Disaster Planning Is Not Just For Humans

Recent events such as the tornadoes in the U.S. and the Japan earthquake and tsunami remind us that our four-legged friends are just as vulnerable as we are when a disaster strikes.

Starting with Hurricane Katrina in 2005, the web has been used to powerful effect to locate not just people, but lost pets and reunite them with their families.

A quick search of Facebook reveals pages created earlier this year for animals lost and found from the April tornadoes in Alabama and the May tornado in Joplin, Missouri as well as the Japan earthquake and tsunami in March.

While these are valuable tools for pet owners, it’s always prudent to plan ahead before a disaster strikes.

This is why the I.I.I. suggests that any disaster plan includes provisions for your pets.

Things to think about include: mapping out a route and knowing where you might be able to shelter your pet in an emergency as not all hotels and shelters are pet-friendly.

Your vet, or the humane society or the local emergency management agency are good places to get information on evacuation plans that include pets.

A grab-and-go disaster kit for your pets is also a must and should include things like food and water, medication and your pet’s vaccination records.

The I.I.I. message is simple: don’t forget your four-legged friends in your disaster-planning.

For more information on disaster planning with pets check out the I.I.I. web video.

“Sea Change” In Securities Class Action Litigation

Federal securities class action filings saw a moderate decline in the first half of 2011 as a drop in traditional claims and credit-crisis filings was countered by a rise in Chinese reverse mergers and M&A litigation.

According to the mid-year report from Stanford Law School and Cornerstone Research, a total of 94 federal securities fraud class actions were filed in the first half of the year, down 9.6 percent from the 104 filings in the second half of 2010.

Professor Joseph Grundfest, director of the Stanford Law School Securities Class Action Clearinghouse said there appears to be a sea change in the structure of the class action securities fraud litigation business:

“The traditional claims that U.S.-based companies have been cooking their books or hyping their stocks are in sharp decline.

“The new kid on the block is the claim alleging that Chinese-based issuers have made false financial statements. The question remains as to whether or not this litigation will lead to meaningful recovery for plaintiffs.”

There were just two credit-crisis filings in the first half of 2011. Meanwhile, Chinese reverse mergers and traditional M&A filings together accounted for 47.9 percent of all securities fraud class action complaints filed during the first six months of 2011, up from 32.7 percent in the last six months of 2010.

A key takeaway of the mid-year report is that only 8.5 percent of filings named companies in the S&P 500 Index, down from 15.4 percent in the second half of 2010.

Only one company in the S&P Financials sector, representing 1.2 percent of the sector, was named as a defendant in a class action in the first half of 2011, compared with the historical average of 11.7 percent of Financials sector firms for the 11 years ending December 2010.

Check out the D&O Diary Blog for in-depth analysis of the report.

U.S. Debt Ceiling And P/C Insurers

Congressional failure to raise the federal debt ceiling by August
2 should not significantly immediately affect property/casualty insurers,
according to an article in Business Insurance that cites I.I.I. president Dr. Robert Hartwig.

The article notes:

“Failure to raise the nation’s debt ceiling is not synonymous with a sovereign default in which a government does not honor its debts. While a failure to raise the debt ceiling remains a possibility, the odds of a default are extremely remote, observers say.”

I.I.I. president Dr. Robert Hartwig tells Business Insurance that there is zero possibility the United States will default on its debt, and that the U.S. is not Greece.

Revenue flowing into the U.S. Treasury in August will greatly exceed what is needed to make interest payments on debt, he adds.

Dr. Hartwig’s comments come as the New York Times reports that rival separate debt plans to raise the debt ceiling are being assembled by Democrat and Republican leaders.

The dueling plans emerged after House speaker John Boehner walked away from negotiations with the White House Friday, the NYT says.

Playground Risks

As mom to a 14-month old, Thursday’s New York Times article questioning whether a playground can be too safe made for a compelling read.

The article charts the transformation of playgrounds from places of adventure – think seesaws, tall slides and merry-go-rounds – to today’s   safety-first playgrounds.

According to the NYT, some researchers are questioning the value of safety-first playgrounds, even if children suffer fewer injuries.

The NYT reports:

“Even if children do suffer fewer physical injuries – and the evidence for that is debatable – the critics say that these playgrounds may stunt emotional  development, leaving children with anxieties and fears that are ultimately worse than a broken bone.†

The NYT cites one researcher who after observing children on the playgrounds in Norway, England and Australia, identified six categories of  risky play: exploring heights, experiencing high speed, handling dangerous tools, being near dangerous elements (like water or fire), rough and tumble play, and wandering alone away from adult supervision.

