Insurance Articles
P&C Insurers Benefit From Reserve Releases
August 9, 2010
Much like a farmer bringing in his crop in the fall, U.S. property/casualty insurers have harvested significant reserve redundancies, according to a report issued today by Moody's Investors Service, leaving a narrower cushion for the next 12 to 24 months.
The report, "U.S. P&C Insurers Harvest Significant Reserve Redundancy," cites a weak pricing environment as P&C insurers' primary impediment to building reserves at the same pace as recent years.
Moody's says that insurers reported less—though still significant—benefit from reserve releases in their 2009 statutory earnings compared to 2008.
"Though we believe reserves are still redundant as of year-end 2009, we expect that as reserve releases taper off, coupled with lower investment yields, insurers will either raise prices or experience continued pressure on underwriting profitability," says Moody's analyst Enrico Leo, author of the report. "Continued deterioration for 2008 and 2009 accident years is likely to offset benefits received from older accident years, leading to a reduction in total reserve releases over the medium term," notes Leo.
Approximately $10 billion, or 1.9%, of prior year-end reserves was posted in 2009, the report says. Moody's goes on to note that favorable reserve development was seen across most major market sectors and nearly all lines of business. A breakout of the top 50 primary insurance groups illustrates that personal lines reported favorable development of 1.5%, compared to 1.1% in 2008, while diversified carriers reported 2.5% compared to 4% one year ago. Commercial lines insurers experienced less favorable development, reporting just 0.3%, compared to 2% last year.
Reserve releases over the last five years resulted from more favorable conditions of the last hard market, including price increases and improved terms and conditions, favorable loss cost trends and relatively little natural catastrophe activity in 2006 and 2007, Moody's adds.
"As a result, P&C insurers experienced redundancies in their reserves, which contributed to strengthened earnings and capital positions in recent years," Leo says.
© 2010 Insurance Networking News and SourceMedia, Inc. All rights reserved.
Vlingo Launches SafeReader Free Feature for BlackBerry Smartphones Users
March 26, 2010
Vlingo Corporation, maker of the world’s most popular mobile voice application, has introduced SafeReader, a new and free feature that gives users more “hands-free” control of their BlackBerry smartphones and also helps deter driving while texting.
The drivers, through this new feature are provided with a safer and easier way to consume incoming text and email messages. SafeReader prevents the drivers from fumbling to retrieve to read messages while on road, it rather reads the messages aloud to them and help them keep their eyes glued on the road and wheel while driving.
“Although Vlingo does not condone the use of a mobile device while driving, we believe SafeReader provides a safe, hands-free option for receiving must-have messages while on the go,” said Dave Grannan, CEO of Vlingo. “Before getting on the road, simply press a button, speak to the device ‘Start SafeReader,’ and all incoming messages will be delivered audibly, without fail. We believe that any distracted driving is dangerous, but with SafeReader we can ensure that getting incoming texts and emails when driving is no more distracting than listening to the radio. By providing our BlackBerry smartphone users with SafeReader we hope to keep the roads a little safer.”
The concept for SafeReader originated from and developed as a result of Vlingo’s proprietary DWT data research. To examine over 4,800 consumer attitudes and habits nationwide around the topic of DWT, the company each year conducts and publishes the Vlingo Consumer Mobile Messaging Habits Report.
A full 93 percent of consumers, according to initial 2010 results, believe reading or typing a text message while driving is as unsafe as not wearing a seatbelt, yet a quarter of those surveyed admit to having done it in the past. On the other hand, 66 percent are of the opinion that the practice presents one of the biggest distractions drivers face on the road, while most believe it should be illegal.
The Vlingo speech to text technology is already used by the users worldwide to send a text or e-mail message, call a friend, search the web, update their Facebook or Twitter status, use instant messaging, add contacts and calendar entries and more, simply by speaking into their phone.
The newly added features, SafeReader expands upon these extensive features and helps users to experience a more thorough and more reliable hands-free experience.
In related news, Vlingo launched an enhanced version of its popular Vlingo for iPhone App that gives the users the ability to send email and text messages simply by speaking into their iPhone.
