The trusted source of unique, data-driven insights on insurance to inform and empower consumers. Insurance Information Institute
Corporate Social Responsibility, Insurance Industry

Insurance Industry’s Week of Giving Kicks Off Saturday Across the U.S.

Leave a comment

The Insurance Industry Charitable Foundation (IICF) invites insurance professionals to volunteer for their community nonprofit organizations during the annual Week of Giving (October 10-17, 2020).

With many in-person projects cancelled this year due to the COVID-19 pandemic, the IICF lists many ways to safely make an impact in the communities where we live and work.

Some of the suggested activities include:

AARP Create the Good: Search AARP’s virtual volunteer database here for an opportunity in your community.

American Red Cross 
– Missing Maps Program
– Blood donation

Hire Heroes USA: Help veterans with mock interviews, career coaching remotely.

Homemade PPE Masks: For healthcare workers, homeless programs/shelters, etc. Many opportunities are listed on VolunteerMatch.com.

Smithsonian Institute: volunteer by transcribing historical documents.

Track bird populations and migration patterns. 

Trevor Project: Trevor Chat/TrevorText volunteers are trained to answer chat messages or texts online from young people who are struggling with issues such as coming out, LGBTQ identity, depression, and suicide. 

United Nations: Apply to volunteer with the UN.

UPchieve: Be a virtual Academic Coach to at-risk students.

Virtual Tutoring –Provide tutoring services and support for high school students in statistics and government courses through virtual Microsoft TEAMS and Zoom platforms.

Write letters to Service Members:
– Operation Gratitude 
– A Million Thanks 

Read more about IICF volunteerism during COVID-19 here.

The IICF also provides volunteering opportunities throughout the year. It has hosted the Week of Giving since 1998, generating over 300,000 hours of volunteer service, and contributing $40 million in community grants since its founding in 1994.

Disaster Preparedness

Delta to be 5th Hurricane to Make U.S. Landfall in 2020

Leave a comment

Residents from eastern Texas to the Florida Panhandle should prepare for Hurricane Delta, which is forecast to make landfall in Louisiana on Friday, October 9.

The National Hurricane Center (NHC) warns Delta’s impacts will include destructive winds, torrential rain, life-threatening storm surge, flash flooding, isolated tornadoes and widespread power outages.

Delta may intensify to a Category 3 storm as it approaches the U.S.’s Gulf Coast states. The region will begin to experience the storm’s impacts on Thursday, October 8.

In what has become the second most active Atlantic hurricane season on record with 25 named storms (there were 27 in 2005), Delta will be the fifth hurricane and record-setting 10th tropical cyclone to make landfall in the continental U.S. this year. Previous 2020 landfalls include Hurricanes Hanna, Isaias, Laura and Sally, and Tropical Storms Bertha, Beta, Cristobal, Fay and Marco.

Preparedness tips for Alabama, Florida, Louisiana, Mississippi, and Texas residents who may be impacted by Delta:

  • Review your evacuation plan and, if you have a pet, your pet’s evacuation plan
  • Make sure your hurricane kit includes a minimum seven-day supply of non-perishable food and drinking water (one gallon per person, per day) for all family members and pets, as well as a one-week supply of medications for everyone in your household. Also include COVID-19 safety supplies such as two face coverings per person and hand sanitizer
  • Write down the name and phone number of your insurer and insurance professional and keep this information either in your wallet or purse
  • Purchase emergency supplies, such as batteries and flashlights
  • Prepare your yard by removing all outdoor furniture, lawn items, planters and other materials that could become airborne in high winds
  • Fill your car’s gasoline tank because long gas lines and fuel shortages often follow in areas impacted by a storm

Damage caused by hurricanes and tropical cyclones are covered under different insurance policies. Wind-caused property damage is covered under standard homeowners, renters and business insurance policies. Renters’ insurance covers a renter’s possessions while the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business – resulting from a flood – is generally covered under FEMA National Flood Insurance Program (NFIP) policies, if the homeowner, renter or business has purchased one. A growing number of private insurers also offer flood insurance.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy.