Apparently, the most common was climbing heights.

The gist of the NYT piece  (the original article is published in the journal Evolutionary Psychology) is that by gradually exposing themselves to more hazards in the   playground, children develop the techniques needed to master their fears and phobias over the longer-term.

Something worth bearing in mind as we encounter the challenges of   raising children.

Perhaps the most important takeaway, from a risk management  standpoint, in the NYT article is that the threat of litigation caused the removal of slides and seesaws from New York City   playgrounds.

Check out I.I.I. facts and stats on recreation.

Avoiding Crashes With Hi-Tech Solutions

Last week I was sitting in traffic on New Jersey’s infamous Garden State Parkway. We couldn’t have been going more than 10 or 15 miles per hour, but a couple of cars ahead a vehicle pulled out seemingly unaware of its surrounds and rammed into another car.

Maybe the female driver was distracted by something, maybe she was getting impatient, or maybe there was a mechanical problem with her car. The cause of the crash wasn’t immediately clear, but luckily there were no injuries to the passengers, only damage to the cars.

The incident came to mind as I read about a new study on advanced crash avoidance technology from the Highway Loss Data Institute (HLDI).

HLDI studied an automatic braking system called City Safety in Volvo midsize SUV’s and found that it prevented about one in four of the common low-speed crashes that happen in everyday commuter traffic.

It found that claims under property damage liability coverage – the insurance that pays for damage to vehicles that an at-fault driver hits – were filed 27 percent less often for the Volvo XC60 than other midsize luxury SUVs.

Adrian Lund, president of the HLDI described the findings as encouraging:

“City Safety is helping XC60 drivers avoid the kinds of front-to-rear, low-speed crashes that frequently happen on congested roads.†

He added:

“The pattern of results strongly indicates that City Safety is preventing low-speed crashes and reducing insurance costs.†

City Safety automatically brakes to avoid a front-to-rear crash in certain low-speed conditions. It uses an infrared laser sensor built into the windshield to monitor the area in front of the SUV when traveling at speeds of about 2 to 19 mph.

Other forward collision warnings systems are designed to address higher speed collisions.

HLDI is working with several automakers to evaluate the loss experience of these and other crash avoidance technologies, as the features make their way into more vehicles.

Other crash avoidance technologies include: lane departure warning and prevention, side view assist, adaptive headlights and fatigue warning.

An article in USA Today has more on this story.

Check out I.I.I. information on auto crashes.

Drought Conditions Heighten Wildfire Risk

A heat wave covering much of the United States continues to bring record temperatures and worsening drought conditions in many areas.

The Capital Weather Gang blog at the Washington Post reports that already during July, some 882 record high temperatures have been tied or set across the U.S., while drought is more extensive than any time since at least 2000.

It cites the U.S. Drought Monitor released last Thursday, showing some 29 percent of the country in drought, and 12 percent of the country in exceptional drought – the largest extent on record (though records only go back to 2000).

A link to a New York Times graphic shows dry/moderate to exceptional drought conditions across the U.S. and over time.

Warmer temperatures and drier conditions raise the potential for wildfire activity. In 2010 catastrophic wildfires caused $210 million in insured losses and $314 million in total economic losses, according to Munich Re.

Aon Benfield’s latest edition of its Monthly Cat Recap report, wildfires in parts of Arizona, New Mexico, Texas and Florida erupted in the U.S. in June which led to two fatalities. In Texas, a large fire destroyed significant amounts of timber which could cost the state $500 million in lost productivity, it says.

The National Interagency Fire Center has the latest fire outlook for July through October.

Check out I.I.I. facts and stats on wildfires.

E-Subro Hub Goes Nationwide

Subrogating a claim – the sometimes lengthy process by which an insurer that has paid a loss, seeks to recover the loss amount from another party who is legally liable for it – is about to become more streamlined now the final link in a nationwide
electronic subrogation network is complete.

The web-based paperless system, called E-Subro Hub, will transform a traditionally slow subrogation process and provide
significant operational savings to the insurance industry.

According to Arbitration Forums, Inc. (AF), which developed the system, E-Subro Hub will handle more than 500,000 demands valued in the billions of dollars in 2011 now that it is available in all 50 states and the District of Columbia.

