Extreme weather and other climate-related hazards.
And now, zombies.
Swiss Re’s chief economist this week said failures of hundreds of “zombie companies” over the next few years are among the concerns prompting insurers to reduce risk and charge higher premiums – a trend that is likely to continue as corporate failures increase.
Zombies – companies that lack the cash flow to cover the cost of their debt – are “a ticking time bomb” whose effects will be felt as governments and central banks withdraw measures that have helped keep these companies alive during the pandemic, Jerome Haegeli told Reuters.
The sobering prediction comes as stock prices hit records and the U.S. economy appears headed for 6.5 percent growth this year. Haegeli said these strengths are illusory because they’re based on temporary fiscal and monetary support.
Insurers are being cautious: reining in underwriting risk, being more prudent about investment allocations, and even taking precautions on insuring operations and supply-chain risk.
“They are not getting fooled by the short-term picture,” Haegeli said. “If you look at the market today, everything looks great. However, it’s illusionary to think that this environment can last” as “life support” is withdrawn in coming months. And that, he said, will bring an increase in long-overdue bankruptcies.
It’s tempting to presume that, as the pandemic-driven aspects of the economic crisis are brought under control, recovery will proceed apace. After all, the economy was doing fine before the pandemic hit, right?
But in September the Bank for International Settlements (BIS) pointed to a “pre-pandemic increase in the number of persistently unprofitable firms, so-called ‘zombies’, which are particularly vulnerable to economic downturns.”
Before the pandemic, the BIS said, about 20 percent of listed firms in the United States and United Kingdom were zombies and 30 percent in Australia and Canada. By comparison, zombies constituted about 15 percent of listed companies in 14 advanced economies in 2017 and 4 percent before the 2008 financial crisis.
Absent any reason to believe these companies’ situations substantially improved during the pandemic or that the contagion didn’t spawn more zombies, the expectation of more corporate collapses seems reasonable.
Add to this rising losses due to hurricanes, severe convective storms, and wildfires; the threat of sea level rise; and the growing reality business and government disruption from cybercrime, and the likelihood of increasing premiums and reduced coverage limits seems strong.
By Marielle Rodriguez, Social Media and Brand Design Coordinator, Triple-I
To celebrate Asian American and Pacific Islander (AAPI) Heritage Month, we spoke with Joann Wang, Co-Founder and Director of Operations of East Side Stories (ESS), a NYC-based non-profit organization dedicated to sharing the AAPI experience through film, media, and education. ESS brings together local talent, AAPI creatives and filmmakers, AAPI-owned businesses, and other community organizations to create meaningful storytelling and conversations around the AAPI experience.
We spoke to Wang on what inspired her to found ESS, how her crew prepares for pandemic-related liabilities on a film set, and the dogged resilience and solidarity of AAPI small businesses and their supporting communities.
Joann Wang
Let’s talk about your background. What inspired you to found East Side Stories (ESS)?
I’m Taiwanese-Mongolian, and I’m a full-time school counselor and a part-time vocational counselor. Shane, our freelance filmmaker, and I started ESS as a passion project. We started doing our “Stories From the Heart” series and interviewing more than 50 Asian Americans on love and what it means to them. We met tons of great people during that project which was back in February 2020. Shortly after, a lot of the hate crimes against Asian Americans really sparked. We saw so many people who were really upset wanting to do something about it. During that time, because of COVID, we had not done anything with ESS. It was still just a YouTube channel.
We had decided to make ESS into a nonprofit organization because we felt that it would be a great way for people to channel their energies and what they want to do to tell Asian American and Pacific Islander stories. You can’t always rally or protest, but you can channel your feelings into a creative project and create something more meaningful, and we figured a nonprofit would be the best way for people to do this.
What is the mission of East Side Stories? What do you hope to achieve and inspire in others through your organization’s work?
