Litigation Rebounds, While Regulation Hits High

Companies in the United States and United Kingdom dealt with more litigation in 2012 and  see further increases  in 2013 while  heightened regulatory activity is also expected to  continue, according to the 9th Annual Litigation Trends Survey from international law firm Fulbright & Jaworski.

The majority of all respondents—92 percent (compared with 89 percent in last year’s survey)—expect the number of legal disputes their companies will face to rise or stay the same in the next 12 months.

One-quarter of U.S. respondents and 32 percent of U.K. respondents expect litigation to rise in 2013. Companies from the retail, energy, and health care industries have the highest expectations for a rise in the number of disputes.

After a one-year decline, businesses on both sides of the Atlantic initiated and faced more lawsuits in 2012 than they did in 2011. In the U.S., labor and employment disputes and contract litigation led the way.

Meanwhile, respondents to the Fulbright survey adapted to a stricter regulatory environment in 2012, both at home and abroad, as regulatory investigations reached a five-year high.

Indeed, Fulbright’s poll of corporate law departments found that the rate of companies retaining outside counsel for assistance in a regulatory investigation jumped in the U.S. from 55 percent in 2011 to 60 percent in 2012, and in the U.K. skyrocketed from 27 percent to 72 percent.

In a press release Otway Denny, head of Fulbright’s global disputes practice, says:

As litigation rebounded in 2012, more companies, particularly in energy, health care, and manufacturing, experienced an increase in government and regulatory investigations. All three of these industries, along with technology, were involved in investigations that concerned at least six different U.S. regulators.†

The survey gathered input from 392 in-house attorneys, including 275 U.S. respondents, onlitigation issues and trends.

Check out I.I.I. facts and statistics on litigiousness.

Identity Fraud Incidents Continue Upward Trend

One million more consumers became victims of identity fraud in 2012, and the dollar amount stolen rose to $21 billion –  the highest level since 2009.

The 2013 Identity Fraud Report by Javelin Strategy & Research found 12.6 million victims of identity fraud in the United States in the past year, which equates to 1 victim every 3 seconds.

The report also found that nearly 1 in 4 data breach letter recipients became a victim of identity fraud, which is the highest rate since 2010. This underscores the need for consumers to take all notifications seriously, Javelin said.

Breaches involving social security numbers were the most damaging. The study found consumers who had their social security number compromised in a data breach were five times more likely to be a fraud victim than an average consumer.

The good news is that companies appear to be responding more quickly to incidence of fraud. The study found a consumer’s information is being misused for an average of 48 days in 2012, down from 55 days in 2011 and 95 days in 2010.

Misuse time was down for all types of fraud including fraud on cards, loans, bank accounts, mobile phone bills as well as other types.

Small businesses in particular  are losing out to fraud as victims become more selective where they shop after an incident. The study found that 15 percent of all fraud victims decided to change behaviors and avoid smaller online merchants after an incident.

Check out I.I.I. info on identity theft here.

Meteors and Insurance

Now that we’ve had the weekend to absorb Friday’s news of a meteor exploding over Russia’s central Ural mountains, injuring up to 1,200 and causing damage to buildings in six cities, here’s a quick recap of the insurance impact.

According to a report by catastrophe modeler AIR Worldwide, most of the damage was caused by the shock waves as the meteor broke up in the atmosphere. The force of the explosion was enough to shatter dishes, televisions, and windows.

The explosion is estimated to have shattered more than 1 million square feet of glass, AIR Worldwide notes. Preliminary reports suggest more than 3,000 homes and businesses sustained damage from broken glass, including a zinc factory where part of the roof collapsed.

What about the insurance impact?

AIR Worldwide reports that in many countries with developed insurance markets, a comprehensive multi-peril insurance policy generally will cover all risks that are not specifically excluded, meaning that meteorite damage would generally be covered:

The dwelling portion of the homeowner policy is very broad and if damage from falling objects is not listed in the exclusions, it is generally covered.†

CNN cites  local officials who say damage from Friday’s explosion could be as much as $33 million.

