Latest Studies

This fourth annual Directors’ Risk Survey was conducted in March 2018, with 570 members responding to the inquiry. The report is divided into four sections: Personal risks; internal risks; external business risks; and the involvement of boards in both ongoing and emerging risks. The responding directors expressed concerns about cyber, the disruption of intelligence technology (IT), the loss of key personnel and attracting and retaining talent. Most emerging risks involve disruptive technologies, such as artificial intelligence, blockchain and robotics. The article includes four tables listing the five top concerns of the respondents about Directors and Officers (D&O) liability insurance and the top five concerns about external risks, internal risks and emerging risks. Full report

As the world’s population becomes increasingly concentrated in cities, they become more vulnerable to various risk events ranging from a stock market crash to solar storm. To understand the risks, Lloyd’s compiled a City Risk Index, detailing the threat landscape for the world’s 279 leading cities. The index estimates how much economic output (GDP@Risk) a city could potentially lose due to 22 different threats with a total loss potential of $546.50 billion. Man-made threats account for 59 percent of the total GDP@Risk. A market crash is the largest single threat, with cities exposed to losses of $103.33 billion on an annual basis. The 10 cities with the highest exposure have a combined $126.82 billion of GDP@Risk, almost a quarter of the global total, with Tokyo standing to lose more than any other city. Due to its proximity to North Korea, Tokyo is also the city facing the most risk. Climate-related risks account for $122.98 billion of GDP under threat for all cities, and this sum will grow as extreme weather events grow in frequency and severity. If cities were to improve their resilience, global GDP exposure to loss would drop by $73.4 billion. Full report

Insurtech deals reached $724 million in the first quarter of 2018, a record high, and a 155 percent increase from the same time in 2017, according to Willis Towers Watson. There were seven $30 million investment rounds completed in the first quarter. Incumbents seem to prefer minority stakes and seek investments that allow them to learn how to improve processes. Full report

Flooding from Hurricane Harvey was extraordinary not only due to the amount of rainfall, but also to its geographic range. Sixty Texas counties were affected, with heavy rains extending into Louisiana, along with storm impacts recorded in five other states. There were 103 fatalities, and damages are estimated to be at $125 billion (only $19.4 of which is insured). This report focuses on lessons to be learned from the heavy damage inflicted on Houston and lists measures that could have mitigated some damage, including not allowing homes to be built near the city’s two reservoirs, giving adequate disclosures about flooding risks whenever homes around the reservoirs were sold and better risk awareness in the general population. Full report

This study is based on Zurich’s review of its post-catastrophe reports for global events occurring between June 2013 and June 2018. The study found that businesses and communities are spending more on disaster response than on risk reduction measures prior to disasters. Several findings in the report show the benefits of spending for preemptive disaster risk. For example, each dollar spent on disaster resilience saves $5 in future losses. Full report

CoreLogic has released its annual Storm Surge report, which found that along the Gulf and Atlantic Coasts about 6.9 million homes, worth more than $1 trillion, are at risk. CoreLogic estimates reconstruction costs for 2018 increased 6.6 percent from a year ago, mirroring increased regional construction, equipment and labor costs. The Atlantic Coast has more than 3.9 million homes at risk of storm surge with reconstruction cost value of more than $1 trillion, up by about $30 billion from 2017. Gulf Coast homes with the same risk total more than 3 million, with more than $609 billion in potential exposure to total destruction damage, a $16 billion increase compared to 2017. Full report

A study by DEKRA North America found that water utilities have the highest rate of exposure to employee fatalities and serious injuries, at 42 percent, while the entire utilities sector has a rate of 32 percent and the overall industry rate is 25 percent. The study also found that 30 percent of hazards in the utilities industry resulted from motor vehicle incidents, while 28 percent stemmed from line-of-fire or struck-by incidents. News Release

This study addresses the changes to property/casualty insurance distribution channels and processes. It estimates the size of the predominant channels—exclusive agents, independent agents, brokers and direct sales and discusses changes driven by new customer preferences and adoption of technology advances by the various channels. Market pressures include changing buyer behavior; technology advances; new products; consolidation; expense pressures; growth challenges; and new entrants. The study covers responses to these pressures by distributors and insurers, as well as the emergence of insurtech firms that work with existing agents or insurers, or independently of them. The study concludes that contrary to some of the prevailing wisdom, innovations in insurance distribution are not poised to eliminate the role of agents and brokers. Incumbent players, whether agents, brokers or insurers, are likely to collaborate with firms offering buyer-oriented solutions, efficiency, and innovation. The report is available for purchase from Conning.

Drug tests of car drivers killed in crashes in 2016 found more drivers had marijuana, opioids or other substances in their system than a decade ago. This report from the Governors Highway Safety Association, which represents state highway-safety offices, found that 44 percent of drivers who died and were tested had positive results for drugs up from 28 percent in 2006. In 2016, 37.9 percent of all drivers with known test results were alcohol-positive, compared with 41.0 percent a decade earlier. Marijuana was the most commonly detected drug: 38 percent of those testing positive had marijuana in their system. Sixteen percent tested positive for opioids. Another 4 percent had marijuana and opioids, with the rest testing positive for other drugs.) The report calls for a series of actions to combat driving while under the influence of opioids and alcohol, including: Adding drug-impaired driving messages to impaired-driving campaigns; training patrol officers to spot impaired drivers and Drug Recognition Experts; and monitoring the development of marijuana breath test instruments. Full report

Congress has repeatedly renewed and extended the National Flood Insurance Program (NFIP), which is now authorized to operate through July 31, 2018, and has enacted two reforms intended to make the program’s rates coordinate more closely with the risks. The new laws are intended to make the program more financially sound and to encourage greater participation by the private sector. Stand-alone flood policies are now being offered by 88 private insurers, which have been successful in competing with the NFIP. Direct written premiums total $569.5 million in 2017, compared with $356.6 million in 2016. Within the last year, 39 private companies entered the private flood market. The article includes two bar graphs, one showing the increase in the direct written premiums as more private insurers enter the flood insurance market, based on data from S&P Global Market Intelligence, and another from FEMA showing the increasing number of homeowners who have dropped their NFIP policies each year since 2011. Full report

Although parents have long been an important part in the learning and licensing process of teenage drivers, this role has expanded greatly with graduated driver licensing (GDL) provisions. In spite of this added responsibility, many parents report that they do not know what, where and when teen drivers should be practicing. In response, many states, jurisdictions and organizations have created programs to aid parents during the learning and licensing process. This report provides a comprehensive assessment of nine existing parent orientation sessions across the United States and makes recommendations based on a review of the scientific literature aimed at improving existing programs or guiding the development of new ones. Full report