Latest Studies

The world’s 10 largest insurance markets are cumulatively expected to see gross domestic product (GDP) decrease by 4.9 percent in 2020 compared to 2019 because of COVID-19, according to a new Insurance Information Institute (Triple-I) report. “Given the scope of the downturn so far in China, North America, and Western Europe, the virus’s continuing expansion in the Southern Hemisphere, and the possibility of further rebounds in the former this fall and winter, the likelihood of a V-Shaped recovery is extremely low,” writes Dr. Michel Léonard, Vice President & Senior Economist, Triple-I, in the Global Macro and Insurance Outlook: Q2 2020. “The most likely outcome for the rest of 2020 is a slow recovery, with multiple false starts and step backs, that does not stabilize until well into 2021.” Full report

The 2020 Atlantic hurricane season activity is projected to be "well above average,” according to Triple-I non-resident scholar Dr. Phil Klotzbach. Dr. Klotzbach, an atmospheric scientist at Colorado State University (CSU), and his team issued an updated forecast on June 4. They project the 2020 Atlantic hurricane season will have 19 named storms (including the storms that already formed), 9 hurricanes, and 4 major hurricanes. Triple-I Blog 06/04/2020

Homeowners insurance lightning claims decreased in 2019 for the second year in a row. Still, the average cost per claim has increased 11 percent between 2017 and 2019, according to Triple-I. James Lynch, chief actuary and senior vice president of Research and Education at Triple-I, added, "Homes are more susceptible to lightning damage because electronic systems have become more interconnected—think Smart Homes—which have an easy gateway to much of a home's electronic network, damaging scores of devices and appliances at once."  Full Text

This article from Milliman, a risk management and benefits firm, considers the refunds insurance companies issued to customers during the COVID-19 pandemic from a tax and actuarial perspective. When considering auto refunds, the average cost per claim could go up if cars are driving faster on average due to reduced traffic, resulting in more severe accidents. The article also states that insurers need to quantify changes in their expenses when considering rates and that costs to support employees working remotely may have been unanticipated in insurers’ rates. Additionally, insurers need to quantify changes to their anticipated investment income due to recent economic events because anticipated investment income is considered by actuaries when setting rates. The article also discusses how premium rebates and refunds reduce taxable income in the year the rebate or refund is paid to the policyholder, a positive tax result for insurance companies. Full report

The report indicates that rates for directors and officers liability insurance (D&O) would increase by 100 percent as insurers take steps to protect themselves from increased shareholder litigation over the last three years and lawsuits in the future related to exposures to the coronavirus pandemic. The report cites a Marsh LLC study showing that D&O rates are increasing significantly in 2020, having risen 44 percent in the first quarter. The report predicts a triple-digit rate increase as the economy recovers from the COVID-19 lockdowns and as insurers respond to increased litigation, litigation financing and other legacy issues and work to manage emerging claims related to the pandemic. The report identifies travel and leisure as the industries that are most likely to be named in lawsuits involving COVID-19 claims. Full report (Subscription required)

This study of 40,123 auto insurance customers found that for the first time in the study's 21-year history, insurance company websites surpassed agents in client interaction and service, providing higher customer satisfaction. However, the difference in satisfaction was narrow, with customer service through auto insurers websites at 34 percent as opposed to 33 percent for an agent. "We've seen this trend developing for several years, but this is the first time that the digital channel has become the preferred means of interacting with auto insurers, exceeding one-on-one communication with agents," said Robert Lajdziak, senior consultant for insurance intelligence at J.D. Power. The study also found that customer loyalty is heavily influenced by claim history. Full report

On May 21 the National Oceanic and Atmospheric Administration (NOAA) issued its official pre-season forecast, which predicts a season with above average activity, with 13 to 19 named storms and three to five major hurricanes. This latest annual CoreLogic analysis focuses on the risk of storm surge to single-family (SFR) and multifamily residences (MFR) during the 2020 Atlantic hurricane season. Hurricanes and their storm surges often lead to mandatory evacuation orders and the loss of lives and can result in billions of dollars of property damage. Dr. Thomas Jeffery, principal, science and analytics at CoreLogic, said that storm surges have historically been the deadliest and most destructive of all hazards, and the current season, compounded by the pandemic, makes it even more important than ever to heed storm warnings and prepare for the possibility of the landfall of a hurricane along the Gulf and Atlantic Coasts. The report includes multiple exhibits, including a table showing the total homes and total MFRs potentially affected and their total estimated reconstruction cost value (RCV) for the surge risks associated with each of the five hurricane categories. The table is accompanied by four maps, color-coded to show the total homes at risk of storm surge damage and the total RCVs for both single-family and multifamily residences. Full report

