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INSURANCE DIGEST --SEPTEMBER 2008
Each month the Insurance Information Institute highlights studies and reports that are of key interest to the insurance industry.
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WORKERS COMPENSATION INSURANCE INDUSTRY OVERVIEW: TRENDS AND CHALLENGES AMID THE ECONOMIC STORM
Robert Hartwig. Insurance Information Institute, New York, NY http://www.iii.org August 20, 2008. 142 pages
This PowerPoint report, presented at a meeting of the American Association of State Compensation Insurance Funds by Robert Hartwig, president of the Insurance Information Institute, discusses what a weakening economy, rising unemployment and the threat of inflation mean for workers comp insurers. Sections review the economic factors affecting workers comp exposure; workers comp underwriting,
operating and investment performance; premium growth drivers; frequency and severity trends for both medical and indemnity components of the line; and predictive modeling. A survey of workers compensation residual market performance is also provided. The presentation includes an overview of the overall property/casualty insurance sector, looking at performance cycles, profitability, underwriting and investment performance. A number of emerging risks are discussed, including the impact of an aging population and the country’s obesity epidemic. The full report is posted at http://www.iii.org/media/presentations/wceconomy/.
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TRENDS AND CHALLENGES IN THE P/C INSURANCE INDUSTRY: ENERGY MARKETS AT THE EYE OF THE ECONOMIC STORM
Robert Hartwig. Insurance information Institute, New York, New York http://www.iii.org August 12, 2008. 117 pages
This PowerPoint presentation by Robert Hartwig, president of the Insurance Information Institute,provides an overview of the property/casualty (P/C) insurance industry, with a specific focus on energy markets. Concerning the P/C industry in general, the presentation discusses profitability, underwriting trends, investments, premium growth, capacity and policyholders’ surplus. The energy segment presents a review of the market, focusing on the implications of high energy prices, rising inflation, capacity trends, the weak economy, proposed changes in insurance/financial sector regulation and a catastrophe loss review focusing on the respite in the energy sector. The presentation also surveys some of the domestic and international regulatory, geopolitical and socioeconomic challenges faces energy producers and
generators at a time of record global energy costs. The full report can be accessed on the I.I.I. Web site at http://www.iii.org/media/presentations/energy/ .
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2008 NATURAL DISASTER BUSINESS RISK STUDY
FM Global, Johnston, Rhode Island, http://www.fmglobal.com August 2008
A new survey of financial executives representing the largest corporations in North America reveals that almost all companies are exposed to natural disasters, yet many of those firms are not well-prepared for such catastrophes and are not overly concerned about the potential business impact. While 96 percent of financial executives said their companies have operations exposed to natural catastrophes, such as hurricanes, floods and earthquakes, less than 20 percent indicated that their firms were "very concerned" about such natural disasters negatively affecting their bottom line. Further findings of the study, commissioned by FM Global are posted on the Web at http://www.fmglobal.com/press_release/2008/FMGStudy_080608.html.
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INSURANCE RESEARCH COUNCIL RESEARCH DOCUMENTS HIGHER INJURY CLAIMS COSTS WITH LIGHTER VEHICLES
Insurance Research Council, Malvern, Pennsylvania http://www.ircweb.org August 2008
The cost of auto injury claims involving lighter weight vehicles tends to be higher than the cost of claims involving heavy vehicles, according to new research from the Insurance Research Council (IRC). IRC found that the average auto injury claim payment in accidents involving lighter weight vehicles was 14.3 percent greater than the average payment in accidents involving heavy vehicles. The IRC said, "These findings suggest that as rapidly rising gas prices prompt more drivers to choose lighter and more fuel-efficient vehicles, the average cost of injury claims arising from motor vehicle accidents can be expected to climb." The full news release is posted at http://www.ircweb.org/News/IRCGasPrices082608.pdf
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WORKERS COMPENSATION: BENEFITS COSTS AND COVERAGE
National Academy of Social Insurance, Washington, DC
This annual study provides comprehensive data on workers compensation benefits, including medical and cash payments. The latest study found that, "In 2006, workers’ compensation covered an estimated 130.3 million workers, an increase of 1.7 percent from the 128.1 million workers covered in 2005. Total wages of covered workers were $5.5 trillion in 2006, an increase of 6.3 percent from 2005. In 2006, employment increased for the third year in a row after having declined between 2000 and 2003. These developments reflect the conditionof the overall economy." The full report is posted on the Web at:
http://www.nasi.org/usr_doc/NASI_Workers_Comp_Report_2006.pdf
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TOP CITIES FOR HYBRID CARS
Travelers, Hartford, CT http://www.travelers.com August 26, 2008
A new study by hybridcars.com ranks Los Angeles as the top city for sales of hybrid cars, followed by San Francisco, New York, Washington, D.C., and Chicago. California is the top state for sales, followed by Florida, New York, Texas and Illinois. A release from Travelers Insurance highlighting the study is posted on the Web at http://investor.travelers.com/phoenix.zhtml?c=177842&p=irol-newsArticle&ID=1190619&highlight= The release notes Travelers was the first insurer to offer an auto insurance discount of up to 10 percent to hybrid drivers nationally when the trend of driving a hybrid started taking off in early 2006.
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TRAFFIC SAFETY FACTS: ALCOHOL-IMPAIRED DRIVING FATALITIES
National Highway Traffic Safety Administration, Washington, DC http://www.nhtsa.dot.gov August 29, 2008
New national figures show a significant decline in the number of drunk driving-related fatalities occurring nationally and in 32 individual states. However, the number of alcohol-related fatalities among motorcyclists is climbing in half of the states. NHTSA's new statistical report on 2007 alcohol-related fatalities is drawn from the agency's Fatality Analysis Reporting System (FARS) and can be viewed at http://www- nrd.nhtsa.dot.gov/Pubs/811016.PDF
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INJURY FACTS, 2008 EDITION
National Safety Council, 1121 Spring Lake Drive, Itasca, IL 60143
This annual compilation presents comprehensive occupational, motor vehicle, home, community, state and international injury statistics on deaths, nonfatal injuries and their costs. The 2008 edition includes a new chapter on intentional injuries –- homicide, assault, suicide, and self-harm –- in support of the Council's Safe Communities America initiative. The book can be ordered online at http://www.nsc.org/resources/injuryfacts.aspx
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COLUMBIA UNIVERSITY STUDY: EARTHQUAKES MAY ENDANGER NEW YORK MORE THAN PREVIOUSLY THOUGHY
Earth Institute, Columbia University, New York, NY http://www.earth.columbia.edu/ August 2008
A study by Columbia University's Lamont-Doherty Observatory of recent earthquake activity around New York City has found that many small faults thought to be inactive could contribute to a major, disastrous earthquake. The study also found that that the Indian Point nuclear power plants, 24 miles north of the city, sit on top of the previously unidentified intersection of two active seismic zones. A release highlighting the findings is posted on the Web at http://www.earth.columbia.edu/articles/view/2235 . The paper is posted on the the Web at
http://www.earth.columbia.edu/sitefiles/File/pressreleases/1696.pdf .
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