Pictured left to right: Sampson, McChrystal, Parrillo, Watkins
One of the most interesting parts of I.I.I.’s Joint Industry Forum conference was the CEO Conversations, a panel discussion moderated by David Sampson, President and CEO of American Property Casualty Insurance Association. The panelists were: Sandy Parrillo, President and CEO, Providence Mutual; Hank Watkins, President, Lloyd’s America and four-star General Stanley McChrystal who was also the event’s keynote speaker.
The panel discussed some of the top challenges and opportunities facing the insurance industry today. It’s well known that insurers are concentrating on recruiting new talent, but Sandy Parrillo also pointed out the value of keeping “vintage workers” engaged and helping them adapt to different styles of work. Parrillo also spoke about the need to involve and get buy-in from all levels of employees when rolling out a new product.
Hank Watkins spoke about the insurance gap which poses a significant threat to global prosperity, especially in developing nations such as earthquake-prone Ecuador, as one of the top challenges to our industry. And on the positive side, Watkins gave Jumpstart Recovery’s earthquake coverage as an example of an innovative new product. Jumpstart is a surplus lines insurance broker using Lloyd’s capacity. It offers earthquake insurance in California with payment that’s triggered by an earthquake of a pre-specified intensity without the traditional claims handling process.
General McChrystal brought the conversation back to leadership. He recalled the characteristics of one of the most important leaders in his career – a tough commander who did not have much positive feedback to give when his subordinates did a good job. However, when McCrystal failed at a task, the commander surprised him by saying “I thought you did great!” Being given the freedom to fail means you can try different things and ultimately succeed.
Each year the I.I.I. hosts a conference called the Property/Casualty Joint Industry Forum. This unique event assembles key figures from the business, policymaking and media spheres to explore topics of vital interest to our industry.
This year we were fortunate to have four-star General Stanley McChrystal as keynote speaker. General McChrystal was the commander of Joint Special Operations Command (JSOC) and International Security Assistance Force. He shared crucial lessons on leadership which he acquired while leading the effort against Al Qaeda in Iraq.
Al Qaeda used smartphones and the internet to coordinate attacks; they were “lightning fast and constantly changing.” The elite JSOC was daunted by the terror group; “we were losing” said McChrystal. In order to beat Al Qaeda some of the old rules had to be thrown out, and radical new leadership techniques had to take root. Here are some of the lessons corporate leaders can take away:
Violate the chain of command. Giving everyone in your organization the information you normally only give the C-suite leads to “empowered execution”. In our fast-paced world there is not always time to let everything trickle down a long chain of command.
Give employees the freedom to use their own judgement. “Execute the order, but if the order is wrong, execute the order we should have given you.” Don’t allow “just following procedure” to be an excuse for actions that are wildly inappropriate for the situation.
Think of the role of leader as akin to that of a gardener. A gardener does not grow plants, only plants can do that. Instead, a gardener feeds, weeds and protects the plants thereby allowing them to do what they do best. By enabling the organization you will be sure to see a positive outcome, concluded McChrystal.
The Workers Compensation Research Institute (WCRI) is holding its 35th Annual Issues and Research Conference on February 28th at the Renaissance Phoenix Downtown in Phoenix, AZ. Anyone working to improve workers’ compensation systems or seeking to manage a changing environment would benefit from attending.
Some of the highlights from the conference agenda include:
A keynote address by world-renowned economist Alan Krueger on the future of work, the impact of technology on the economy, and how the opioid epidemic has affected the labor force participation rate
The latest research on opioid prescribing to injured workers
A panel discussion of Washington State’s community-based program that brings together medical providers, employers, and injured workers to help ensure timely, effective, and coordinated services
The challenges and opportunities of telemedicine
A discussion of some of the latest findings and trends seen across WCRI’s core benchmark studies, including WCRI’s 18-State CompScope™ Benchmarks reports, a multistate benchmarking program that measures the performance of a growing number of state workers’ compensation systems
Past attendees have said that the WCRI’s is the one conference that offers an “independent point of view that covers the entire spectrum of works compensation” and that it is “a great place to learn and a great place to network.”
Click here to learn more about the conference agenda or to register.
By Sean Kevelighan, CEO, the Insurance Information Institute
For centuries, the insurance industry has helped communities and individuals rebuild after losses and catastrophes. But as the threats of natural catastrophes grow, the industry is well-positioned to do more than just help rebuild shattered lives. We can help lessen the impacts of natural catastrophes before they even happen. At the I.I.I. we call it “resilience” – stronger homes, better emergency response, better risk management tools.
I am pleased to say that the insurance industry is already leading the way forward in helping to build resilient communities. At this year’s I.I.I. Joint Industry Forum, Mitch Landrieu, former lieutenant governor of Louisiana and two-term mayor of New Orleans, led a townhall discussion on resilience – what it means and how insurance can help.
