Latest Studies

Haze of confusion: How employers and insurers are affected by a patchwork of state marijuana laws
Lucian McMahon and James Lynch
Insurance Information Institute ;
June 25, 2019

Marijuana legalization continues apace, but many are concerned about how legal marijuana affects workplace safety, employer duties and obligations and workers compensation insurance. More than 30 states, the District of Columbia, Guam and Puerto Rico have programs that allow qualifying patients to access medical marijuana products. Another 13 states permit non-intoxicating medical marijuana products. Eleven states and D.C. permit recreational marijuana, where any adult over the age of 21 can possess and use the drug. This report examines the following questions: How does marijuana intoxication work and how might it impact workplace safety? What accommodations, if any, are employers expected to provide for workers that use marijuana? Does workers compensation insurance provide benefits to injured employees testing positive for marijuana? What about reimbursement to injured workers for medical marijuana? Full report

2019 U.S. auto insurance study
J.D. Power;
June 13, 2019

Auto insurance customer satisfaction has hit a new high as consumers take more control over managing their policies, according to this J.D. Power study. Overall customer satisfaction with carriers rose to a record 831 out of 1,000 points, and 23 percent of customers who use direct distribution models reported the highest overall satisfaction. Customer reliance on agents declined by 33 percent over the last 20 years. Robert Lajdziak, senior consultant for Insurance Intelligence at J.D. Power, said it is becoming more important for insurers to offer “superior digital experiences and easy access to account management features” as customers take greater control of their auto policies. The study is based on responses from 42,759 auto insurance customers from February 2019 through April 2019. News release

Insurance banana skins 2019: The CSFI Survey of the risks facing insurers
Centre for the Study of Financial Innovation and PwC;
June 01, 2019

The seventh Insurance Banana Skins survey published since 2007 is the second in which technological risks and cyber ranked highest among respondents’ concerns, and the first in which these risks were unequivocally the greatest risk. Other risks have not diminished, and the overall level of the industry’s perceived risks is the highest since the first report. The report analyzes 927 responses from 53 nations. The respondents were presented with a three-part questionnaire (which is included in an appendix) asking them to describe their primary concerns about the sector in the next two or three years, to rate a list of potential Banana Skins and then rate the preparedness of insurance institutions to manage the risks they identified. The report includes multiple charts and identifies the three risks that moved up in the rankings this year—regulation, climate change and reputation—and the three that ranked lower this year—interest rates, guaranteed products and social change.  Full report

2019 CoreLogic storm surge report
June 01, 2019

This report is the first to provide an annual evaluation of the number of multifamily residential homes as well as single-family homes in the U.S. vulnerable to storm surge in the Gulf of Mexico and the Atlantic Basin along with their reconstruction cost value (RCV). The report also provides a probabilistic loss analysis of 2018 storm surge events and a pre-season forecast for 2019. The study includes the 19 states with Gulf or Atlantic coastlines and does not cover storms in the Pacific basin, where storm surges are typically less likely to occur and are likely less damaging. The early forecasts for the 2019 hurricane season vary, with Colorado State University predicting near-average activity, Tropical Storm Risk forecasting activity that is slightly less than average and North Carolina State University predicting activity that is slightly above average. The report includes multiple tables and discusses the severe flooding and significant wind damage from Hurricanes Florence and Michael last year. Full report

Insurance markets: Benefits and challenges presented by innovative uses of technology
United States Government Accountability Office (GAO);
June 07, 2019

This report discusses the challenges and potential risks that uses of technologies, including artificial intelligence (AI) and mobile applications, by established insurers and insurtechs (recently established companies bringing technology-enabled innovations to the insurance industry) pose to consumers and regulators. The report shows that as of mid-2018, more than 1,000 insurtech firms were operating in more than 60 nations, and that more than half of these firms have been set up in the U.S. since 2008. The report concluded that insurtech has the potential to improve customer experience and lower company costs but called on insurtech firms to be aware that they must comply with regulations in their data collection and licensing activities. The GAO said that when insurers employ AI to collect and use consumer data in large quantities from a wide variety of sources, including social media, it can be difficult for insurers to validate the data. Although the GAO did not issue any recommendations, the report cited steps taken by the National Association of Insurance Commissioners and state regulators to address these issues. Full text


