet, only 40 percent of countries have motorcycle helmet laws that cover both riders and passengers, and mandate quality standards for helmets.

A map shows helmet laws and standards by country.

The WHO also has information on road safety laws by country relating to other key risk factors, such as speed, drink-driving, seat belts and child restraints.

Check out the I.I.I. issues update on motorcycle crashes.

Litigation Lending

An article in the New York Times takes a closer look at how banks, hedge funds and private investors are investing hundreds of millions of dollars into others’ lawsuits in the hope of taking a share of any settlement or damages award.

According to a review by the NYT and the Center for Public Integrity, the rise of lending to plaintiffs and their lawyers is a result of the high cost of litigation and is giving more people their day in court.

However, it goes on to highlight some problems with the practice, such as investors initiating and controlling cases and plaintiffs being hit with sky-high interest payments on lawsuit loans, the costs of  which can exceed the benefits of winning a case.

For example, the NYT article mentions a woman injured in a 1995 car accident outside Philadelphia who borrowed money for a suit, along with her lawyer. By the time she won $169,125 in 2003, the lenders were owed $221,000.

Lawyers for ground zero workers whose health was damaged during the rescue and clean up following the terrorist attack of 9/11 borrowed more than $35 million, the article says.

A $712.5 million settlement  was  announced in June  and workers have until today to approve it.  Of the costs billed to clients -  some  $6.1 million of $11 million in interest payments, the NYT reports.

According to a 2009 report by the Institute for Legal Reform (ILR) titled “Selling Lawsuits: Buying Trouble†, third-party litigation funding is playing an increasingly visible and potentially harmful role in U.S. litigation and is a recipe for abuse.

ILR said the root problem with third-party litigation financing is that it introduces a stranger to the attorney-client relationship whose sole interest is a financial one.

The Wall Street Journal Law blog has more on this story.

Check out I.I.I. information on the liability system  and I.I.I. facts and stats on litigiousness.

Terrorism Risk Index Flags Countries Most At Risk

Somalia is now more at risk from terrorist attacks than Iraq, Pakistan, Afghanistan and Colombia, according to a global ranking developed by risks advisory firm Maplecroft.

It shows that Somalia moved from 4 to 1 in this year’s Terrorism Risk Index (TRI) and has the highest number of deaths from terrorism per population, surpassing Iraq and Afghanistan in the number of fatalities per terrorist attack.

According to Maplecroft’s analysis, Somalia experienced 556 terrorist incidents, killing a total of 1,437 people and wounding 3,408 between June 2009 and June 2010.

Yemen has also jumped into the extreme risk category for the first time. The country has seen a very significant increase in the number of terrorist incidents on its own soil with a total of 109 attacks between June 2009 and June 2010, Maplecroft reports.

A recent incident in which two parcel bombs sent from the Yemen were discovered aboard cargo planes en route to the U.S. minutes before detonation, highlights the elevated risk given this country by Maplecroft.

The index ranks the U.S. (33) at higher risk for a terrorist attack than France (44) and the United Kingdom (46), though none of the major Western economies fall within the high or extreme risk bracket.

Greece saw the largest jump in rankings from 57 to 24, overtaking Spain (27) to become the European country most at risk from terrorist attacks.

Check out a recent I.I.I. paper for more information on why terrorism risk is likely to remain a serious threat in the decade ahead and I.I.I. facts and stats on terrorism.

Fortune 500 And Insurers Increase Use Of Twitter

Insurance companies in the Fortune 500 have increased their use of Twitter dramatically, according to an annual study from the Center for Marketing Research at the University of Massachusetts Dartmouth.

Insurance companies are also most likely to be on Facebook, it found.

The study revealed that the number of insurance companies in the F500 with active Twitter accounts increased to 20 in 2010, up from 13 in 2009.

Overall, some 60 percent of F500 companies now have an active Twitter account, compared with 35 percent in 2009.

Size appears to influence the decision to adopt Twitter. Half of the Twitter accounts belong to the companies in the Fortune 200, while 33 percent come from those ranked in the bottom 200.

Interestingly, the F500 demonstrate a real willingness to interact on Twitter. Some 35 percent of companies consistently responded with @replies or retweets within 72 hours, many more often.

The study also found that just over half (56 percent) of the F500 are now on Facebook. Insurance companies rank first among industry sectors with 28 having a Facebook presence.

However, the use of blogs in the F500 appears to be leveling off, as 23 percent of F500 companies have a public-facing corporate blog with a post in the past 12 months – an increase of just 1 percent on 2009.

Indeed, the number of insurers in the F500 blogging dropped to three in 2010, compared to 5 in 2009.

The study concludes:

This clearly demonstrates the growing importance of social media in the business world. These large and leading companies drive the American economy and to a large extent the world economy. Their willingness to interact more transparently via these new technologies with their stakeholders is clear.†

For its part, the I.I.I. now has seven Twitter feeds (@iiiorg @Bob_Hartwig @JeanneSalvatore @LWorters @III_Research @IIIindustryblog @InsuringFLA) with a collective following of over 3,000 users and a Facebook page with over 300 “likes†.

Data Breaches Costing Healthcare Industry Billions

AÂ  list of data breaches maintained by the Privacy Rights Clearinghouse includes a variety of breaches at healthcare facilities, where personal information such as medical records or prescription drug information was compromised.

Now a study from the Ponemon Institute finds that data breaches of patient information cost healthcare organizations nearly $6 billion annually, and that many breaches go undetected.

Hat tip to the Wall Street Journal Health blog for highlighting the study.

According to its findings, the impact of a data breach over a two-year period is around $2 million per organization and the lifetime value of a lost patient is $107,580.

The average organization had 2.4 data breach incidents over the past two years. Major factors causing data breaches are unintentional employee action, lost or stolen computing devices and third-party error.

Given the rising exposure, you’d think hospitals and other healthcare facilities would be taking steps to protect patient data. Not so.

The research shows that protecting patient data is a low priority for hospitals and that organizations have little confidence in their ability to secure patient records.

Some 58 percent of organizations have little or no confidence in their ability to appropriately secure patient records, while 70 percent of hospitals said that protecting patient data is not a priority.

This is despite the fact that the HITECH Act, enacted in 2009, widened the scope of privacy and security protections under HIPAA to provide stronger safeguards for patient data. This includes notification to patients when their information is breached.

Unfortunately, the majority (71 percent) of respondents do not believe the HITECH Act regulations have significantly changed the management practices of patient records.

Rick Kam, president and co-founder of ID Experts (sponsors of the study) says:

We talk with healthcare compliance people dealing with data breach risks every day and they just can’t get their arms around the problem of data exposure. Unfortunately, in healthcare organizations, patient revenue trumps risk management.†

Check out I.I.I. info on ID theft.