Landrieu was joined by some of the top insurance experts in this space: Phil Klotzbach, research scientist, Department of Atmospheric Science at Colorado State University and I.I.I. non-resident scholar; John Rollins, FCAS, MAAA, actuary, Milliman; Keith Wolfe, president, U.S. Property & Casualty, Swiss Re; Roy Wright, president and CEO, Insurance Institute for Business & Home Safety; and Rohit Verma, global chief operating officer at Crawford & Company.
Landrieu himself knows a thing or two about the power of resilience. He was on the ground when Hurricane Katrina hit New Orleans and he helped lead the effort to rebuild the city in the aftermath.
I was especially struck by how the storm changed his entire mindset around preparedness and resilience. “It shifted from hoping something bad wasn’t going to happen to expecting it to happen, and to building social and physical resilience and to prepare ourselves, so that if something happens we’re stronger and in a better position to respond.”
Unfortunately, this story is all too common: people often only appreciate the need for resilience after the disaster. The insurance industry can and should change that. Our panelists pointed out several ways insurance can help build community resilience:
Improving catastrophe modeling to identify and quantify exposures to help insurers, policymakers, and consumers make resilience-focused decisions.
Educating consumers to better understand the risks they’re exposed to – and what kind of insurance they need to protect themselves.
Encouraging consumers to invest in mitigation through premium discounts and other incentives.
Working in public/private partnerships with local and state governments for insurance affordability and community mitigation initiatives, including better building codes to create a more resilient built environment.
But there are many hurdles still to overcome.
Mitigation can be expensive for some risks. For example, installing wind-resistant roofs is relatively affordable and easy to do. But elevating already-built houses above flood levels is another story entirely.
Catastrophe models are increasingly viable for some risks (like flood), but not others (like wildfires).
Many consumers are still in the dark about how their insurance works. Take flood: 43 percent of homeowners incorrectly think they’re covered for floods. And only 15 percent of homeowners had flood insurance.
A resilient America won’t be built in a day. But the insurance industry will be a crucial player in making our communities ready – so that when the next hurricane hits, the next wildfire breaks out, or the next earthquake strikes, there is less that needs to be rebuilt and more people whose lives and livelihoods were saved from destruction.
Everyone wins – insurers, insurance customers, and society – in a more resilient world.
You may have read the recent story featured in the I.I.I. Daily about raccoon damage and homeowners insurance. The gist: raccoons got into a house and caused $80,000 worth of damage. The homeowners were surprised to learn that their insurance wouldn’t cover any of it.
So what’s the deal with animal damage and insurance?
Let’s start with the easy stuff. If your dog Fido rips through your couch or pees all over the wall, you’re out of luck. Standard homeowners policies won’t cover any damage to your house or personal property caused by a pet. And”pet” is a pretty broad term. Doesn’t matter if it’s a Shih Tzu or a Clydesdale horse, pets are any animal you own.
What about animals that aren’t pets, like deer or birds or – God forbid – rats? That’s where things get interesting.
Building damage: You probably aren’t covered for any damage to the building caused by birds, rodents, insects, or vermin. There also probably won’t be coverage for any nesting or infestation. Insurance policies can vary widely, however, so make sure you ask your agent what is and isn’t considered a rodent or vermin (some insurers will say raccoons are vermin, some will say they’re not). The specific details of your policy will determine your coverage.
Damage to the building from other wild animals could be covered, though. If a moose runs through the sliding door to your deck, the damaged door would be covered.
Personal property damage: Unfortunately, your personal property is probably not covered no matter what kind of animal does the damaging. If a moose runs through your sliding door and wreaks havoc on grandma’s china, then you’re covered for damage to the door, but not the china.
Liability: You go to your friend’s house and bring Fido for a dog playdate. Fido then rips through your friend’s couch. Are you covered? Yes. Homeowners liability protection will cover the damage to other people’s property caused by your pets. Just not your property. Friendship saved.
A squirrel chews through the wiring in your car. Fido dents your door chasing after a squirrel. A moose rams your car in a fit of rage, smashing the windshield. (Why do I keep thinking of moose scenarios?)
Does personal auto insurance cover animal damage? Yes, if you have optional comprehensive coverage. If you only have collision coverage, then you’re not covered.
Collision only covers damage when a car overturns or hits another car or object. Comprehensive covers…more or less everything else: damage from falling objects, fire, explosions – and birds and animals.
So if you paid the extra premium for comprehensive coverage (like most Americans do), then you’re covered for damage from chewing squirrels, incautious Fidos, and rampaging moose (meese?).
Doors that can be locked remotely with a smartphone app. Facial recognition cameras that alert you when certain people arrive at your front door. Motion sensors that trigger video recordings when someone steals your Amazon packages.
If we’re being honest, smart home security systems sound extremely creepy to me.