An international survey commissioned by insurer Hiscox indicates that businesses' cyber losses have shown a nearly six-fold increase during the last year, rising from a median cost of $10,000 per firm to $57,000. Total cyber losses among the study group increased from $1.2 billion to nearly $1.8 billion during the same period. The largest loss of a single company during the year was $87.9 million, and the highest loss from any one event was the $15.8 million. Financial services, manufacturing and technology, media and telecoms were the sectors most heavily targeted. The study also found a broad-based rise in cybersecurity spending over the past year. A little more than 25 percent of respondents said they had a standalone cyber policy, while an additional 18 percent said they planned to either purchase standalone coverage or add it to their policies. Full report

This annual study found that overexertion, falls and struck-by hazards are among the most expensive workplace injuries. The index utilized data from 2017, studying injuries and illnesses that required more than five days away from work. The index also examined the most common injuries in different industry sectors, finding that overexertion from outside sources was the most prevalent injury in healthcare and social assistance, accounting for more than 30 percent of injuries in that field, with over 20 percent of manufacturing injuries also due to overexertion. Additionally, the report revealed that overexertion from handling objects accounted for almost a quarter of all workplace injuries, costing employers $13.98 billion, with falls on the same level comprising 18 percent of injuries and costing $10.84 billion. Full report

This report found a continuing trend of an increasing frequency of workers compensation cases involving traffic accidents. NCCI reported that from 2011 to 2016, the frequency of all workers compensation claims fell by 20.1 percent while claims involving motor vehicle accidents rose by 4.9 percent. The trucking industry accounts for 13 percent of motor vehicle accidents, while workers in other industries, including chauffeurs, taxi drivers, salespeople and automobile services workers, accounted for 2 percent to 5 percent of the claims. NCCI concluded that the rapid expansion of smartphone ownership, which rose to 80 percent during the period of the study, was possibly a contributing factor. The report shows that lost-time claims for motor vehicle accidents continue to cost 80 percent more than average lost-time claims because vehicle crashes generally involve severe head, neck and spine injuries. Full report

Public policy for prescription drugs is a complex issue, both in general and in the workers compensation system. Patients are affected by the high and increasing cost of prescription drugs directly as well as indirectly through their employers and insurers. An increasing number of prescriptions covered by workers compensation are now subject to regulations from the federal government as well as numerous state agencies. Opioids are a prominent feature of this report on the status of regulations as of January 1, 2020, just as in the first edition in 2018. States continue to be concerned about opioid use, over-prescription, addiction and addiction treatment. Full report

According to this report, workers compensation claims in the contracting industry showed a relatively higher number of cases involving opioid use, and the costs were almost 100 percent higher compared with other industry groups. Researchers examined claims from the period of 2012 through 2017 and attributed the higher costs to the greater severity of many of the contractor claims involving opioids. The ratings agency reported that 20 percent of workers compensation claims in the contracting industry, which includes trades such as construction and roofing, receive opioids, compared with 14 percent of claims from other groups such as manufacturing and clerical. According to the report, the cost per claim in the construction industry averaged $12,760, compared with an average of $5,608 in all other industries. Full report

This issue contains two reports on how the coronavirus (COVID-19) pandemic has affected employment. The first report is on job losses due to the pandemic from February to May 2020. Key insights include that job losses were most severely felt in services with high interpersonal proximity and goods and services whose consumption is discretionary or deferrable. Additionally, job losses in manufacturing and construction appear to be a secondary effect of pandemic-induced employment contractions in services. As of mid-April, state job losses ranged from 8 percent to above 20 percent of pre-pandemic employment. The second report on job losses and physical proximity found that over 70 percent of workers in Accommodation and Food Services, Health Care and Retail Trade work with high physical proximity to others; and that 10 percent or fewer workers in the office-based sectors of Finance, Management, and Professional Services work in high-proximity occupations. Finally, the largest percentage job losses during the pandemic came in economic sectors with large shares of high-proximity workers. Full reports

This study warns that autonomous vehicles (AVs) would probably prevent only one-third of all vehicle crashes. About 94 percent of crashes occur because of driver error, but AVs will still crash if they make the same mistakes as humans. This study highlighted the types of crashes that may still occur in an all-AV fleet if AVs are not designed to avoid poor choices that currently lead to crashes. Mistakes such as choosing evasive maneuvers, predicting actions of other drivers, and traveling at speeds suitable for conditions will persist if designers do not program AVs to avoid these errors. Full report