Safety and shipping review 2019
Allianz SE Global Corporate & Specialty (AGCS);
June 01, 2019

AGCS’s annual study shows that in 2018 large shipping losses fell more than 50 percent, compared with 2017 and to the lowest level during this century. A total of 46 large ships were lost around the world in 2018, compared with 98 in 2017. The significant decline could be attributed to a decline in losses in South East Asia, which is known as a global hotspot, as well as a substantial decline in hurricane and typhoon activity. The study considers reports of all shipping losses of more than 100 gross tons. Despite the very notable and encouraging decline in total losses, the number of reported shipping incidents overall fell by less than 1 percent to 2,698 in 2018. The largest cause of shipping incidents was machinery damage, representing more than one-third of the 26,000 incidents over the last decade; and the second-highest cause was collision. Full text

Early estimate of motor vehicle traffic fatalities in 2018
National Highway Traffic Safety Administration (NHTSA);
June 17, 2019

The NHTSA estimates that 36,750 people died in traffic collisions in the U.S. in 2018, making the year the third-deadliest on the nation’s roads during the last decade. The previous year, the agency recorded 37,133 highway fatalities, a decline of 1 percent in 2018, the second consecutive year in which fewer Americans died on the road. An all-time low of 32,744 was recorded in 2014. From 2009 through 2014, the total number of fatalities did not exceed 34,000. The number of people killed in crashes remains high despite advanced safety systems in new vehicles. Automotive safety experts attribute the stubbornly high risk of being killed on the nation’s roads to such behaviors as drinking, speeding and distraction. NHTSA is scheduled to release official figures and detailed commentary later this year, when the agency will also provide an update on pedestrian safety. The Governors Highway Safety Association estimates that the number of pedestrian deaths in the U.S. rose to a 28-year high of 6,227 in 2018, a 4 percent increase from the previous year. Full text

What’s in a name? Drivers’ perceptions of the use of five SAE Level 2 driving automation systems
Eric Teoh
Insurance Institute for Highway Safety (IIHS);
June 01, 2019

This IIHS study reveals that drivers may have a poor understanding of what advanced driver-assist systems like adaptive cruise control and lane-keeping assistance are able to do, and that the names of these systems are contributing to the confusion. While currently available automated systems can assist the driver with multiple parts of the driving task, the driver must continue to monitor the driving environment and be actively engaged. The IIHS surveyed drivers about behaviors ranging from taking a nap to taking hands off the steering wheel and found that the name “Autopilot” was associated with the highest likelihood that drivers believed a behavior was safe while in operation. A limited proportion of drivers had experience with advanced driver assistance systems: 9 percent to 20 percent of respondents reported having at least one crash avoidance technology such as forward collision warning or lane departure warning, and fewer of these reported driving a vehicle in which Level 2 (the most advanced) systems were available. The IIHS concluded that while a name alone cannot properly instruct drivers on how to use a system, it is a piece of information and must be considered so that drivers are not misled about the correct usage of these systems. The report recommends that manufacturers, suppliers and organizations regulating or evaluating automated driving systems should ensure that systems are named so as not to mislead drivers about their proper use. Full report

Cyber insurers are profitable today but wary of tomorrow's risks
A.M. Best Market Segment Report;
June 17, 2019