But I understand the sell: smart home security devices can keep people safe and offer peace of mind – did I remember to lock the door? Doesn’t matter, my phone can lock it.
Nothing in this world is perfect, though. Unlike smart home security systems, you can’t use a computer to hack into and unlock a standard deadbolt.
The Insurance Journal recently ran a piece describing yet another experiment where researchers easily hacked into someone’s smart home security system. In one scenario, a researcher hacked into a person’s phone using a coffee shop’s free WiFi. Once inside, he accessed their smart light switch app, and then jumped from there into the smart home’s security devices. Voila, smart door unlocked. All that’s missing is a red carpet to welcome thieves as they waltz in the front door.
This shouldn’t be news. Here’s a video from 2016 of researchers hacking into a smart lock:
Everything is a trade-off. As informed consumers, we can’t assume that a solution to one security problem (forgetting to lock our doors) will solve every other security problem – or that it won’t create new ones (hacking into our front doors). It’s important to weigh the risks and benefits of smart home security, and to conduct due diligence in researching the cybersecurity protections of each system. It’s also important to consider additional protections, like purchasing cybersecurity insurance coverage, just in case.
If that sounds onerous, it’s nothing compared to dealing with a robbed house.
On December 11, 2018 the Insurance Information Institute (I.I.I.) published a report documenting Florida’s assignment of benefits crisis – what the crisis is, how it’s spreading and how it’s costing Florida consumers billions of dollars.
You can download and read the full report, “Florida’s assignment of benefits crisis: runaway litigation is spreading, and consumers are paying the price,” here.
Today we also published PowerPoint slides accompanying the report. We hope the slides will help illustrate the depth and breadth of the abuse. You can download the slides via this link.
An assignment of benefits (AOB) is a contract that allows a third party – a contractor, a medical provider, an auto repair shop – to bill an insurance company directly for repairs or other services done for the policyholder.
The process is innocuous and common throughout the country. But as our report notes, Florida’s unique legal systems richly rewards plaintiff’s attorneys and vendors when they submit inflated bills to insurance companies and then file lawsuits when those bills are disputed.
Not just a few lawsuits. Lots of lawsuits. The numbers are staggering. There were roughly 1,300 AOB lawsuits statewide in 2000. There were more than 79,000 in 2013, and nearly 135,000 through November 9, 2018, a 70 percent increase in just five years.
Inflated claims and massive volumes of lawsuits have the predictable result of driving up insurance companies’ legal costs. Insurers are forced to then pass those costs on to consumers. In the study, we estimate that Florida’s auto and homeowners policyholders have paid about $2.5 billion more for insurance over the past dozen years to cover the increase in legal costs.
That doesn’t even count the billions more in excess claim settlements that are at the heart of the problem.
Many of these inflated bills and lawsuits are driven by a select number of contractors and their attorneys. Florida insurance customers can protect themselves – and their fellow citizens – by being very cautious when signing away their benefits under an AOB.
A friend of mine likes to say that New York City is so expensive that just leaving your apartment will cost you $20. It cost me $100 to leave my apartment the other day – in fines for leaving a piece of furniture by the curb on a day not designated for “bulk trash removal.”
I get it: leaving bulky trash all over the sidewalk for days on end is an antisocial thing to do, especially in a crowded city. I wouldn’t have felt great about myself if a kid had somehow tripped and hurt herself on my discarded garbage.
My landlord could also have landed in legal trouble had that happened. That’s because NYC law makes property owners responsible for keeping sidewalks “reasonably safe” and clear of debris (with some exceptions). “Reasonably safe” also includes shoveling snow and ice – something I’m always grateful for after the occasional NYC blizzard.
New York is not alone. Many jurisdictions across the country put the onus on property owners for maintaining sidewalks, including clearing snow and ice (even if the sidewalks are city property).
If you’re a property owner, it’s important to check your city or homeowner’s association codes to see who is responsible for what. If you rent, you should also check your lease. Some leases make tenants responsible for clearing snow from sidewalks.
Let’s say you do live in a city where you’re responsible for keeping the sidewalk safe. What happens if someone slips and suffers injuries on your sidewalk?
Homeowners insurance could provide some coverage. Depending on the case, there could be coverage for liability and for some medical payments to the injured person. But an insurance company could deny coverage if the homeowner knew about an unsafe sidewalk and did nothing to fix it.
And liability payments can get expensive quickly. That’s why some people will also buy optional “personal umbrella liability coverage,” which has a higher payment cap than standard homeowners.
Renters insurance also provides liability coverage. But whether the tenant or landlord is responsible for a slip and fall on a sidewalk would depend on the terms of the lease and local ordinances.
The upshot is: check if you’re responsible for the sidewalks outside your home. It’s also a good idea to chat with your insurance agent to see if you have the appropriate coverage to protect you from liability costs.