ESS’ mission is to serve our creatives and to serve our community through education and storytelling. We hope that ESS is not only going to be a platform where we can spread education and information about being Asian American and Pacific Islander, but that it could be a meeting point for creatives to learn and share information and resources, and to connect with the community. A lot of businesses we see are not able to market themselves, so that’s where ESS would love to step in — “Let’s help you create a fun video to market your business. Let’s tell your story because you’re someone that’s doing amazing work for the community.”
What are some liabilities to think about when working on a film set and working in media production? How do you prepare for these liabilities for your crew and your organization?
We must make sure that our crew members are safe especially because of COVID liabilities, health liabilities, and any type of commercial liabilities. ESS currently operates as a volunteer-based organization so we’re all very bare bones right now. We’ve been using a lot of liability waivers to cover for ESS, but we hope to have more substantial compliance documents in place in the future.
Our Health and Safety Compliance Officer, Tori Wong, is a nurse foremost, and she’s an actress who works in media a lot and is a COVID compliance officer for other big sets. We worked together and created the health and safety protocols, so we follow a lot of what is recommended for standard businesses. For every single shoot that we have, crew members must check in with somebody on set that does COVID compliance. We have COVID compliance officers that go through training. Everyone must wear masks and do temperature checks, and there are particular zones that both talent and crew must stay in.
I know nonprofit insurance and liability is big, but because our organization is so young, and this is all our first time making a nonprofit, it’s been a lot of reading and learning. Taking a stab at the insurance part hasn’t come up yet, but I know it’s coming. We’re still in the process of getting our foundation set up, and then slowly rolling all the compliance into place.
2020 has been a rough year for small business owners, especially those in the Asian American community. Through your encounters and conversations with small business owners and other non-profits, in what ways have AAPI small businesses and the AAPI community demonstrated resilience and solidarity during the pandemic?
We’ve already collaborated with so many organizations and met so many people, and they’re all doing amazing work and bringing together businesses, for example, Welcome to Chinatown, Soar Over Hate, and Asians Fighting Injustice.
AAPI businesses have a fight in them and a huge will to live. That is why we’ve survived for so long, and ESS just wants to capture that. If we don’t amplify what everyone has been doing, people aren’t going to be able to see all the amazing work being done. It will inspire even more organizations to pop up.
Also, no one is afraid to share resources. I can message one organization and say, “Hey, I am trying to connect with someone with an organization who can do XYZ” and they will automatically help me get in touch with them. No one is gatekeeping, and that’s beautiful. That’s what community is about.
Let’s talk about ESS’ upcoming short film “An Essential Delivery”. How does this film capture the challenges and resilience of those working in AAPI small businesses and the gig economy?
This story is about a young woman who lost her marketing job and has to pick up a job as a food delivery worker, and she hides it from her mom, which is not the typical “model minority” story. The film is about essential workers. Shane was the one who came up with the idea after seeing videos of food delivery workers and their hardships. We put together a crew, and for a lot of them it was their first time working on a short. I saw people coming together, and I was blown away by the patience they had and in teaching the newer work crew members. We did it on a very small budget because all the people donated their time. We had around five restaurants that donated their space for us to shoot “An Essential Delivery,” so that was amazing because they didn’t even ask anything back from us.
Let’s talk about your TogethernESS program and your AAPI Community digital series. These provide an opportunity to engage and collaborate with AAPI businesses, organizations, and figures to share their stories. Can you give us insight on the work you do for these?
The TogethernESS program is something that we’re doing for the community. Organizations reach out to us when they want to create something, like a video or graphics, or attain any type of creative service. We can provide them with our nonprofit rate, or we work on a sliding scale with them. We’re still trying to build in a model where we can perhaps provide pro bono. We also want to be able to pay our creatives for their hard work. The TogethernESS program also includes work that we do with Soar Over Hate for their Care Fair event and Asians Fighting Injustice and their rallies. It’s been great so far.
The AAPI Community digital series lives on our YouTube channel. That series is focused on profiles of community members and organizations. When someone on our team has a particular person that they want to do a profile on and it aligns with our mission, we go and cover their story.