Triple-I has additional hurricane and flood preparedness resources:

Hurricane Season Insurance Checklist
How to Prepare for Hurricane Season
Hurricane Season Insurance Guide
Hurricanes and Windstorm Deductibles
Understanding Your Insurance Deductible
Preparing an Effective Evacuation Plan
Settling Insurance Claims After A Disaster
Facts About Flood Insurance
Recovering from a Flood

Business Insurance, Business Risk, Emerging Risks

COVID-19 & Beyond: Study Highlights Claims Trends

Leave a comment
Coronavirus

Commercial insurance loss estimates related to the COVID-19 pandemic vary widely, with Lloyd’s estimating global claims as high as $107 billion in 2020 and analysts from investment bank Berenberg projecting total claims between $50 billion and $70 billion.

But a new Allianz paper says the unprecedented size of pandemic-related claims is only part of the story. The paper discusses the changes in loss patterns and causes spurred by the pandemic that “may be the prologue to more far-reaching and disruptive changes in years to come.”

Shifting exposures

The pandemic has reduced risk in some areas while heightening it in others. The paper points to “material reductions [in claims] in some lines of property and liability insurance, most notably in the aviation sector.”

Reliance on technology and the shift to homeworking for staff and remote monitoring of industrial facilities make companies more vulnerable to cyber-attacks. Reduced air travel and increased emphasis on hygiene standards could benefit the risk profile of many industries, while changes in production line processes to facilitate social distancing could increase error rates.

According to Allianz, the cost of business interruption not related to COVID-19 fell in many cases as many manufacturers, their customers, and their suppliers either shut down or scaled back operations. On the other hand, COVID-19 containment measures have led to longer disruptions and more costly claims in some cases.

“For example, a fire at a chemical plant in South Korea forced the closure of the facility,” Allianz reports. “Restricted access due to the coronavirus lockdown prolonged the reinstatement period, increasing the overall cost of the standstill.”

The hibernation of some industries, such as aviation, doesn’t mean all loss exposures have equally disappeared, Allianz says. They’ve just changed, creating new risk accumulations: “For example, large parts of the worldwide fleet are grounded in airports, many of which might be exposed to hurricanes, tornados, or hailstorms. The risk of shunting or ground incidents, when large aircraft fleets are parked temporarily, also increases and can result in costly claims.”

Business resumption brings its own risks. Opening factories and restarting production lines are high-stress situations that can involve machinery breakdowns and fires.

Eye on supply chains

Allianz points to “the current rethinking and de-risking of global supply chains to achieve more operational resilience” as a trend to watch.

“Many companies are reviewing their supply chain strategies and evaluating options such as parallel supply chains with more redundancies or some reshoring from low-cost countries back to more developed markets,” Allianz says. “This will have an important impact for insurers, both in terms of generating demand for new protection solutions, as well as new claims scenarios.”

Potential also exists for claims to materialize from long-tail lines, such as directors and officers (D&O) or professional liability, as well as workers’ compensation, if any negligence or failures to adequately protect against the coronavirus outbreak have been perceived.

Insurance Industry

Insurance Organizations Are Often Missing This…

Leave a comment

By John Novaria

A wise insurance executive once told me, “People try to make insurance too complicated.” As a communications professional, that was music to my ears.

Don’t get me wrong. Complexity comes with the territory when your job is protecting assets while balancing the interests of policyholders, regulators and shareholders.

There has to be a counterbalance, and that’s why Triple-I exists: to demystify insurance. It’s a meaningful mission given that everyone has numerous encounters with insurance in their lifetime. A product that is essential – and often required by law – should be understandable and accessible.

Behind every insurance transaction there are trade organizations setting rates, lobbying and advocating for consumers. They’re the backbone of an industry that contributes $630 billion to the GDP, employs 2.8 million people and paid $404 billion in claims last year.

All of this doesn’t magically happen. The insurance industry functions effectively only when everyone’s on the same page. There’s power in partnership. And in order to succeed, these organizations rely on communications to work together. In fact, communicating with impact and immediacy has never been more important. In the current crisis, it’s imperative for unifying people, conveying confidence and ensuring transparency.

Over time, Triple-I has seen an increased demand for PR services from trade associations and professional organizations that have limited communications staff or seek a stronger connection to the industry. To address this need, we developed an agency model and engaged professionals with strong communications and insurance background to steer the effort.

The result is Amplify, a public relations consultancy designed to help insurance industry organizations drive increased awareness of their mission and deepen their industry engagement.

Some of our clients are the American Institute of Marine Underwriters (AIMU), Casualty Actuarial Society (CAS), Lightning Protection Institute (LPI), National Conference of Insurance Guaranty Funds (NCIGF), National Insurance Crime Bureau (NICB) and Workers Compensation Research Institute (WCRI). From coalition building to professional development to research, each plays a vital role and has unique communications challenges. To meet those challenges, Amplify draws from the collective resources of Triple-I and The Institutes, delivering a rare combination of insurance acumen and communications proficiency.