In 2010, nearly 115,000 subrogation demands valued at nearly $206 million were resolved by E-Subro Hub while operating in only 23 states.

AF noted that E-Subro Hub saves time by enabling users to electronically send and receive subrogation demands, attach supporting documents, manage subrogation claims and electronically file intercompany arbitration where necessary.

According to W. Russ Smith, president and CEO of AF, current users of E-Subro Hub are reporting that cases are frequently closed within days as opposed to weeks or months as in the past; printing and mailing costs have been eliminated and expenses associated with preparing an arbitration filing have been reduced.

E-Subro Hub also enables insurers to return deductibles to their policyholders faster, which reflects positively on customer service. Smith noted:

“Already, E-Subro Hub has vividly demonstrated to participating carriers and self-insureds that the electronic system can manage their subrogation workflow more effectively, reduce subrogation-related expenses and lower cycle times.†

AF offers the service at no-cost to participants. It predicts the paperless system will save over 44 million sheets of paper weighing more than 586,000 pounds annually.


Property Insurers Of Last Resort See Record Policy Growth

Six years since Hurricane Katrina and with no major hurricane making U.S. landfall in 2009 or 2010, the assumption might be that the residual property market in hurricane-exposed states would have reduced significantly in size and regained its financial equilibrium.

However, this year’s report by the Insurance Information Institute (I.I.I.), like the reports of the last four 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.

The ongoing growth in the residual property market comes at a critical juncture for private U.S. property insurers and the global property catastrophe reinsurance market as the first-half of 2011 has seen record catastrophe activity with severe tornadoes and other events resulting in an estimated $17 billion in insured losses through June 30 in the U.S. alone.

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 $757.9 billion in 2010 – an increase of 81 percent – and since 1990 exposure to loss in the plans has surged by 1,286 percent.

Meanwhile, total policies in force (both habitational and commercial) in the plans practically tripled from 931,550 in 1990 to 2.8 million in 2010 – a record high.

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.

It is important to recognize that 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.

MarketScout: Workers Comp Rates Rising

Workers’ compensation is the only coverage to see an actual rate increase (up 1 percent) in June 2011, according to latest analysis from online insurance exchange MarketScout.

The rising rates for workers’ comp come as MarketScout reported that the composite rate for U.S. property and casualty insurance was down 3 percent in June, after three consecutive months at minus 4 percent.

Richard Kerr, CEO of MarketScout said:

“It looks like workers’ compensation will be the coverage leading us out of the soft market. Rates for workers’ compensation are up 1 percent. Workers’ comp is the only coverage with an actual rate increase in June.†

In April, Kerr first indicated that workers’ compensation and catastrophe exposed property risks would lead the way out of the soft market.

General liability and commercial property were priced most aggressively in June, with rates down 3 percent, according to MarketScout.

Rates for business owners policies (BOP), professional liability, directors and officers (D&O), employment practices liability insurance (EPLI), crime and surety policies were flat.

Business Insurance has more on this story.

Check out I.I.I. information on workers compensation and I.I.I. facts and stats on the property/casualty insurance cycle.

BLS On Southern California Quake Impact

A magnitude 7.8 earthquake on the San Andreas fault could have wide-ranging effects on businesses, jobs and payrolls in the Southern California area, according to a new analysis from the Bureau of Labor Statistics (BLS).

Hat tip to the Insurance Information Network of California (IINC) for tweeting this story.

The BLS notes that the southern section of the San Andreas fault has not ruptured for more than 300 years, although evidence indicates that a large earthquake has occurred on the fault every 150 years, on average.

The ShakeOut Scenario simulated a magnitude 7.8 earthquake on the southern San Andreas Fault, and the program’s scientists determined this hypothetical earthquake would create very strong to severe shaking and moderate to heavy damage across seven southern California counties.

The seven southern California counties (Imperial, Kern, Los Angeles, Orange, Riverside, San Bernardino, and Ventura) that would be most affected by the earthquake are home to 621,000 business establishments, 6.3 million employees, and an annual payroll of $303.3 billion, according to the BLS.

It adds:

“The potential economic consequences to employers and workers in southern California are widespread and are likely to have an effect on the state economy and, in turn, the national economy because of the far-reaching economic ties between firms and industries in California and beyond.†

As cited by the BLS, a 2008 U.S. Geological Survey report estimated that a 7.8 magnitude earthquake in Southern California would cause about $213 billion in direct and indirect economic losses.

Check out I.I.I. facts and stats on earthquakes and tsunamis.