What are your goals for ESS in 2021 and beyond? What projects do you have in the works and is there anything you’re particularly excited to share with your audiences?
This year, we’re doing a feature length film documentary on Ace Watanasuparp, the owner of Spot Dessert Bar. Typically, our schedule is three short films a year, and we’re also launching our mentorship program. These are things I’m really excited about for 2022. This year we’ve been shooting a lot of the feature length film, and it’s been really cool to see and connect with all these awesome people. Other than that, just watching the organization grow and seeing and meeting people has been nice and heartwarming.
This weekend’s ransomware attack that forced the closure of the largest U.S. fuel pipeline provides another powerful illustration of the need for a resilience mindset that applies to more than just natural catastrophes.
Colonial Pipeline Co. operates a 5,500-mile system that transports fuel from refineries in the Gulf of Mexico to the New York metropolitan area. It said it learned Friday that it was the victim of the attack and “took certain systems offline to contain the threat, which has temporarily halted all pipeline operations.”
Individually, the event demonstrates the threat cybercriminals pose to the aging energy infrastructure that keeps the nation moving. More frighteningly, though, it is yet another example of how vulnerable the complex, interconnected global supply chain is to disruptions of all kinds – a message that isn’t lost on risk managers and insurers.
The DHS described the attack on an unnamed pipeline operator that halted operations for two days. Although staff didn’t lose control of operations, the alert said the company didn’t have a plan in place for responding to a cyberattack.
“This incident is just the latest example of the risk ransomware and other cyber threats can pose to industrial control systems, and of the importance of implementing cybersecurity measures to guard against this risk,” a CISA spokesperson said at the time.
Not just energy companies
It isn’t only energy and industrial companies that need to be paying attention. According to cyber security firm VMware, attacks against the global financial sector increased 238 percent from the beginning of February 2020 to the end of April, with some 80 percent of institutions reporting an increase in attacks.
“Cyber is an existential issue for financial institutions, which is why they invest heavily in cyber security,” says Thomas Kang, Head of Cyber, Tech and Media, North America at Allianz Global Corporate & Specialty (AGCS). “However, with such potentially high rewards, cybercriminals will also invest time and money into attacking them.”
He pointed to two malware campaigns – known as Carbanak and Cobalt – that targeted over 100 financial institutions in more than 40 countries over five years, stealing over $1 billion.
An ACGS report shows technical failures and human error are the most frequent generators of cyber claims, but the financial impact of these is limited:
“Losses resulting from the external manipulation of computers, such as distributed denial of service attacks (DDoS) or phishing and malware/ ransomware campaigns, account for the significant majority of the value of claims analyzed across all industry sectors (not just involving financial services companies).”
According to the report, regulators have turned their attention to cyber resilience and business continuity.
“Following a number of major outages at banks and payment processing companies, regulators have begun drafting business continuity requirements in a bid to bolster resilience.”
Not just cyber
The COVID-19 pandemic has taught the world a lot of lessons, not the least of which is how vulnerable the global supply chain – from toilet paper to semiconductors – is to unexpected disruptions. Demand for chlorine increased during 2020 as more people used their pools while stuck at home under social distancing orders and homeowners also began building pools at a faster rate, adding to the additional demand. Such disruptions can ripple through the economy in different directions.
Business interruption claims and litigation have been a significant feature of the pandemic for property and casualty insurers.
When the container ship Ever Given got wedged in the Suez canal – one of the most important arteries in global trade – freight traffic was completely blocked for six days. Even as movement resumed, terminals experienced congestion and the severe drop in vessel arrival and container discharge in major terminals aggravated existing shortages of empty containers available for exports. The ship’s owners and the Egyptian government remain locked in negotiations over compensation for the disruption, and the ship is still impounded.