Here’s more on Amplify, and in the coming weeks we’ll be sharing some early client successes. If you want to talk about your organization and its challenges and opportunities, I love to listen.

John Novaria is executive director of Amplify. He can be reached at johnn@iii.org.

Disaster Preparedness

Hurricane Delta takes aim at northern Gulf Coast

Leave a comment

Hurricane Delta is strengthening rapidly as it heads for Cancun, Mexico. It’s expected to reach Louisiana by Saturday morning. If the storm makes U.S. landfall, it will become the 10th named storm to do so this year – a new record.

Louisiana Governor John Bel Edwards warned coastal parishes to prepare for the storm now. “It is common for many people to experience hurricane fatigue during a busy season, but we need everyone to take this threat seriously,” he said.

Other states along the northern Gulf Coast expected to be impacted include Mississippi, Alabama and Florida.

Please click on the links below for Triple-I’s hurricane preparedness guides:

Triple-I’s Mark Friedlander offers hurricane safety tips in the video below.

Business Risk, Cyber Risk, Emerging Risks

Ransomware claims rise in severity since start of pandemic

Leave a comment

During the last week in September, Universal Health Services Inc., one of the largest hospital chains in the United States, began taking some ambulances out of service because of disruptions caused by a ransomware attack. Universal said no patients were harmed, but systems that support medical records, laboratories and pharmacies were taken offline at approximately 250 facilities.

This incident is part of a disturbing trend of healthcare institutions being targeted by ransomware attacks  as the software used by hackers becomes more sophisticated and their attacks broader.

While cyber insurance claims impacted businesses of all types and sizes certain industries, including consumer businesses (retail, hospitality and food), healthcare and financial services were more frequent targets of cyberattacks in the first half of 2020, according to a recent report by Coalition, a provider of cyber insurance.

Overall, ransomware (41 percent), funds transfer loss (27 percent), and business email compromise incidents (19 percent) were the most frequent types of loss—accounting for 87 percent of reported incidents and 84 percent of claims paid in the first half of 2020.

“We’ve seen a sharp increase in ransom demands over the past quarter as threat actors have exploited COVID-19 and changes in company operating procedures. Although the frequency of ransomware claims has decreased by 18 percent from 2019 into the first half of 2020, we’ve observed a dramatic increase in the severity of these attacks,” said the Coalition report.

Since email is the single most targeted point of entry for a hacker, taking a few basic email security measures and implementing an anti-phishing solution would go a long way toward securing your business from criminals.

Coalition reports that, for each claim processed, cyber insurance played a critical role in helping the insured recover operationally. For example, a nonprofit organization providing child and family services grants to other nonprofits was duped into transferring $1.3 million to criminals. Coalition worked with law enforcement and the financial institutions involved to recover the stolen funds.

Catastrophes, Disaster Preparedness, Disaster Resilience, Flood Insurance

Mudslides Often Follow Wildfire; Prepare, Know Insurance Implications

Leave a comment

As wildfires continue to burn in California, Oregon, Colorado, and elsewhere – and people pray for precipitation to help firefighters in their efforts – another threat looms: mudslides.  

Wet weather is in Oregon’s forecast, and the Marion County Sheriff’s Office warned that mudslides and falling trees will be a big concern with so much burned land in the county. Areas that could be seriously affected include Mill City and Gates, where much of the towns have been destroyed by wildfires. 

The sheriff’s office said people need to pay attention to what happens around them and listen to alerts from local authorities. 

“We’re really concerned about as those high winds pick up, some of those coming down and creating more hazards along the roadway, more than we would see in a typical windstorm,” Sgt. Jeremy Landers with the Marion County Sheriff’s Office said.  

He added that it’s important that people have a plan in place in case the weather becomes dangerous. 

Santa Cruz County, Calif., also is preparing for mudslides in the aftermath of the CZU Lighting Complex fire in August. Carolyn Burke, senior civil engineer, said during a special meeting of the Santa Cruz County Board of Supervisors,  “The only effective means of protection” is early warning and evacuation. 

The fire in the Santa Cruz Mountains burned 86,509 acres – and while Cal Fire on September 22 said it was 100% contained, risk remains of fires igniting and the subsequent danger of mudslides when rain comes. Rainy season there has a history of starting from September to November. 

