MarketScout: Soft Market Continues

The composite rate for U.S. property and casualty insurance was down five percent in January 2011, unchanged from December and November  2010.

In its latest market analysis, online insurance exchange MarketScout noted that small accounts were less competitive than larger accounts.

Richard Kerr, CEO of MarketScout observed:

Underwriters on small accounts, those under $25,000, are not pricing nearly as aggressively as large account underwriters. Small account rate reductions were down only 1 percent, while accounts paying a premium over $1 million enjoyed rate reductions averaging 6 percent.†

By coverage, commercial property and general liability were down the most with an average rate reduction of minus 5 percent.

Workers’ compensation, professional liability, D&O liability, EPLI, fiduciary and surety were the coverage classes experiencing the smallest decreases (minus 1 percent).

An article on  has more on this story. Check out I.I.I. information on the industry’s results and financial conditions.

Nasdaq Security Breach Highlights Cyber Threat

The company that owns the Nasdaq Stock Market over the weekend confirmed that its computer network had been hacked, according to a report in today’s Wall Street Journal.

An application called Directors Desk that allows corporate board members to share confidential documents was targeted. Nasdaq OMX issued a statement on the breach here.

According to the WSJ, the security issues with Nasdaq have triggered broader concerns:

People familiar with the Nasdaq case say that while the specifics of that hacking aren’t particularly egregious in a world where corporate networks are attacked daily, the case has raised alarms in the government because of the potential implications of compromising Nasdaq, which runs one of the world’s most-important exchanges.†

The incident highlights the fact that  network security  breaches remain a top threat facing businesses.

In its recently published Global Risks Report 2011, the World Economic Forum (WEF) identified cyber-security as one of the top five risks to watch.

The WEF warned that the complexity of cyber security issues is still not well understood and its risks could be underestimated:

Cyber security encompasses online data and information security and critical information infrastructure breakdown, and ranges from petty online theft by disenfranchised youths to government-led provocations with potentially catastrophic consequences.†

All of this reminds us of the potentially enormous liability facing businesses when a data breach occurs. Specialized cyber risk insurance coverage is a key purchase to help businesses manage this risk.

Super Bowl XLV: Who Will Win?

This Sunday’s Super Bowl is nearly upon us and in keeping with our annual tradition we take a look at the prediction of sports statistician John Dewan to see if we should be cheering for the Green Bay Packers or the Pittsburgh Steelers.

In his Stat of the Week, the owner of Baseball Info Solutions and co-publisher of ACTA Sports says:

The betting lines currently favor the Packers, but the Super Bowl Prediction system picks the Steelers.†

Dewan’s unique Super Bowl prediction system comprises 12 different statistical indicators: five defensive, four offensive and three based on overall stats (the defensive ones are the strongest indicators overall). Each one taken by itself predicts the Super Bowl winner 55 percent to 67 percent of the time.

Taken collectively, the indicators have an even better track record. The system favors the team that wins the most indicators and it has predicted 16 of the last 20 Super Bowl winners.

This year the prediction system picks the Pittsburgh Steelers to win their seventh franchise Super Bowl and third in the last six years.

The system has the Steelers winning nine of the 12 indicators. For the record, teams with eight or more indicators have won 21 of 26 Super Bowls.

Looks like the statistical odds favor the underdog, so place your bets!

By the way, if you’re throwing a Super Bowl party, check out I.I.I. tips for being a responsible host.

Catastrophes By State

The sheer size of the latest round of ice, snow and wintry conditions blanketing much of the United States reminds us that insurers play a vital role in helping communities recover from disasters such as winter storms.

The Insurance Information Institute (I.I.I.) has a great resource that can quantify just that in its just-published 2011 national edition of A Firm Foundation: How Insurance Supports the Economy.

It shows the wide variety of ways in which insurers contribute to the U.S. and state economies, including a section on catastrophe losses by state.

According to A Firm Foundation, Texas, Colorado, Georgia, Kentucky and Oklahoma were the highest-ranking states on ISO’s list of the top five states for insured catastrophe losses in 2009 (latest available data).

ISO defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of property/casualty policyholders and insurers.

In addition to winter storms, catastrophic events affecting states include hurricanes, tornadoes, thunderstorms, earthquakes, wildfires and floods.

In 2010 insured catastrophe losses in the U.S. totaled $13.6 billion, according to Munich Re data. Multiple severe winter storms across the country generated $2.6 billion in insured losses in 2010, the highest losses from this peril since 2003.

Check out I.I.I. facts and stats on winter storms.

TC Yasi Hits Northeast Australia

Severe winter storms and Groundhog Day may be dominating the headlines here in the U.S., but spare a thought for flood-weary Queensland, Australia where massive Tropical Cyclone Yasi, a Category 5 storm, is crossing the coast.

An article in The Australian describes Yasi as a storm bigger than Hurricane Katrina and notes that the storm surge after Yasi  may coincide with a high tide, meaning the floods to come could be even higher.

The latest advisory from the Australian Bureau of Meteorology puts Yasi at about 120km (75 miles) south southeast of Cairns, Queensland, and moving west southwest at 30km (19 miles) per hour.

It warns that the very destructive core of Yasi will take up to four hours to pass and bring a dangerous storm tide and battering waves, as well as destructive winds.

Over at Wunderblog, Dr. Jeff Masters observes:

Yasi is larger and more dangerous than Cyclone Larry of 2006, which hit Queensland as a Category 4 storm with 135 mph winds. Larry killed one person and caused $872 million in damage (2011 U.S. dollars). Yasi will bring heavy rains to a region with soils already saturated from record rains, and may become a billion-dollar cyclone.”

Check out  this pic of Yasi courtesy of NASA:




















I.I.I. has facts and stats on global catastrophes.

Poll Shows Rising Opposition To Accident Response Fees

Public opposition to accident response fees is growing across the country.

Evidence of the public backlash comes amid a growing trend of cash-strapped cities to pass on the cost of auto accident response services provided by police and fire departments.

A new Harris Interactive poll conducted by telephone for the Property Casualty Insurers Association of America (PCI) found that three out of four adults (76 percent) believe their taxes cover the time and services provided by emergency response providers following a traffic accident. As a result, they believe additional accident response fees charged by local governments are not necessary.

According to the survey, only one-third of adults believe charging these fees is appropriate, while twice as many (six in 10) disagree with the practice.

Opposition to charging these fees rises to 66 percent if it were to lead to an increase in the cost of insurance and 70 percent if only non-residents are charged the fee.

The survey also found that charging accident response fees could also have a significant impact on local businesses and tourism, as more than four in 10 adults reported they would be reluctant to travel in towns that assess such fees.

The results mirror the findings of a poll commissioned by the Insurance Information Network of California (IINC) last year.

IINC found that only 21 percent of Californians supported the concept of response fees, while 50 percent opposed the idea of cities charging fees to respond to traffic accidents.

Check out I.I.I. information on accident response fees.