Spurred in part by this event, the Japanese shipping community is considering alternative freight routes to Europe, both reliant on Russia: the Trans-Siberian Railway and the Northern Sea Route. Neither option is devoid of risks.
In an increasingly interconnected world, there is no bright line distinguishing man-made from natural disasters. After all, the Ever Given grounding was caused, at least in part, by a sandstorm. April’s power and water disruptions that left dozens of Texans dead and could end up being the costliest disaster in state history were initiated by a severe winter storm.
A resilience mindset focused on pre-emptive mitigation and rapid recovery is called for in both cases. There is no “either/or.”
The future looks brighter every day for the cannabis industry.
From recent findings that cannabis components may lead to treatment or even prevention of coronavirus infection in lung cells to yesterday’s vote by the House of Representatives in favor of the Safe Banking Act, barricades to full legalization just keep falling.
This isn’t the first time the act – which would protect banks from federal penalties for doing business with cannabis-related businesses that comply with state laws – has made it through the House. It was first introduced in March 2019, and the House has approved it three times, only to have the Senate Banking Committee block its progress. But with the current Democrat majority, apparent bipartisan support, and growing public and state-government support for cannabis legalization, the fourth time just might be the charm.
The Drug Enforcement Agency characterizes cannabis as a Schedule I drug, defined as having “no currently accepted medical use and a high potential for abuse.” Without legislative change, banks and insurers can’t do business with business without risking running afoul of federal drug laws.
“There’s more optimism now and an assumption that they’re going to work to pass some of these bills that have been in motion for a while now, but never hit the point of actually moving forward,” said Max Meade, cannabis insurance advisor at Brown & Brown Insurance. “I’m also seeing more conversations around working to bundle some of these bills that they’ve been talking about and do a larger cannabis reform.”
As states continue to decriminalize marijuana to different degrees, one of the biggest issues facing cannabis businesses is the 280E federal tax burden, which means cannabis businesses can’t expense the normal cost of goods or anything a normal business can during the course of operation, from utilities to payroll and rent. This means marijuana businesses often pay federal income tax rates in the 65–75 percent range, compared to 15-30 percent for other businesses. They are taxed on their gross revenues, unlike all regular businesses, which pay tax only on income after their expenses.
The Small Business Tax Equity Act would provide an exception into the Internal Revenue Code to let cannabis operators – as long as they’re in compliance with state laws – make the same deductions as any other business.
Easier to operate
Passage of these laws would make it easier for cannabis-related businesses to operate. The CLAIM Act would let these businesses obtain insurance to cover the same risks of theft, damage, injury, loss, and liability as all other businesses.
“There are upwards of 30 surplus lines carriers and several managing general underwriters that currently service the cannabis industry across many lines of coverage,” the National Law Review reports. “There also is a small handful of admitted carriers that operate in California, and most recently in Arizona.”
While market capacity for property, commercial general liability, product liability and workers’ compensation coverage has expanded – these policies remain more expensive than the same coverage purchased by similar companies in other industries. Passage of the CLAIM Act would open the doors for more insurers and should bring the cost of insuring marijuana-related businesses much less expensive.
THC persistence a challenge
But challenges will remain – particularly with respect to the workplace. When marijuana was illegal under both state and federal law, employers would typically prohibit employees or employment candidates from using marijuana off-duty as a condition of employment. But as states have begun to permit medical marijuana, things have gotten a bit hazier.
No state requires companies to accommodate on-duty marijuana use. As with recreational marijuana, no state that permits medical marijuana requires employers to accommodate on-duty marijuana use, possession, or impairment. States will often explicitly state that medical marijuana laws don’t affect an employer’s drug-free workplace policy.
Does workers compensation cover a workplace accident in which the injured employee tested positive for marijuana? Persistence of THC – the main psychoactive compound in marijuana – complicates this question, and state courts have differed on this issue, depending on the individual details of each case.
THC persistence also complicates issues around impaired driving.