The Insurance Information Institute (I.I.I.) also reminds us that while the likelihood of actually getting struck by a satellite, a meteor or an asteroid is extremely rare, the good news is that if one of these falling objects does hit you, your home or car or place of business, the resulting damage would be covered by insurance:

Falling objects, including satellites, asteroids, meteors and space debris, are covered under standard homeowners and business insurance policies.†

Good to know, especially as the Russia meteor weighed around 10,000 tons, entered the earth’s atmosphere at a hypersonic speed of at least 54,000 kph (33,000 mph) and shattered into pieces about 30 to 50 kilometers (18 to 32 miles) above the ground.

The Wall Street Journal says that it is the largest reported meteor since one that hit Tunguska, Siberia in 1908, according to the U.S. National Aeronautics and Space Administration.

Cyber Attack and Security Concerns Rise

A national survey has found that the majority of Americans fear that cyber warfare is imminent and that the country will attack or be attacked in the next decade.

Despite the threat, Americans also believe both the government and private sector networks are ill prepared for a surge in cyber conflict.

An overwhelming 93 percent of respondents to the survey, conducted by Tenable Network Security, believe that U.S. corporations and businesses are at least somewhat vulnerable to state-sponsored attacks. And 95 percent believe U.S. government agencies themselves are at least somewhat, to very, vulnerable to cyber attacks.

Some 94 percent of survey respondents also say they support the President having the same level of authority to react to cyber attacks as he has to respond to physical attacks on the country.

One key takeaway: the survey revealed conflicting results about whether the public or private sector should be held accountable for protecting corporate networks.

Some 66 percent of respondents believe corporations should be held responsible for cyber breaches when they occur. But an almost equal number of Americans, 62 percent – say government should be responsible for protecting U.S. businesses from cyber attacks.

The survey results come just days after President Barack Obama issued an executive order on sharing cyber threat information.

Check out I.I.I. facts and statistics on cyber security here.

PWC Survey: CEOs Confident on Revenue Growth

Global insurance industry CEOs are optimistic about growing revenue in 2013, despite ongoing volatility in the overall economy, according to PWC’s 16th Annual Global CEO Survey.

Some 90 percent of insurance industry leaders are at least reasonably confident about growing revenue this year and in the next three years, the survey found.

However, most CEOs see the prospects for the overall economy as tentative at best, with only 15 percent of insurance CEOs believing that it will improve over the next 12 months.

Nearly a quarter expect the economy to decline, though this is a much less pessimistic outlook than last year, when nearly half anticipated worse times ahead, according to PWC.

Other key takeaways from the survey:

— More than half of the CEOs are focused on organic growth to increase their bottom line, while 12 percent are focused on M&A

— Nearly 60 percent of CEOs are concerned about the shift in consumer spending and are seeking ways to enhance customer loyalty and retention (In response, nearly 90 percent are planning to change their strategies for managing customer growth)

— Almost 90 percent of insurance leaders plan to increase spending on technology to improve analytics and customer profiling capabilities

PWC’s findings are based on interviews with 92 insurance CEOs in 39 countries.

Tracking Nemo

A major winter storm, with blizzard conditions,  is bearing down on the Northeast and New England, with between one and even up to three feet of snow expected in certain areas Friday night through Saturday.

Here in New Jersey the snow is already falling and blizzard warnings are in effect from here to southern Maine, including the New York City metro area and Long Island, Boston, Hartford, Providence, and Portland, Maine.

The National Weather Service warns that in addition to the snowfall amounts, wind gusts as high as 60-75 mph will have a significant impact on transportation and power. Coastal flooding is also possible from Boston northward.

As CNN reports, the storm is on a trajectory similar to that taken by superstorm Sandy.

The Insurance Information Institute (I.I.I.) notes that winter storms are the third-largest cause of catastrophe losses, behind only hurricanes and tornadoes.

From 1992-2011, winter storms resulted in about $28 billion in insured losses, according to ISO. Insured annual U.S. winter storm losses in 2012 totaled $38 million, following losses of over $2 billion in 2011, according to Munich Re.

For more facts and statistics, including the 15 costliest U.S. winters by insured losses click here.

MarketScout: U.S. Commercial Pricing Continues to Rise

Another day, another survey on pricing suggests that commercial insurance rates across the United States are continuing their upward trajectory.

