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INSURANCE DIGEST --DECEMBER 2008
Each month the Insurance Information Institute highlights studies and reports that are of key interest to the insurance industry.
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2009 I.I.I. INSURANCE FACT BOOK
Insurance Information Institute, 110 William Street, New York, NY http://www.iii.org
The Insurance Information Institute’s 2009 Insurance Fact Book is available for sale from the I.I.I. Store for the prepublication price of $38, a 15 percent discount.
The Insurance Fact Book, the almanac of the insurance industry, features thousands of facts, figures, tables and graphs designed for quick and easy reference. The 2009 edition includes a host of new charts to shed light on today’s challenging economic and financial environment, including: Leading writers of mortgage guaranty insurance and financial guaranty insurance; global insurance mergers and acquisitions;new data on causes of homeowners insurance losses; and expanded data on catastrophe bonds. Order the book online at http://www.iii.org/media/publications/
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FRAUD AND BUILDUP ADD EXCESS PAYMENTS TO AUTO INJURY CLAIMS
Insurance Research Council, 718 Providence Road, Malvern, PA 19355-0725. http://www.ircweb.org October 2008
A new study by the Insurance Research Council (IRC) estimates that claim fraud and buildup added between $4.8 billion and $6.8 billion in excess payments to auto injury insurance claims closed with payment in 2007. The excess payments amount to between 13 percent and 18 percent of total payments under the five main private passenger auto injury coverages. Excess payments have increased from 2002, when they were estimated at between $4.3 billion and $5.8 billion, or between 11 and 15 percent of total payments. The percentage of claims that appeared to involve fraud, defined as specific material misrepresentation of the facts of a loss, increased from 9 percent of bodily injury (BI) claims closed with payment in 2002 to 11 percent of closed claims in 2007. The percentage of personal injury protection (PIP) claims with apparent fraud rose slightly, from 5 percent in 2002 to 6 percent in 2007. A news release and ordering information are posted on the Web at http://www.ircweb.org
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AVERAGE AUTO INSURANCE EXPENDITURES BY STATE
National Association of Insurance Commissioners, Kansas City, MO http://www.naic.org November 2008
The average cost of automobile insurance declined by 1.7 percent in 2006, according to a November 2008 report from the National Association of Insurance Commissioners (NAIC). The District of Columbia had the highest average expenditure ($1,164), followed by New Jersey ($1,152), Louisiana ($1,094), New York ($1,083) and Florida ($1,069).
Highlights of the report are posted on the Web at http://www.naic.org/Releases/2008_docs/auto_report.htm
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MALE DRIVERS MORE DANGEROUS SAY SURVEY NUMBERS
Quality Planning, San Francisco, CA http://www.qualityplanning.com November 2008
A study by ISO's Quality Planning division reveal dramatic differences in the number and type of traffic violations received by men versus women. The findings show that women are far more observant of traffic laws than men and that the laws violated more frequently by men are those laws designed to safeguard people and property.Topping the list is the finding that men are cited for reckless driving 3.41 times more than women. For more information, visit http://www.qualityplanning.com
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IMPACT OF EARTHQUAKES ON THE CENTRAL U.S.
FEMA, Washington, DC http://www.fema.gov November 2008
The Federal Emergency Management Agency (FEMA) has released a new study that predicts that should a magnitude 7.7 earthquake erupt along the New Madrid seismic zone six states will suffer extensive casualties and damage to homes, hospitals, roads and utilities. The study, conducted by the Mid America Earthquake Center at the University of Illinois at Urbana Champaign, estimates that if a large quake on the central segment of the fault in Missouri were to hit, that state could see 760 fatalities and $37 billion in total economic loss; if a strong quake were to be centered in Illinois, that state could see 276 fatalities and a $31 billion economic loss;
and if a strong quake were to occur along the segment of the fault in Tennessee, that state could experience 2,904 fatalities and a total economic loss of $56 billion. The study is part of a FEMA initiative to develop catastrophic earthquake disaster plans in eight Midwestern states. A news release with a link to the study is posted on the Web at http://www.fema.gov/news/newsrelease.fema?id=46853
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CONVERGENCE OF INSURANCE AND CAPITAL MARKETS
World Economic Forum, Geneva, Switzerland http://www.weforum.org October 9, 2008
A new report by the World Economic Forum explores the growth of the insurance linked securities market and highlights potential next steps needed to continue its development and to further encourage investors’ strong appetite for catastrophe bonds and other forms of insurance linked products.The full report is posted on the Web at
http://www.weforum.org/pdf/ip/fs/ConvergenceReport.pdf
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INNOVATIVE WAYS OF FINANCING RETIREMENT
Swiss Re, Zurich, Switzerland http://www.swissre.com
Swiss Re’s new sigma study draws on the experience of several countries to highlight innovative solutions that help individuals and companies manage the risks of retirement. The study discusses solutions including annuities, long-term care insurance and reverse mortgages. It also addresses the outsourcing of pension plan risks and the transfer of existing pension liabilities to reinsurers. The study notes how reinsurance and capital market capabilities help companies and insurers provide these solutions. Innovative solutions can benefit individuals, businesses and governments, whose citizens will be better prepared to cope with the uncertain costs of retirement. The full study is posted on the Web at
http://www.swissre.com/resources/0a307a804ba15178ad99fd03bcbf4814-sigma4_2008_e.pdf
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LONG-TERM CARE STUDY
American Association for Long-Term Care Insurance, Westlake Village, CA http://www.aaltci.org/ August 2008
In 2007 the long-term care (LTC) insurance industry paid out $3.5 billion in benefits to individuals, up from $3.3 billion in 2006, according to a survey by the American Association for Long-Term Care Insurance. About 180,000 individuals received benefits, with 43 percent of claims going to home care, 32.9 percent for assisted living and 24.1 percent for nursing home care. The results are based on a survey of 60 insurers, representing about 98 percent of the LTC insurance industry. Alzheimer’s disease was the most common reason for a LTC claim, followed by stroke, arthritis, circulatory issues or injury. The findings are highlighted on the Web at
http://www.aaltci.org/subpages/media_room/story_pages/media080608.html
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