Pride Round-Up 2013

June is Pride month and this week’s U.S. Supreme Court ruling striking down a key provision of the federal Defense of Marriage Act (DOMA) that defines marriage as between a man and a woman, gives added significance to our annual round-up of the latest news affecting the lesbian, gay, bisexual and transgender (LGBT) community.

Supreme Court Rulings: On June 26, 2013, the U.S. Supreme Court handed down two long-awaited decisions on same-sex marriage. Aon Hewitt notes that these rulings will have long-term implications for employers that sponsor employee benefit plans. Given that section 3 of DOMA affects more than 1,000 federal laws, including those related to estate and gift taxes, Social Security benefits and tax return filings, Willis reports that the DOMA ruling will have a significant impact on employer-sponsored plans. According to the Wall Street Journal, one of the biggest changes for married gay couples will be equal tax treatment of health insurance premiums. The DOMA ruling applies only to workers in the 12 states, plus the District of Columbia, that recognize gay marriage. Questions abound in the wake of the ruling, Willis adds. Insurers were among the 278 leading businesses that signed an amicus brief submitted in the DOMA case. A Hartford Courant blog post has more on the insurance implications of the Supreme Court’s DOMA ruling.

Corporate Equality: A record 252 businesses, including 12 insurers scored 100 percent in the Human Rights Campaign Foundation’s 2013 Corporate Equality Index (CEI) based on their LGBT workplace policies, benefits and practices. The number of insurers achieving the top ranking almost doubled to 12, up from seven the prior year. A total of 889 businesses were rated in the 2013 CEI, including the entire Fortune 500. This year saw the largest growth in the survey’s history with 54 new businesses participating.

Auto Insurance Customers Remain Satisfied

Overall customer satisfaction with auto insurance companies dipped in 2013 from an all-time high in 2012, but remains comparatively high relative to the previous decade, according to the J.D. Power 2013 U.S. Auto Insurance Study.

The study, which was launched in 2000, measures customer satisfaction across five factors: interaction, price, policy offerings, billing and payment and claims.

J.D. Power reports that overall satisfaction with auto insurance companies is 794 (on a 1,000-point scale), down 10 points from 2012. Despite this decline, satisfaction in 2013 is the second-highest level since the study launched in 2000.

Price and policy offerings were key factors contributing to lower overall satisfaction.

In a press release, Jeremy Bowler, senior director of the global insurance practice at J.D. Power says:

In 2013, there is a sharp rise in the number of customers who have experienced premium increases. The dollar amount of those increases is also larger, averaging $153 in 2013, compared with an average rate increase of $113 reported in the 2012 study.†

J.D. Power reports there is a direct relationship between the size of premium increase and the percentage of affected customers who switch insurers. Only 9 percent of customers who experienced an annual rate increase of $50 or less switched insurers, whereas 18 percent of customers switched when the increase was between $51 and $100, and 32 percent when the increase is more than $200.

The survey  also  notes  that insurers achieve higher satisfaction scores when they discuss rate increases with customers prior to sending a renewal letter.

Satisfaction averages 698 among customers who are notified before renewal and discuss their options. This is 67 points higher than among customers who did not get to discuss a rate increase prior to renewal.

The study finds that only 16 percent of customers with a rate increase indicate that they had a discussion with their insurer regarding potentially changing their coverage.

Check out I.I.I. facts and stats on auto insurance.

Distracted Walking

Most of us have heard of distracted driving, but it appears cell phone use while walking – also known as distracted walking – is a growing danger.

More than 1,500 pedestrians were estimated to be treated in emergency rooms in 2010 for injuries related to using a cell phone while walking, according to a nationwide study by Ohio State University researchers.

The number of such injuries has more than doubled since 2005, even though the total number of pedestrian injuries dropped during that time, and researchers believe that the actual number of injured pedestrians is much higher than these results suggest.

Jack Nasar, co-author of the study and professor of city and regional planning at the Ohio State University, says:

If current trends continue, I wouldn’t be surprised if the number of injuries to pedestrians caused by cell phones doubles again between 2010 and 2015.

The role of cell phones in distracted driving injuries and deaths gets a lot of attention and rightly so, but we need to also consider the danger cell phone use poses to pedestrians.†

The study found that young people aged 16 to 25 were most likely to be injured as distracted pedestrians, and most were hurt while talking rather than texting.

Researchers examined data for seven years (from 2004 to 2010) involving injuries related to cell phone use for pedestrians in public areas (not at home).

A wide variety of injuries were reported including a 14-year-old boy who suffered chest and shoulder injuries after falling 6-8 feet off a bridge into a rock-strewn ditch while walking down a road talking on a cell phone.

The study appears in the August 2013 issue of the journal Accident Analysis and Prevention.

Claims Journal has more on this story.

#2: Tropical Storm Barry

As Tropical Storm Barry, the second named storm of the 2013 Atlantic hurricane season, formed yesterday in the southern Gulf of Mexico, ahead of landfall early today  near the city of  Veracruz, Mexico, we can’t help but wonder isn’t it a bit early?