Online insurance exchange MarketScout reports that the composite rate for commercial lines increased 5 percent in January 2013.

Commercial property and general liability rates led the way with an increase of 6 percent, followed by BOP and commercial auto increasing at 5 percent.

By industry class, transportation and manufacturing risks led the rate increases at plus 6 percent.

By account size, small sized accounts (premiums up to $25,000) increased 6 percent, while medium accounts ($25,001 to $250,000) were up 5 percent. Large accounts ($250,001 to $1 million) were up 4 percent and jumbo accounts (over $1 million) were up 2 percent.

Richard Kerr, CEO of MarketScout, noted:

The commercial market is continuing its slow but steady upward trajectory in rates and premiums. Couple this with slight increases in exposures and the overall premium written on an expiring account is frequently up 8 to 9 percent.†

Council Survey: Commercial Rate Increases Accelerate

Commercial property/casualty prices continued their rise and underwriting remained tight in the fourth quarter of 2012, according to the latest quarterly Commercial P/C Market Index Survey from the Council of Insurance Agents & Brokers (CIAB).

Pricing rose on average at a rate of 5.0 percent, compared with 3.9 percent in the third quarter of 2012, across small, medium and large accounts.

Small account pricing realized the biggest increase quarter-to-quarter: 5.5 percent compared with a 3.7 percent increase in the third quarter of 2012.

Council president Ken Crerar noted:

I think you can characterize the fourth quarter as more of the same. Carriers were still cautious about the risks they were putting on their books and pushed for price increases where they could get them.†

The workers’ compensation market clearly was in distress in the fourth quarter, according to insurance brokers across the country. One Northeast broker said prices escalated 30 to 50 percent, mostly on large accounts. A Midwest broker said some carriers weren’t particularly interested in writing workers’ compensation accounts. Others said monoline coverage was harder to find.

Property prone to catastrophes was also tough to write. In the Northeast where Sandy hit hardest, carriers decreased CAT limits such as flood and wind, while increasing deductibles. Brokers reported similar stories for vulnerable property across the country.

The Council said the general feeling of the market last quarter can be summed up this way: underwriters looked carefully at their potential loss exposures and in some cases were willing to walk away rather than get caught short.

Check out latest I.I.I. information on financial and market conditions.

Super Bowl XLVII: landslide victory, or historic upset?

Are you one of the millions of football fans who will be tuning in to Super Bowl XLVII on Sunday? If so, you may want to check out the Super Bowl Prediction System of sports statistician John Dewan.

Regular readers may remember that the system has made incorrect predictions the last two years, but Dewan is hopeful that this year the model will “get back to its winning ways.”

Consider this, the system continues to have a positive overall record of 28-14 (with four non-selections) and is 16 of the last 22, which is 73 percent.

That said, it appears the prediction system’s indicators show the 49ers to be overwhelming favorites to win this year’s Super Bowl.

The system uses 12 indicators to predict the winner. Each one of these indicators predicts the winner more than half the time. But taken together, the system is even more successful.

Dewan notes that the 49ers have the edge in all but two of the indicators. The lone Ravens advantage is in points scored during the regular season, and they only beat the 49ers by a single point, 398-397. The 10 categories the 49ers won were mostly convincing victories, including a 350.9 to 294.4 edge in opponent total yards per game and 2,491 to 1,901 edge in rushing yards for the season.

The Ravens did throw for more passing yards for the season with 3,739 to 3,298, but teams with more passing yards lose the Super Bowl more often than they win it, Dewan adds.

The most significant aspect of this year’s prediction?

Prior to this matchup, 10 Super Bowl teams had 10 or more of the 12 indicators in their favor. Nine of those 10 teams went on the win the game, most recently in the 2008-2009 season when the Steelers beat the Cardinals. Interestingly, the one team that failed to win a game with a 10-category advantage was the first team with that advantage, the Vikings in the 1969-1970 season’s Super Bowl. The Ravens will attempt to be the first team to beat those odds in 43 years.†

May the best team win.

And please heed advice from the I.I.I. to be a responsible host if you’re throwing a Super Bowl party this year.