By Loretta Worters, Vice President, Media Relations, Triple-I
(Photo by Mahmoud Khaled/Getty Images)
When mega containership Ever Given wedged herself across a one-way section of the Suez Canal during a sandstorm last month, it brought 10 percent of global trade to a halt for a week. The ship – owned by Taiwanese container transportation and shipping company Evergreen Marine Corp. – was finally refloated and traffic in the canal was able to resume.
A Risk & Insurance cover story, published by Triple-I sister organization Risk & Insurance Group (RIG), describes how – in the context of a trend toward larger container vessels and a global supply chain already disrupted by COVID-19 – this incident should serve as a wake-up call for insurers.
Looking at the Ever Given grounding and disruption of canal traffic from a marine insurance perspective, RIG author Gregory DL Morris highlights the impact on cargo insurance claims and the potential for cargo spoilage. He also discusses compromised maneuverability of these massive vessels in high winds and references an increasing number of on-board fires, challenges surrounding salvage, and lack of suitable repair facilities, noting, “Underwriters need to be aware of this.”
Despite the likelihood that immediate property loss in this case will be minimal, megaships pose serious challenges to marine insurance and risk management. According to MDS Transmodal, a transport and logistics research firm, average vessels capacity grew 25 percent between 2014 and 2018, with ultra-large containerships accounting for 31 percent of the total capacity deployed in the second quarter of 2018. Transmodal attributes this trend to industry consolidation through mergers and acquisitions, as well as growing trade lane co-operation through alliances, slot sharing, and vessel-sharing agreements.
Even as traffic through the canal resumes, terminals will experience congestion. In addition, the severe drop in vessel arrival and container discharge in major terminals will aggravate existing shortages of empty containers available for exports. Delays in shipments, increased costs, and product shortages are therefore likely.
“The fact is that an already heavily disrupted maritime supply chain has taken another hit that will further affect its fluidity, with long-term consequences related to congestions, lead times and predictability,” said Jens Roemer, chair of the Sea Transport Working Group of the International Federation of Freight Forwarders.
While traffic through the canal is now moving, the global supply chain’s vulnerabilities may only now be beginning to become clear.
“Whether a blizzard in Texas or a sandstorm in Egypt,” Morris writes, “the narrow focus on minimal inventories that rely upon just-in-time delivery leaves little allowance for weather or accident.”
A captive insurance company is a type of risk-management arrangement that essentially works like self-insurance. While “single-parent” captives are financially possible only for large, well-capitalized companies, associations or groups of companies may band together to form a captive to provide insurance coverage. Professionals such as doctors, lawyers and accountants have formed many captives.
A new paper, written by Dr. Patricia Born, Midyette Eminent Scholar of Insurance at Florida State University and Triple-I Non-Resident Scholar, discusses the considerations for these companies from a financial cost and benefit perspective.
The paper, A Comprehensive Evaluation of the Member-Owned Group Captive Option,explains how mid-sized companies seeking to lower their insurance costs and control other aspects of their insurance program might consider the costs and benefits of group captive insurance arrangements.
The paper outlines the numerous benefits of group captive membership, including greater control over risk management concerns and lower costs of insurance. It includes information on the types of companies that use member-owned group captives; the various types of captive arrangements; how they are currently used; where they are located; and legal and regulatory compliance concerns. It also offers several case studies.
“While captives can allow companies a means for managing risks that cannot be placed with commercial insurers, the risks that are reasonably retained by companies in captives have some distinctive characteristics,” the paper notes. For example, the frequency and severity of losses for risks transferred to the captive should be well understood by the company. Also, a company should have adequate experience with the risk to fully appreciate the actuarially estimated expected losses associated with the exposure. The expected losses should also not be catastrophic in nature. Since these losses are infrequent, they can be more effectively pooled by an insurer who has more capacity and more opportunities to diversify its risks.
“Group captives have become an attractive risk management option for a growing number and type of companies,” the paper concludes. “The current hardening in the traditional insurance market makes captives even more enticing and suggests the captive industry will see more growth in the form of new captive formations and increasing group captive membership.” A hard market, known in the insurance industry as a seller’s market, describes situations when insurance is expensive and in short supply.
