Category Archives: Technology

Texting While Driving

Strange but true that even though the majority of Americans (89 percent) believe sending text messages or emails while driving is distracting, dangerous, and should be outlawed, 57 percent admit to sending text messages from behind the wheel. These are the key findings of a new survey conducted by Harris Interactive and commissioned by mobile messaging service Pinger, Inc. According to its results, 91 percent of adults thought that drivers distracted by texting or email were as dangerous as drivers who had a couple of drinks. Yet two in three adults (66 percent) who drive a car and have used text messaging said they had read text messages or emails while driving. Even more compelling, 64 percent of adults who admitted to sending text messages while driving were between the ages of 18 and 34, while only 6 percent were 55 or older. On a separate but perhaps not completely unrelated note, we  understand that motor vehicle crashes are the leading cause of death among 15- to 20-year olds. According to the U.S. Department of Transportation, 3,467 drivers in this age group died in motor vehicle crashes in 2005 and an additional 281,000 were injured. As the Harris Interactive survey indicates, state governments have begun to address the dangers of drivers distracted by text messaging. In May 2007, Washington became the first state to ban texting while driving. A number of other states are considering similar legislation. Check out further I.I.I. info on cell phones and driving.  

Online Sales

Just how important a role the Web plays in the sale of insurance is a question we’re often asked. Luckily Celent has published “Online Insurance Sales and Marketing: What’s Happening and What’s Happening Next†, an update to  a 2002 study. The updated report projects that insurance sales will double by 2011 and that the Web will play a major role in most purchases of personal insurance across auto, life and health. Celent notes that the Web has become an increasingly important communication channel between sellers and buyers of personal insurance. Most consumers’ purchasing process is Web-influenced, it says. Further, search engines like Google and Yahoo! are critical channels for insurers that cannot afford massive consumer marketing campaigns to drive shoppers directly to their sites and more insurers are embracing search engine optimization to help capture these shoppers. While pure online sales are growing, Celent estimates they will still account for less than 15 percent of sales, even in personal auto. It also believes 100 percent online sales are unlikely to exceed 30 percent in any business area. Do you agree with these findings? Is the face-to-face sale becoming a thing of the past?  

Clarifying Cat Models

With Florida and Louisiana regulators declining to certify the use of five-year models in the underwriting process, catastrophe modelers must be feeling a little like Albert Einstein who once observed of the disconnect between science and the world beyond the lab: “Science is a wonderful thing if one does not have to earn one’s living by it.† Of course catastrophe models have come under a lot of scrutiny since the record hurricane loss seasons of 2004 and 2005, and it’s important to recognize that they are just one of the many tools that help insurers, reinsurers and risk managers more accurately analyze, write and price for catastrophe risk. The output from a given catastrophe model is also only as good as the data embedded in it and subject to the different variables of an individual insurer’s book of business. That said, today’s models are increasingly sophisticated and constantly being fine-tuned to incorporate the latest technologies and data. Models have also been developed for a wide range of catastrophic risks beyond hurricanes, including earthquakes, tornadoes, floods and terrorism. The use of computer technology in the underwriting process is not new, and in the case of catastrophe models there’s no doubt that with this tool, underwriters are better placed to more accurately analyze and evaluate catastrophe risk going forward. But given recent concerns, clearly there is more to be done in better explaining how the models actually work.  Check out  I.I.I.’s catastrophe modeling update.

Climate Mitigation Technology

It’s been a big week in the Big Apple for climate change, with a number of key initiatives unveiled at the C40 Large Cities Climate Summit 2007. First, the announcement of a major partnership between 16 of the world’s largest cities, five banks, four multinationals and the Clinton Foundation to retrofit buildings in urban areas and reduce carbon emissions. Funded by a hefty $1 billion from the banks it’s hoped the use of more energy efficient products in retrofitting existing buildings will lead to energy savings of 20 to 50 percent. A second initiative announced yesterday will see Microsoft team up with the Clinton Foundation to develop online tools to help cities more accurately monitor, compare and reduce their greenhouse gas emissions. These new software tools, available by year-end, will be developed in conjunction with the ICLEI – Local Governments for Sustainability, and the Center for Neighborhood Technology. The idea is for Microsoft to develop a single Web solution to allow cities to clearly understand their environmental footprint so they can improve their energy efficiency and reduce carbon emissions. An interesting step. For our industry’s part, the Summit included a speech by Swiss Re’s Roger Ferguson, who spoke of a public/private partnership approach to climate change.  