In Colorado, cooler temperatures, rain, and snow have helped suppress the fires that have been  raging across that state. Alaska Incident Management Team Incident Commander Norm McDonald wrote, regarding his team’s work on the Grizzly Creek Fire, “While our assignment ends with the Grizzly Creek Fire at 91% containment, we realize there is still much work to be done and the ramifications of this fire will be long-lived with the potential for mudslides and flooding.”  

For insurance purposes, it’s important to understand the difference between “mudslides” and “mudflow.” 

Mudslides occur when a mass of earth or rock moves downhill, propelled by gravity. They typically don’t contain enough liquid to seep into your home, and they aren’t eligible for flood insurance coverage.  In fact, mudslides are not covered by any policy. 

Mudflow is covered by flood insurance, which is available from FEMA’s National Flood Insurance Program (NFIP) and a growing number of private insurers. Like flood, mudflow is excluded from standard homeowners and business insurance policies—you must buy the coverage separately. 

Business Insurance, Insurance Industry, Regulation

Assessing Financial Support for Businesses During the Pandemic

Leave a comment

On September 29, the American Action Forum (AAF) hosted an event convening experts to discuss the urgency of government-backed financial relief for businesses whose incomes have suffered under the coronavirus pandemic conditions and what challenges lie ahead.
 
Entitled “Assessing Financial Support for Businesses During the Pandemic,” the discussion was centered on the following key topics:

  • The impact and success of the Paycheck Protection Program and the Federal Reserve’s emergency lending programs, particularly the Main Street Lending Program
  • Pandemic business interruption insurance and the potential for a federal pandemic program
  • Protecting businesses from shouldering excessive costs due to the new field of coronavirus litigation

Among the event participants was Insurance Information Institute (Triple-I) CEO Sean Kevelighan. In a discussion with AAF’s Director of Financial Services Policy Thomas Wade, Kevelighan provided an overview of the business interruption (BI) insurance landscape in the context of the pandemic. Key highlights included:

  • Global pandemics are largely uninsurable. “Compared to other covered catastrophes—hurricanes, wildfires, vandalism from civil unrest—a pandemic is not limited to time or geography. What we’re seeing now with COVID-19 is impacting every community, every economy, and all at the same time. And with this, from an industry that relies on the law of large numbers, you simply can’t price risk in a way that would be efficient.”
     
  • Standard business interruption (BI) insurance necessitates direct physical damage. “Beyond the enormity of a pandemic catastrophe, a virus does not cause direct physical damage, which is nearly always needed to trigger a property insurance policy, particularly for businesses insurance and business interruption insurance policies.”
     
  • The lack of a federal system to provide the critical financial relief businesses has created an opportunity for trial attorneys to capitalize on business owners’ desperation. “Sensing [business owners’] desperation, trial attorneys have unfortunately dusted off their playbooks and seized on the opportunity. They’re selling a false sense of hope to consumers; they’re filling court houses with litigation that is attempting to retroactively rewrite contracts by manipulation of language and interpretations.”
     
  • As insurers work to meet promises for policyholders facing covered events such as wildfires, forcing insurers to retroactively cover pandemic-related losses is detrimental to the insurance industry—a backbone of the economy. “The insurance industry is concerned about these misguided and costly attempts—mainly by trial attorneys—to take capital away that we’ve set aside for claims that are actively being paid right now as we are in the midst of extreme seasons of hurricanes and wildfires. We’ve also seen incidents of rioting and civil unrest. To be clear, our own economic analysis at Triple-I shows that any attempt to retroactively pay business interruption claims would put systemic strain on the insurance industry. Notably, this industry was one of the financial services industries that weathered our previous recession well because of how safely we manage our capital. But in this case, it would only take a matter of months to bankrupt the industry.”

More about this discussion and the broader state-of-play for business relief is available from a companion report released by Thomas Wade. For more information on the ongoing business interruption debate, visit fairinsure.org

A recording of the event can be viewed below.

Health & Safety

Is COVID-19 covered by disability insurance?

Leave a comment
Getty Images

Many people are wondering if disability insurance will cover them if they come down with COVID-19. The answer, as is often the case, is a qualified yes.

There are basically three types of disability income insurance: Employer-paid disability insurance, Social Security disability benefits and individual disability income insurance policies.