Fortunately, one of our favorite blogs has some interesting facts and stats  on early season tropical storms.

Dr. Jeff Masters’ Wunderblog tells us that Barry’s formation date of June 19 is a full six weeks earlier than the usual August 1 date of formation of the season’s second storm.

Dr. Masters also reminds us:

The formation of two Gulf of Mexico storms so early in the year does not necessarily suggest that we will have an active hurricane season. June storms forming in the Caribbean and Tropical Atlantic are typically a harbinger of an active hurricane season though.†

Dr. Masters adds that only two hurricane seasons since 1851 have had as many as three tropical storms form in June: 1936 and 1968.

With 10 days left in June, we’ll have to wait and see if 2013 joins this list.

As we previously reported, NOAA’s Climate Prediction Center is forecasting an active or extremely active season this year.

This means there is a 70 percent chance of 13 to 20 named storms (winds of 39 mph or higher), of which 7 to 11 could become hurricanes (winds of 74 mph or higher), including three to six major hurricanes (Category 3, 4 or 5; winds of 111 mph or higher).

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

Billion Dollar Weather Events

Two separate reports, one from Aon and the other from NOAA’s National Climatic Data Center (NCDC) highlight the impact of billion-dollar weather events.

In its latest global catastrophe recap, Aon reports that several multi-day severe weather outbreaks caused significant damage across much of the eastern and central United States during May, both causing billions of dollars in damage.

The most notable stretch was highlighted by an EF-5 tornado that caused catastrophic damage in Moore, Oklahoma. The tornado left 24 people dead, 387 injured and damaged/destroyed up to 13,000 homes and structures. At least 61 tornadoes touched down during the event.

Total economic losses were expected to approach or exceed $5.0 billion, with insured losses of $2.5 billion or more anticipated, according to Aon.

Another period of severe weather prompted multiple tornado touchdowns in the greater Oklahoma City, Oklahoma and St. Louis, Missouri metropolitan regions.

Aon reports that at least 76 tornadoes touched down during the event, including an EF-5 with 295 mph (475 kph) winds and a record 2.6-mile width (4.2-kilometer) in El Reno, Oklahoma.

The event was also notable for a major hailstorm in Amarillo, Texas (that caused insured losses alone of $400 million), flash floods in the Plains and Midwest, and damaging winds in the Northeast. Aon reports that total economic losses are expected to be beyond $2.0 billion, with insured losses in excess of $1.0 billion.

Meanwhile, NOAA’s NCDC reports that 2012 saw 11 weather and climate disaster events each with losses exceeding $1 billion in overall damages across the U.S.

The 2012 billion-dollar events included seven severe weather/tornado events, two tropical storm/hurricane events, and the year-long drought and associated wildfires.

These events caused over $110 billion in overall damages throughout the year, making 2012 the second costliest year on record. (2005 was the most costly year on record since 1980 with $160 billion (in 2005 dollars) due to four land-falling hurricanes, including Katrina.

NCDC reports that the two major drivers of damage costs in 2012 were Sandy, at approximately $65 billion in overall damages and the year-long drought at about $30 billion.

It should be noted that NCDC  estimates incorporate both insured and uninsured losses  and estimates from other federal agencies, state governments, insurers, and other sources.

With 11 events, 2012 also had the second highest number of billion-dollar disaster events behind 2011 which had 14 events, NCDC adds.

Check out I.I.I. facts and statistics on  U.S. catastrophes.

AAA on Distracted Driving: Hands-Free is not Risk-Free

Turns out using hands-free technologies to talk, text or send email while driving is not as safe as many people believe, according to a new study conducted by the University of Utah for the AAA Foundation for Traffic Safety.

The research found that as mental workload and distractions increase, reaction time slows, brain function is compromised, drivers scan the road less and miss visual cues, potentially resulting in drivers not seeing items right in front of them including stop signs and pedestrians.

The report notes:

The assumption that if the eyes were on the road and the hands were on the steering wheel then voice-based interactions would be safe appears to be unwarranted. Simply put, hands-free does not mean risk-free.†

Researchers measured brainwaves, eye movement and other metrics to assess what happens to drivers’ mental workload when they attempt to do multiple things at once.

The results were used to rate the levels of mental distraction drivers experience while performing each of the tasks. The levels of mental distraction are represented on a scale, as follows:

— Tasks such as listening to the radio ranked as a category “1† level of distraction or a minimal risk.

— Talking on a cell phone, both handheld and hands-free, resulted in a “2† or a moderate risk.

— Listening and responding to in-vehicle, voice-activated email features increased mental workload and distraction levels of the drivers to a “3† rating or one of extensive risk.

Professor David Strayer, lead author of the study, says:

These new, speech-based technologies in the car can overload the driver’s attention and impair their ability to drive safely. An unintended consequence of trying to make driving safer – by moving to speech-to-text in-vehicle systems – may actually overload the driver and make them less safe.†

More on this story from NPR.