Road Rage Survey

So for the second year running Miami drivers have been found to be the least courteous in the country, followed by New York and Boston drivers, according to a survey by national auto club AutoVantage. The other two cities with the worst road rage were Los Angeles and Washington, D.C. Talking on cell phones, running red lights and slamming on the brakes were some of the frequent behaviors noted by commuters of their fellow drivers. The most frequent cause of road rage cited in the survey was impatient and/or speeding motorists. Drivers also cited poor driving in fast lanes, talking on the cell phone and driving while stressed, frustrated or angry. The most courteous city is Portland, OR, followed closely by Pittsburgh, Seattle/Tacoma, St. Louis and Dallas/Ft. Worth. The obvious link with  our business  is that drivers’ safety habits are just one of the factors that can affect the cost of auto insurance. The cost and crashworthiness of vehicles is another.  This survey also highlights the emerging risk posed by cell phone use while  driving. Check out further data from the I.I.I. on driver behavior and auto crashes  and cell phones and driving.

Cat Models Innovate

Catastrophe models have come under a lot of scrutiny since the record hurricane seasons of 2004 and 2005. In recent weeks the use of five-year catastrophe models versus 100-year models in the underwriting process has attracted the attention of certain state regulators. Whatever your opinion, it’s important to recognize that catastrophe models are just one of the tools that help insurers, reinsurers and risk managers more accurately analyze, write and price for catastrophe risk. Over the years catastrophe models have been constantly updated and fine-tuned to incorporate the latest technologies, data, and research findings. Take yesterday’s announcement of a collaboration between AIR Worldwide Corp, the International Hurricane Research Center (IHRC) and the College of Engineering and Computing at Florida International University (FIU). This initiative will see a computer controlled, mechanical platform, known as the “AIR Turntable† be incorporated into a hurricane simulator that can test the effects of different wind loadings on different building types. The technology is expected to transform residential and commercial construction and retrofitting practices and lead to more effective methods of strengthening buildings against extreme wind events such as hurricanes. Mitigation technology research like this  will be  key to better managing catastrophe risk in the years ahead.

A Greener Big Apple

A plan aimed at improving New York City’s environment has been unveiled by Mayor Michael Bloomberg. Among the proposals, the idea to charge an $8 congestion fee to drivers entering Manhattan at peak hours during the week. A series of cameras would capture license plates, either charging the car’s commuter account or generating a bill. Modeled after a similar congestion charge introduced across the pond in London in 2003, the plan may have significant implications for auto insurers and their policyholders. It’s easy to identify a few potential benefits right away. As the risk of auto accidents increases in areas of high traffic density, a reduction in the number of vehicles on the road could have a positive effect on auto claims. For drivers who decide to leave their car at home and take the train instead, the lower average miles per year driven could reduce the price they pay for auto insurance. What is not so certain and perhaps up for debate is how the new technology under such a scheme might intersect with the auto insurance underwriting process. What are your thoughts? 

Data Loss

Today another company, this time in the retail sector, revealed details of a breach in data security that saw hackers access information from at least 45.7 million customer credit and debit cards. A further 455,000 customers who returned merchandise without receipts also had their personal data stolen, according to news reports. Indeed, a recent risk survey conducted by the Economist Intelligence Unit (EIU) and sponsored by ACE European Group (ACE) found that one in three global businesses see loss of data as a significant threat and the key issue to address in operational risk management planning. Some 43 percent of survey respondents identified reputational damage as the main threat arising from data loss. Yet only 19 percent of respondents saw loss of revenue as a concern. These latest developments are a reminder of the potentially enormous liability facing corporations, if and when a breach in data security occurs, and the apparent  growth opportunity for insurers.

Cat Modeling With Google

Over the years catastrophe models have been constantly updated and fine-tuned to incorporate the latest technologies, data, and research findings. Following the unprecedented frequency and severity of storms during the 2004 and 2005 hurricane seasons, the output of such models came under close scrutiny. In a recent innovation we can report that underwriters in the Lloyd’s market are now using Google Earth to plot their exposure to hurricanes, earthquakes, terrorist attacks and other catastrophes on a 3D map. This is just the latest evidence that catastrophe models and their  application will continue to evolve amid the ever-changing risk landscape.  Ã‚  

Northern Exposure

We all know cars and deer can be a lethal combination, particularly during deer season which generally runs from October through December. But moose, weighing up to 1,000 lbs, can present even greater risks for drivers and their insurers. For example, reports out of Anchorage warn that moose collisions could be double or even triple the average this winter as heavy snow has led more moose than ever to wander into city limits. The Alaska Moose Federation notes that in 2006 some 236 moose were killed on Alaskan highways, with an average cost per accident of $8,356. Vigilant driving is part of the answer, but new high-tech solutions may also help to better manage this risk. Take Connecticut, where state wildlife officials have just announced they will use GPS collars to track and collect data on the state’s moose population. Now just imagine that regulators allowed auto insurers to use a similar system to monitor the habits of their policyholders.