Short-term disability insurance may cover coronavirus if your illness requires medical quarantine that leaves you unable to complete your work.

For disability coverage to apply “there has to be a medical reason you can’t work” according to Nicholas Mancuso, manager of the disability and advanced planning team at Policygenius. Social quarantines, such as when states mandate that people work from home, do not qualify you for disability benefits.

Some survivors of COVID-19 are reporting lingering symptoms, including fatigue, joint pain, and shortness of breath. These people may be eligible for long-term disability.

“It’s generally more difficult to qualify for long-term disability benefits with the coronavirus because of elimination periods for long-term policies,” said Mancuso.

The elimination period of a disability insurance policy is how long you must be unable to work — for medical reasons — before you can start receiving benefits. Long-term disability policies have elimination periods of at least 90 days.

Employer-paid disability insurance is required in most states, and so is the most common. Most employers provide some short-term sick leave. Many larger employers provide short-term and long-term disability coverage as well, typically with benefits of up to 60 percent of salary lasting from five years to age 65. In some cases, long-term disability insurance is extended for life. Disability benefits from employer paid policies are subject to income tax.

However, individual disability income insurance policies are the best way to ensure adequate income in the event of disability for most workers, even those with some employer-paid coverage. When you buy a private disability income policy, you can expect to replace from 50 percent to 70 percent of income. Insurers won’t replace all your income because they want you to have an incentive to return to work. However, when you pay the premiums yourself, disability benefits are not taxed.

But unfortunately not many people have individual disability income insurance. More than half of U.S. workers forego disability coverage, according to a recent study. And baby boomers, who are more likely to get injured or sick, are even more likely to forego the coverage (7 out of 10).

If you are 40 years old, you have about a 40 percent chance that between now and age 65 you’ll be disabled for 90 days or more for any reason. Injury accounts for 10-15 percent of the reasons why people have long-term disability. Illness is the other 85-90 percent. And if you are disabled for 90 days or more, there is about a 50 percent chance that you’ll continue to be disabled for up to two years, according to Triple-I’s chief economist Dr. Steven Weisbart.

Health & Safety, Workers Compensation

New CDC Numbers Raise Concern for Health, Workers Comp Insurers

Leave a comment
Between June and August, the CDC says, COVID-19 was most prevalent in people between the ages of 20 and 29.

The Centers for Disease Control and Prevention this week provided new data on the spread of COVID-19 that diverges sharply from past reports and is something health and workers  compensation insurance providers will want to incorporate into their claims projections.

In its Morbidity and Mortality Weekly Report, the CDC says that between June and August the virus was most prevalent in people between the ages of 20 and 29, accounting for more than 20 percent of all confirmed cases. It went on to say that “across the southern United States in June 2020, increases in percentage of positive [COVID-19] test results among adults aged 20-39 years preceded increases among those aged ≥60 years” by between four and 15 days.

Most of the workforce

“This has profound implications for claims made against health insurance and workers comp,” says Dr. Steven N. Weisbart, CLU, Triple-I’s senior vice president and chief economist. “Early in the pandemic, COVID-19 was most common among adults age 70 or older – people who are mostly retired. Now, the CDC says, more than 50 percent of confirmed cases during the referenced period were among people between 20 and 49. This is the segment of the population that makes up most of the workforce and tends to have health and life insurance.”

They also are the most mobile portion of the population, more likely than the elderly and infirm to spread the infection to co-workers, friends, and family before they know they have it.

Indicating how significant the shift has been, Weisbart points out that in May the most affected age group was still 80 and older, with a case incidence of 4.04 per 1,000 population. In August the most affected age group was 20-29 (case incidence: 4.17 per 1,000).

“By August,” Weisbart says, “the case incidence of the 80-plus group was down to 2.61 per 1,000.”

Expanded workers comp coverage

The ultimate impact of the pandemic on workers compensation is still not clear. It generally doesn’t cover illnesses like a cold or flu because they can’t be tied to the workplace. Before the pandemic, the National Council on Compensation Insurance (NCCI) says, at least 18 states had policies that presumed firefighters’ and other first responders’ chronic lung or respiratory illnesses are work-related and therefore covered.

Since the pandemic, some states have extended coverage to include health care workers and other essential employees. A common approach is to amend state policy so COVID-19 infections in certain workers are presumed to be work related. This puts the burden on the employer and insurer to prove the infection was not work-related, making it easier for workers to file successful claims.

Latest research and analysis