The cyber insurance market continued to grow in 2018 and underwriting performance remained strong. Growth was spurred by rising awareness and demand but also by insurers excluding cyber protection from traditional business coverages and offering it separately. Many insurers are adding cyber endorsements to their package policies and business owner’s policies and packaging cyber with technology errors and omissions policies. Direct premiums written for both stand-alone and packaged cyber policies grew about 12 percent in 2018 from $1.8 billion to $2.0 billion. This compares to growth rates of 30 percent in 2016 and 2017. Of the $2.0 billion in premium in 2018, about $1.1 billion was package policies. In 2017, $813 million of the $1.8 billion total was packaged. In 2018, 528 U.S. insurers reported writing cyber insurance, up from 471 in 2017. A.M. Best found that small- and medium-sized enterprises (SMEs) are more likely to buy packaged policies than large firms. In 2018 total claims grew 39 percent from 2017, which A.M. Best regards as further evidence of SMEs buying coverage as SME have fewer cyber protections and are more vulnerable. In 2018, there were more than 12 million first-party claims for costs associated with breach notifications, credit monitoring for customers and business interruption. Attrition losses due to ransomware are becoming increasingly common, according to the report. Direct paid loss and defense and cost containment expenses ratios were below 25  for both standalone and packaged cyber. A.M. Best said it believes cyber loss ratios are low because carriers are pricing with higher loads given the uncertainty surrounding this risk but that could change once more data is gathered. It said it expects that the “current profitability of cyber insurance will attract more competition, which will ultimately pressure profitability.” 

Health Insurance and Outcomes of Injured Workers
Bogdan Savych
Workers Compensation Research Institute (WCRI);
June 11, 2019

This report is of interest to those looking to better understand what recent changes in the health insurance landscape may mean for outcomes that workers experience after their injuries at work. While prior studies focused primarily on understanding whether access to health insurance impacts workers’ incentives to file a claim for workers’ compensation injuries, little is known about the relationship between health insurance and worker outcomes. This report discusses factors important for studying how expanded access to health insurance coverage may alter the outcomes that workers experience after their injuries. It documents changes in health insurance coverage rates of the working population between 2008 and 2017, using information from the American Community Survey (ACS) and then compares characteristics of injured workers with and without health insurance for non-work-related injuries and discusses what the comparison may reveal about the potential role of health insurance. New empirical evidence about relationships between health insurance coverage for non-work-related injuries and many outcomes that workers experience after they are injured at work is presented. The report is available for purchase and is free to WCRI members.

Board Diversity: Strategies to increase representation of women and minorities
Chelsa Gurkin
United States Government Accountability Office (GAO);
June 20, 2019

Diverse boards of directors have been found to be beneficial to the organizations they serve. Research has shown that the broader range of perspectives represented in diverse groups requires individuals to work harder to come to a consensus, which can lead to better decisions. Diverse boards also make good business sense because they may better reflect a company’s employee and customer base and can tap into the skills of a broader talent pool. This statement by Chelsa Gurkin, Acting Director of Education, Workforce, and Income Security, covers factors that limit board diversity including: not prioritizing diversity in recruitment efforts; limitations of the traditional board candidate pipeline; and low turnover of board seats. It offers strategies for increasing diversity including setting targets, expanding the board search beyond CEOs, and evaluating board performance. Full report

An Assessment of Analytical Tools in Product Liability Matters—Perspectives from Economics, Marketing, and Consumer Behaviour
Samid Hussain et al.
Cornerstone Research;
May 01, 2019

The dismissal of a class action against Comcast in 2013 and U.S. case law since then has upped the ante for plaintiffs to establish a causal link between their suppositions of liability and actual harm. In product liability matters, plaintiffs commonly claim that the defendant misrepresented the true characteristics of the products at issue, and therefore plaintiffs either overpaid for the products and/or the purchased products diminished in value following disclosures of the alleged misrepresentations. The authors discuss the strengths and weaknesses of empirical tools typically employed by plaintiffs and defendants in product liability matters. These tools include: Surveys relating to consumer behavior and purchase decisions; Surveys relating to contested marketing communications; Conjoint analyses; Content analysis; and Regression methods. This text was originally published as a chapter in the publication, International Comparative Legal Guide to: Product Liability 2019. Full text