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INSURANCE DIGEST -- AUGUST 2008
Each month the Insurance Information Institute highlights studies and reports that are of key interest to the insurance industry.
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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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HOW LONG CAN THE GOOD TIMES LAST IN TEXAS; INSURANCE, TEXAS AND THE ECONOMIC STORM
Robert Hartwig. Insurance Information Institute. July 17, 2008. 175 pages
This PowerPoint report, presented by Robert Hartwig, president of the Insurance Information Institute, at the Mid Year Property & Casualty Insurance Symposium hosted by the Insurance Council of Texas, focuses on the conditions in the Texas and U.S. insurance markets. Individual sections focus on the insurance repercussions of the weakening economy; property/casualty insurance industry profitability; underwriting performance; reinsurance markets; premium growth; capacity and policyholders’ surplus; mergers and acquisitions; and financial strength and ratings. The presentation also provides a focus on Texas, with a comparative analysis of the state’s profitability and a review of catastrophe risk there. The report concludes with a look at major challenges facing the industry and at the impact of Presidential politics on insurance industry profitability. The presentation can be accessed on the I.I.I. Web site at http://www.iii.org/media/industry/outlooks/texas/.
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MEGAFIRES: THE CASE FOR MITIGATION
Institute for Business and Home Safety, 4775 E. Fowler Avenue, Tampa, FL 33617 http://www.disastersafety.org/ July 23, 2008 48 pages
The Institute for Business & Home Safety (IBHS) has released the findings of its comprehensive research into the Witch Creek Wildfire, which damaged or destroyed nearly 1,700 structures in San Diego County in 2007, causing $1 billion in insured losses. IBHS evaluated nearly 3,000 homes to determine why some survived and others did not, despite facing similar wildfire conditions. The study also analyzed meteorological conditions, vegetation and topography, building characteristics and social attitudes. IBHS found that homes situated less than 15 feet apart are at high risk. While homes adjacent to wildlands are most vulnerable, homes in the interior areas of neighborhoods that were located less than 15 feet apart were much more likely to burn in clusters. Wind-blown embers caused the most damage to homes during this wildfire. There were few, if any, reports of homes burned as a result of direct contact with flames. To read the full research report, watch the wildfire re-enactment video or download the resulting wildfire home assessment checklist and retrofit guide, visit the IBHS Web site at http://www.DisasterSafety.org/megafire
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PANDEMIC: IS IT INEVITABLE? LEXINGTON INSURANCE COMPANY
Lexington Insurance, Boston, MA http://www.lexingtoninsurance.com July 2008
Recent events have brought the threat of pandemics to the forefront. This podcast features Dr. Eric Toner, Senior Associate with the Center for Biosecurity of the University of Pittsburgh Medical Center, and Dr. Steven Weisbart, Vice President and Chief Economist for the Insurance Information Institute. The discussion focuses on science, as well as the possible social and economic
impacts of a pandemic outbreak. The podcasts are posted on the Web http://www.lexcasts.com
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CLASS ACTION TRENDS 2008
NERA, One Main Street, 5th Floor Cambridge, Massachusetts 02142 http://www.nera.com. July 2008. 16 pages
A new study by NERA Economic Consulting, a part of the Oliver Wyman Group, a unit of Marsh & McLennan Cos., found that filings of shareholder class actions have increased primarily because of the subprime mortgage and credit crisis. The study found that filings of lawsuits seeking class action status increased in the first half of the year at a rate that could bring the total for 2008 to 280, a 42 percent increase compared with 2007. The study found that approximately 51 percent of the filings in the first half this year involve allegations related to the
collapse of subprime loans. The increase will be the largest since 2002. According to NERA, 131 lawsuits sought class certification in 2006. A newsrelease with a link to the study is posted on the Web at http://www.nera.com/publication.asp?p_ID=3544
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CATASTROPHE REINSURANCE REPORT
Guy Carpenter, New York, NY. http://www.guycarp.com July 2008
A new report from Guy Carpenter describes how El Niño-Southern Oscillation (ENSO) is an important predictor of the number of tropical cyclones affecting the western North Pacific and the South China Sea. The report is the second report produced by the Guy Carpenter Asia-Pacific Climate Centre at City University of Hong Kong (GCACIC), launched in June this year. The report is posted on the Web http://www.guycarp.com
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CONNING RESEARCH: PROPERTY CASUALTY FORECAST THROUGH 2010
Conning Research, Hartford, CT. http://www.conningresearch.com July 2008
The financial condition of the property/casualty insurance industry is strong; and, it should be able to withstand the current price deterioration, according to a new Property Casualty Industry Forecast by Conning Research and Consulting. The Conning Research study, “Property Casualty Forecast & Analysis,” identifies the key drivers of the industry and forecasts industry growth and performance for 2007-2010. The study is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707 1177 or by visiting the company's Web site at www.conningresearch.com. A news release is posted at http://www.conning.com/crcstore/Pressreleases/071408.asp
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BABY BOOMER DISABILITY INSURANCE SURVEY
America's Health Insurance Plans, Washington, DC http://www.ahip.com July 2008
A new survey conducted by Harris Interactive on behalf of America's Health Insurance Plans (AHIP) assesses baby
boomers' perceptions about disability income protection. Responses from 3,607 adults aged 18 and older, including
1,182 baby boomers aged 44–62, were analyzed. Results showed 56 percent of baby boomers believe disability insurance is important to protect their income, but only 52 percent have either short-term or long-term disability insurance. Forty-four percent say they have long-term disability insurance provided through their employer or purchased individually, but the U.S. Department of Labor reports only 30 percent of workers in private industry have the coverage. Data show that there are just over three million active individual disability insurance policies, which accounts for only about 2 percent of U.S. workers. With regard to the source of income respondents would rely on if disabled, 25 percent said personal
savings, 15 percent said Social Security disability insurance, 13 percent said private disability insurance and 13 percent said workers compensation. More information and the survey methodology is available at www.yourincomeatrisk.org
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ALIEN REINSURANCE IN THE U.S. MARKET, 2007
Reinsurance Association of America, Washington DC. http:/www.reinsurance.org 2008
A new Reinsurance Association of America study examines foreign participation in the U.S. reinsurance market in 2007. In 2007 total U.S. premium ceded to offshore reinsurers was $58.4 billion,compared to $54.7 billion in 2006, an increase of 6.8 percent. Net recoverables totaled $113.0 billion, a decrease of 1.1 percent from $114.2 billion in 2006. The total premium ceded to unaffiliated offshore reinsurers was $24.6 billion, a 10.7 percent increase compared with $22.2 billion in 2006. The findings are based on based on data from the National Association of Insurance Commissioners. A release highlighting the
the results are posted on the Web at http://www.reinsurance.org/i4a/pages/Index.cfm?pageID=3703
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