Check out I.I.I. facts and statistics on highway safety.

Cyber Risks and the Fortune 500

Most U.S. listed Fortune 500 firms recognize that a cyber attack would cause serious harm or adversely impact their business, but many may be overlooking critical exposures, according to a new report by Willis North America.

For example, only one out of five firms mention cyber-terror (20 percent) as a factor, despite heightened emphasis on cyber-terror by the U.S. government.

And only six percent of companies mentioned that they purchase insurance to cover cyber risks, even though recent market surveys suggest significantly higher take-up rates.

The Willis Fortune 500 Cyber Disclosure Report, 2013, tracked organizations’ response to SEC Guidance issued in October 2011, asking U.S. listed companies to provide extensive disclosure on their cyber exposures.

The report found that some 88 percent of the Fortune 500 are following SEC Guidelines as of April 2013 and providing “some level† of disclosure regarding cyber exposures. Some 36 percent disclosed that the risk was “material† or “serious†.

However, some companies within particular industries that would seem to have exposures, were silent, Willis said.

Top three cyber risks identified by the Fortune 500 include:

1. Loss of theft of confidential information (65 percent)
2. Loss of reputation (50 percent)
3. Direct loss from malicious acts (hackers, virus) (48 percent)

Business Insurance has more on this story.

For additional information on the  cyber terrorism threat, check out  a just-published  I.I.I. paper on terrorism risk.

AIR Updates Coastline at Risk Report

A steady rise in the number and value of exposed properties along the U.S. Gulf and East Coasts continues – and remains the largest factor increasing the hurricane risk of property insurers today, according to catastrophe modeling firm AIR Worldwide.

AIR just released an updated version of its report The Coastline at Risk, showing that the insured value of residential and commercial properties (the replacement value or cost to rebuild) in coastal counties now exceeds $10 trillion.

In coastal counties of Florida and New York, values approach $3 trillion in each state.
AIR notes:

In the past five years, the insured value of properties in coastal areas of the United States increased at a compound annual growth rate of just under 4 percent. Indications are that, as the economy recovers, the rate of growth will pick up. At a historical rate of 7 percent, the total values insured would double every decade.†

Overall, AIR estimates that some 38 percent of the total exposure in Gulf and East coast states is located in coastal counties. This exposure accounts for nearly 16 percent of the total value of properties in the U.S.

New York edges Florida as the state with the highest coastal property values, at over $2.9 trillion, but Florida has the largest proportion of its value in coastal counties at 79 percent.

More on this story from Claims Journal.

Check out additional facts and statistics from the I.I.I. on hurricanes.

Storm Surge Report Shows Increasing Risk Along Atlantic and Gulf Coasts

An annual report from CoreLogic reveals that the number and value of total properties along the Atlantic and Gulf coasts at risk of hurricane-driven storm surge is increasing significantly.

In its 2013 analysis CoreLogic estimates that more than 4.2 million residential properties are exposed to storm-surge risk valued at roughly $1.1 trillion, with more than $658 billion of that risk concentrated in 10 major metro areas.

Florida tops the state rankings with nearly 1.5 million properties at risk and $386 billion in total potential exposure to damage.

Louisiana ranks second in total properties at risk with just over 411,000 homes in storm-surge zones, while New York ranks second in total value of coastal properties exposed at nearly $135 billion.

At the local level, the New York metropolitan area, which encompasses northern New Jersey and Long Island as well, contains not only the highest number of homes at risk for potential storm-surge damage, but also the highest total value of residential property exposed, at more than $200 billion.

CoreLogic makes the point that extensive regions along both the Gulf and Atlantic coasts are vulnerable to storm surge, and yet the homeowners who live in these areas are not required to carry flood insurance because they are not located within a designated FEMA 100-year floodplain.

It says:

Homeowners who live outside of the FEMA Special Hazard Flood Areas (SFHA), especially in the Northeast, would have little reason to carry flood insurance, given that they may not be aware of the risk storm surge poses to their properties.†

For that reason, fully understanding the number and value of homes at risk of sustaining storm-surge damage allows insurance providers to improve underwriting policies and procedures.†

CoreLogic notes that public awareness of the risk hurricane-driven storm surge poses to coastal homeowners has never been higher coming off the heels of Hurricane Sandy last fall.

A press release quotes Dr. Howard Botts , vice president and director of database development for CoreLogic Spatial Solutions:

Sandy was a harsh reminder of the potential destruction associated with storm-surge flooding, and of just how many communities are vulnerable to that risk, in areas typically assumed to be relatively safe from hurricanes along the northeastern Atlantic shoreline.†

According to I.I.I. facts and statistics on flood insurance, Hurricane Sandy was the sixth costliest U.S. flood, based on National Flood Insurance Program (NFIP) payouts as of March 7, 2013.