Public discussion about re-opening the economy after COVID-19 has mostly revolved around the safety, efficacy, and availability of various vaccines. But in the longer term, other measures and new technologies will be key to getting back to normal and being prepared for future public health emergencies.
Tomer Mann, executive vice president of business development for 22 Miles, discussed his company’s “digital experience platform,” which incorporates temperature-scanning technology, touchless kiosks, virtual concierge, and other applications to provide social distance among customers and employees and early warning of possible infection in business settings.
“In March, when we were seeing a lot of the temperature-scanning solutions coming out of China, we realized we could leverage our software to pivot and create a more secure solution, avoiding some of the sensors that are coming out of China that are blacklisted in the trade market and avoiding some of the data breach implications,” Mann said.
22 Miles’ “workplace workflow” starts at a building’s lobby, using facemask and temperature detection and including badge integration and access control for employees and guests. For companies using shared workspaces, the system tracks what spaces are being used to facilitate sanitization between uses. To minimize physical contact while maximizing interactivity, the system’s components can be activated using voice, gesture, or mobile device.
In addition to facilitating safe, hygienic use of these spaces, the system captures large amounts of data that can provide warnings of possible infections and inform modifications to the workflow.
Scrubbing the air
Santiago Mendoza, senior vice president with Integrated Viral Protection, spoke about his company’s indoor air protection system, which has been shown to capture and destroy coronavirus at a 99-plus percentage rate. The system has shown similar results when tested with anthrax spores and other airborne pathogens.
Heating, ventilation, and air conditioning (HVAC) systems are “super spreaders” of coronavirus and other pathogens, Mendoza said, adding that most filter systems only catch and don’t kill them.
“Our system heats up to almost 400 degrees Fahrenheit and destroys the pathogens,” he said.
The IVP system is available for commercial and residential uses and has been installed in hospitality venues, health facilities, and schools across the United States, Mendoza said. It comes in multiple sizes, including a personal unit for travelers to use in hotel rooms and other closed spaces.
Early warning in water
Jennings Heussner, business development manager for BioBot Analytics, a wastewater epidemiology company, explained how BioBot went from testing for opioids to tracking coronavirus.
“We analyze wastewater coming into treatment plants for human health markers,” Heussner said. The company originally was focused on the opioid epidemic, helping communities better understand the nature of their local opioid problems to better inform their public health response.
When the pandemic hit, BioBot expanded its focus and became the first company in the United States to identify the presence of the virus in wastewater.
Leveraging existing wastewater sampling processes, BioBot analyzes the sample and reports back within one business day after receiving it, providing a quick, inexpensive, comprehensive early warning system.
Ready and resilient
Such technologies will be essential parts of building a pandemic-ready and resilient society. Anticipating and addressing outbreaks early can help alleviate health-related and business-interruption concerns and head off insurance claims.
Just as the insurance industry played a vital role in improving vehicle safety, infrastructure, building codes, and more, insurers and risk managers – partnering with policymakers, businesses, homeowners, and others – will help determine which of these emerging solutions will endure.
CISA urges ALL organizations across ALL sectors to follow guidance to address the widespread domestic and international exploitation of Microsoft Exchange Server product vulnerabilities; see CISA’s newly released web page for details. https://t.co/VwYqAKKUt6. #Cyber#InfoSec
The alarm about the ongoing hack of Microsoft Exchange Server, which began as early as January, appears quite justified. Microsoft believes a state-sponsored Chinese group called Hafnium orchestrated the attack that exploited flaws in Exchange software to gain access to email accounts and install unauthorized software, gaining full control of affected systems.
Hafnium primarily targets entities in the United States across a number of industry sectors, including infectious disease researchers, law firms, higher education institutions, defense contractors, policy think tanks and NGOs, according to Microsoft.
