The call for better data collection follows the release of NSC figures showing that in 2016 there were more than 40,000 traffic fatalities in the U.S. for the first time in 10 years.
A recent I.I.I. white paper found that in the past two years, both the accident rate and the size of insurance claims have climbed dramatically. These are the largest and most volatile components of auto insurance.
As hundreds of risk professionals gather in Philadelphia, the birthplace of insurance, for the annual RIMS (Risk and Insurance Management Society) conference, here’s the latest take on corporate risk costs:
Businesses saw a 5 percent decline in the total cost of risk (TCOR) in 2016—the third year in a row that corporates have benefited from lower prices, according to the latest RIMS benchmark survey. The study defines TCOR as the cost of insurance, plus the costs of the losses that are retained and the administrative costs of the risk management department. CFO.com has more on the findings.
The commercial insurance marketplace remains buyer-friendly and stable for North American insurance buyers, even as it braces for potential changes from Washington D.C. That’s the outlook from Willis Towers Watson in its 2017 Marketplace Realities report which points to the fluidity of capital as a key driver of current market conditions. The report’s line-by-line commercial insurance price predictions for the remainder of 2017 show a mix of increases, decreases and flat rates, as follows:
Amid ongoing political upheaval in Venezuela and a volatile geopolitical landscape elsewhere, the need for political risk insurance is rising to prominence for multinational companies.
AP reports that General Motors just became the latest corporation to have a factory or asset seized by the government of Venezuela.
GM said assets such as vehicles were taken from the plant causing the company irreparable damage.
To protect themselves against loss or damage to physical assets caused by political action and instability, businesses should consider purchasing political risk insurance.
This specialty type of insurance can protect against a variety of risks, including:
Political violence (including terrorism and war).
Contract frustration due to political events.
Due to the accelerating pace of geopolitical uncertainty, the market for political risk insurance is pushing toward $10 billion in 2018, up from $8.1 billion in 2015, according to a KPMG LLP report published last year.
Willis Towers Watson advises multinational companies to buy political risk coverage on operations worldwide — particularly for select regions —while it is still available, Business Insurance reports.
About two-thirds of insurers use artificial intelligence-based (AI) “virtual assistants” to handle some customer calls and use of the technology is expected to increase, according to a just-published Accenture survey.
Today’s I.I.I. Daily, via Bloomberg, reports that 85 percent of the executives surveyed by Accenture indicated that they would invest “significantly” in the technology over the next three years.
Insurance companies will spend on average $90 million on artificial-intelligence technologies by 2020, according to research from Tata Consultancy Services.
A new global study by software company Pegasystems Inc reveals that while consumers are optimistic about the benefits of AI, they are also confused about what AI really does and have misplaced fears that inhibit them from fully embracing AI devices and services.
In the survey of 6,000 customers in six countries, Pegasystems found that only one in three (36 percent) of consumers are comfortable with businesses using AI to engage with them—even if this typically results in a better customer experience.
Digital Insurance reports: “The irony in many cases is that consumers may be surprised to learn they are already exposed to much more AI than they realize.”
Only 34 percent of respondents thought they had directly experienced AI. But when asked about the technologies in their lives, the survey found that 84 percent actually use at least one AI-powered service or device such as virtual home assistants, intelligent chatbots, or predictive product suggestions.
Rates for business interruption, inland marine, workers’ compensation, crime, and surety coverages held steady in the first quarter. Rates for all other coverages either moderated or increased.
By industry class, every industry experienced a move toward higher rates in the first quarter. Transportation had the largest rate increase at plus 5 percent, MarketScout reported.
Small accounts (up to $25,000) were assessed a 1 percent rate increase in the first quarter of 2017. Medium accounts ($25,001 – $250,000) were flat while both large ($250,001 – $1 million) and jumbo (over $1 million) accounts enjoyed rate decreases of minus 1 percent and minus 2 percent respectively.
Check out Insurance Information Institute facts and statistics on the commercial lines insurance market here.
While the social media firestorm following the forcible removal of a passenger from a United Airlines flight highlights the importance of crisis and reputation risk management, it also underscores the potential liability airlines face from balancing duties to their customers, employees and to shareholders.
“Those contracts are well thought through. They are generally fair and balanced, and they reflect the market,” said Roy Goldberg, a partner at Steptoe & Johnson who practices aviation law in Washington, D.C. “As a general matter, passengers have rights, but airlines have rights, too.”
A Reuters analysis of federal data shows U.S. airlines are bumping passengers off flights at the lowest rate since 1995.
On April 11 Oscar Munoz, head of United Airlines, apologized for the forcible removal by the police of Dr. David Dao, a passenger, from United Express Flight 3411 in Chicago. The apology came two days after the altercation led to the widespread expression of anger on social media, including millions of angry posts in the airline’s rapidly growing market in China. Politicians in Washington, D.C., also condemned the airline’s forcible removal of a passenger. Munoz sent a message to employees of United Continental Holdings Inc. apologizing for an incident he characterized as horrific and acknowledging the general public outrage, which he said he shared. The message was in sharp contrast to Munoz’s initial response.
FAA guidance for planning and preparing for your next airline trip here.
London’s TSR (Tropical Storm Risk): “The precision of hurricane outlooks issued in April is low and large uncertainties remain for the 2017 hurricane season.”
Forecasters believe development of potential El Niño conditions in the coming months will suppress storm activity.
What are the numbers?
CSU: 11 named storms, with 4 hurricanes and 2 major (Category 3-4-5) hurricanes. The median between 1981 and 2000 was 12 named storms, 6.5 hurricanes and two major hurricanes. U.S. major hurricane landfall is estimated at 80 percent of the long-period average.
TSR: 11 named storms, with 4 hurricanes and 2 major hurricanes. 2017 Atlantic hurricane activity will be 30 percent below 1950-2016 long-term average.
I.I.I. hurricane facts and statistics here, plus information on flood insurance here.
The average cost per claim paid out by insurers actually decreased by more than 10 percent in 2016, but the average cost per claim nationally has risen more than 70 percent from 2003 to 2016 (see chart).
This is due to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, the I.I.I. reports.
Costs vary widely by state.
The state with the highest average cost per claim was New York, at a whopping $55,671 per claim.
National Dog Bite Prevention Week® (April 9-15, 2017), is an annual event designed to provide consumers with information on how to be responsible pet owners while increasing awareness of a serious public health issue.
Watch this I.I.I. video for tips on preventing dog bites: