Latest Studies

COVID-19’s impact on global growth and the insurance industry is likely deeper and wider than the current consensus, and could last well into Q3 and beyond, according to this report. Key findings include: economic impact likely to continue into Q3/Q4 2020 and 2021; the event could reduce global GDP growth from 3.3 percent to 2.3 percent and delay recovery by up to 12 months; and fiscal and monetary policy rate cuts will unlikely be effective. The report also summarizes which insurance lines will experience high to low impact, as a consequence of the outbreak. Full report

This report advises businesses on how to respond to the spread of contagions by establishing preparedness strategies that include emergency response, business continuity, crisis management and crisis communications. Several types of insurance coverage may apply when employees or their family members or third parties are infected or when an insured property or a third party’s property is contaminated. The report discusses pandemic protection provided under workers compensation and employers liability as well as general liability and umbrella/excess policies. Full report

Considering the fact that property/casualty actuaries have never experienced a pandemic like covid-19, the paper considers the impact from several perspectives. The paper addresses, among others, the following questions: To what extent, if any, was P/C risk underpriced? Given the dramatic cessation of economic activity, what lines may have been overpriced? Was such a scenario foreseeable? How will ratemaking models respond to the changes in coverage wording that will undoubtedly appear in the future? How can actuaries assist in the development of viable coverages to meet new demand in the market? Do actuaries have any advice about communication of risk and how best to mitigate it? Full report

The world has been broadly challenged by the COVID-19 virus, and the related threat to public health makes the virus the most serious respiratory illness since the influenza pandemic of 1918. This study shows the results of the epidemiological modeling that has shaped the policymaking in the U.S, the U.K. and other nations. The report focuses on the potential of several non-pharmaceutical interventions that reduce contact rates in the population and thus reduce transmission of the virus. The authors conclude that the effectiveness of any single intervention alone would be limited so the impact of combined interventions is considered. The report includes multiple exhibits. Full report

More than half of the property/casualty insurance executives surveyed by Deloitte continue to expect to complete a merger and acquisition (M&A) deal over the next two years, even though M&A activity declined sharply last year due to prolonged uncertainties about the economy. Insurers continue to see alliances, investments and acquisitions as suitable approaches to expanding their product portfolios and their digital capabilities. At the same time, Deloitte found that potential buyers are expected to make smaller deals to meet specific needs rather than widely tying up their resources in one large deal that broadly affects the organization’s operations. There were 38 M&As in the P/C segment in 2019, a 38 percent decline compared with 2018. Full report

Ratings downgrades in 2019 were marginally higher than upgrades in the U.S. property/casualty sector for the first time in five years. The factors contributing to the downswing included losses related to weather, the narrowing of pricing in competitive lines of business and increases in loss cost severity in several lines. Although the number of upgrades declined, many companies showed improvements in risk-adjusted capitalization and sound operating performance, which supported high ratings. 2019 also brought a significant decline in catastrophes, which benefited the underwriting profitability of many lines of business and the companies’ risk-adjusted capitalization. The article includes multiple exhibits. Full report

The National Weather Service's 2020 spring flood outlook indicates that a third of the U.S.—128 million in 23 states—is at risk for flood. The previous year was one of the worst seasons for spring flooding on record but flooding in 2020 is not expected to be as severe. The areas at greatest risks are the Northern Plains and Upper Midwest, but the entire Mississippi River Valley could face flooding as spring rains become more frequent and as snow melts in the north, causing rivers and streams to overflow their banks. The Deep South is also particularly vulnerable, after many cities have reported approximately 30 inches of rain so far this year, making the soil widely saturated. Full report

A new landmark study released March 4 by the San Diego chapter of the Earthquake Engineering Research Institute indicates that the Rose Canyon Fault underneath central San Diego, an area previously deemed to be relatively safe, is a serious threat. Researchers analyzed the potential effects of a magnitude 6.9 earthquake along the fault and concluded that the liquefaction and landslides from such a tremor would devastate the state’s second largest city, with potential damage to 120,000 structures in San Diego County. It could also result in economic losses of $38 billion from the damage to buildings and infrastructure and $5.2 billion in lost income from business interruptions. Experts found 30 years ago that the fault was not dormant, after which the minimum building codes for the region were raised to the state’s highest level.  Full text

As consumers own more internet-connected devices and buy more products online and businesses use more electronic data and online storage, cyberattacks continue to occur. Only about one in 10 connected Americans say they have insurance to help them recover from a cyberattack. And close to half do not know whether they have this protection, according to the survey. Because of consumer confusion about their current cyber coverage, and the persistent idea that consumers are unwilling to pay more, insurers are faced with a challenge. They need to find a way to educate and inform consumers about the benefits of personal cyber insurance, and its value for helping them recover from thousands of dollars in personal losses after an attack. Full report

This paper continues and extends a series of NCCI studies comparing costs for treating comparable injuries between Workers Compensation (WC) and Group Health (GH)—research that goes back over the last 10 years. Findings include: WC pays more than GH to treat comparable injuries; Quantity differences dominate price differences, explaining 80 percent of the cost difference for a select group of 12 common WC medical conditions; Quantity differences vary principally by type of injury; All the injuries considered show a higher quantity of services for WC than for GH; Price differences are more related to the jurisdiction than to the type of injury, due, in part, to the different WC physician fee schedules that apply by state; Traumas to arms and legs consistently have the smaller cost and quantity differences, while chronic or pain-related injuries, such as bursitis and back pain, have larger differences. Full report

This study series provides in-depth analysis of costs per claim and other performance metrics across 18 state workers’ compensation systems. "The studies can help policymakers and other stakeholders identify current cost drivers and emerging trends in a wide variety of workers’ compensation system components,” said Ramona Tanabe, executive vice president and counsel of WCRI. “While the full impact of COVID-19 on state workers’ compensation systems is currently unclear, these studies will be a useful baseline to monitor the effects.” The state studies explore the time from injury to first indemnity payment, the average total cost per claim, the average payment per claim for medical care, and the average payment per claim for indemnity benefits, as well as how state results may reflect system features and processes. For more information on these studies, visit https://www.wcrinet.org/reports/compscope-benchmarks-20th-edition.