In a tweet, the United States Cybersecurity and Infrastructure Security Agency (CISA) urged “ALL organizations” across “ALL sectors” to follow its guidance to address the email software’s vulnerabilities.
The number of U.S.-based organizations affected is estimated to be at least 30,000, while worldwide that number is close to 100,000. The vulnerability can be exploited to compromise networks, steal information, encrypt data for ransom, or even execute a destructive attack. CISA advises business leaders at all organizations to ask IT personnel to immediately address this incident or get third-party IT support.
A Hafnium attack should trigger any cyber insurance an organization has in place, according to Lockton, an insurance broker. Lockton recommends that organizations contact their insurer only if they discover that the vulnerabilities being exploited are present in the system. If an attack is underway, it should be reported to cyber insurers immediately.
Social inflation – increasing insurance claims costs related to legislative and litigation trends – may be spreading beyond the United States, attendees were told at a webinar with the Greenberg School of Risk Management of St. John’s Tobin College of Business.
The webinar, held on February 10, was aimed to help lawyers and claims professionals understand the phenomenon, which is characterized by claims costs rising faster than general economic inflation can explain.
Annette Hofmann, Ph.D., professor of actuarial science at the Maurice R. Greenberg School of Risk Management, Insurance and Actuarial Science, pointed out that “though it is largely a U.S. issue, there are signs of social inflation in other countries with potential for further international contagion, albeit not to the same degree as in the U.S.”
She added that the impact of social inflation in the U.S. has been most evident in commercial auto liability insurance.
“Litigation finance, societal attitudes toward corporations and large jury payouts are all behind the phenomenon,” according to James Lynch, Chief Actuary of Triple-I and one of the presenters.
In his presentation, Lynch showed how incurred losses in commercial auto liability have been climbing steeply since 2010.
Lynch said Triple-I studied the link between social inflation and trends in actuarial data (rising loss development factors) by focusing on long-tailed liability lines including Commercial Auto, Medical Malpractice and Other Liability.
He said actuaries look at the pattern of reported losses – the sum of claims experts’ estimates of every known loss. Even if the ultimate amount of claims rises or falls from year to year, the pattern of emergence should stay the same. That hypothesis is at the core of standard actuarial practices.
In this case, it is increasing.
One interesting offshoot of this work is that actuaries can also predict how much in losses will be reported in any 12-month period. The chart on the right shows how actuaries analyzing countrywide data have not been able to do this in commercial auto. And this is not just happening in auto, medical malpractice occurrence, and other liability are seeing the same effect.
Lynch went on to discuss some of the potential reasons behind large jury payouts. One explanation is the darker view of life that people have. Confidence in government has plummeted, incomes and life expectancy have declined, and Google Trends indicates that searches for the word “dystopia” have increased by over 400 percent from 2005 to 2020.
In the meantime, Lynch and another presenter, Julie Campanini of Magna Legal Services, noted that huge amounts of money have been normalized by billion-dollar lottery jackpots, sky-high celebrity net-worth, and news reports of “nuclear” awards verdicts.
Other speakers included:
Jonathan E. Meer, partner at Wilson Elser, who spoke about the state of tort reform.
Jeff Cordray, a vice president and economist at Christensen Associates, who discussed the importance of determining economic damages, particularly when there is a potential for punitive damages in a case.
The vast majority of Americans believe COVID-19 relief should come via public policy solutions — and not litigation — according to polling released last week by the American Tort Reform Association (ATRA).
Key takeaways from the poll include:
59% say those harmed by the pandemic should get assistance from policies passed by elected officials, versus just 7% who say they should get payouts from lawsuits;
74% say small businesses affected by COVID-19 should be supported by government grants or loans versus 6% who say lawyers should help small businesses pursue legal claims.
Source: ATRA
More information on the polling results is available on ATRA’s website.
For information on the principles the broader insurance industry has put forth for a government-backed pandemic policy solution, click here