Technology Marketing Corp. 1997-2010 Copyright
More cities ban digital billboards
March 24, 2010
As the USA cracks down on texting while driving, more than a dozen cities around the nation have banned what some consider a growing external driving distraction: digital billboards.
Digital billboards change images every four to 10 seconds, flashing multiple messages from one or more advertisers on the same sign. Opponents such as John Regenbogen of Scenic Missouri deride them as "television on a stick."
Several communities have banned digital billboards outright, the most recent being Denver earlier this month. Other places have put a moratorium on them pending a federal study on whether they distract drivers. At least two other cities and two states are studying moratoriums.
"The digital billboards are a distraction," says Fred Wessels, an alderman in St. Louis, which just approved a one-year moratorium on new such signs in that city.
"If they weren't distracting, they wouldn't be doing their job," says Max Ashburn, spokesman for Scenic America, a national non-profit group that seeks to limit billboards.
Research on the issue is mixed. A Virginia Tech Transportation Institute study in 2007, financed by the billboard industry, found that they aren't distracting. A review of studies completed last year for the American Association of State Highway and Transportation Officials, however, concluded that they "attract drivers' eyes away from the road for extended, demonstrably unsafe periods of time."
"There's no doubt in my mind that they are not a driving distraction," says Bryan Parker, an executive vice president for Clear Channel Outdoor, which owns about 400 digital billboards. He cites industry-sponsored studies of collisions before and after digital billboards were installed in Albuquerque, Cleveland, and Rochester, Minn., that found no correlation.
"We've looked at that very carefully," says Bill Ripp, vice president of Lamar Advertising, which owns 159,000 billboards, 1,150 of them digital. "We don't want to cause any unsafe conditions for drivers."
Digital billboards are a fast-growing segment of the outdoor advertising market. Since a federal rule against them was eased in 2007, the number of digital billboards has more than doubled to about 1,800 of 450,000 total billboards. At least 39 states allow them. They cost an average $200,000 to $300,000 apiece, according to the industry group Outdoor Advertising Association of America.
In 2007, the Federal Highway Administration relaxed a rule against digital billboards, saying they don't violate the 1965 Highway Beautification Act's ban on "intermittent," "flashing" or "moving" lights. FHWA is researching the signs, using eye-trackers inside volunteers' vehicles to determine whether drivers look at the billboards and for how long. The study is to be completed this summer.
There is little current data on whether greater distractions for drivers come from in-vehicle or external factors. The Department of Transportation, which is leading the national push against texting while driving, says that 5,870 people were killed in distracted driving crashes in 2008. But the agency has not determined how many of those deaths involved an electronic device, another distraction such as eating or tuning the radio, or something outside the vehicle.
Copyright 2010 USA TODAY, a division of Gannett Co. Inc.
Michigan ballot drive would drop insurance rates 20%
November 11, 2009
Michigan voters could decide whether to reduce automobile, home and business insurance premiums by 20 percent if a proposal qualifies for the 2010 statewide ballot.
The form of a legislative initiative submitted by a group called Fair Affordable Insurance Rates was approved Monday by the Board of State Canvassers. Supporters still must collect more than 304,000 valid voter signatures and clear other procedural hurdles to put the measure on next November's ballot.
"This initiative will lower the cost of insurance for everyone in the state," said Kim Bowman, chief of staff to state Sen. Hansen Clarke, D-Detroit, who is backing the proposal. "Those who aren't insured can afford insurance and those who are paying too much can experience savings."
The insurance industry said the "unrealistic" ballot measure, if approved, would kill jobs because insurers will not do business if they cannot price their policies appropriately.
"A 20 percent rate reduction puts us at risk with regard to solvency," said Pete Kuhnmuench, executive director of the Insurance Institute of Michigan. "How does any business operate with 20 percent less in income when it can't affect the expense side? We still have the obligation to pay those claims."
The state's regulatory insurance commissioner has the power to reject rate increases, though not until after they take effect. Critics say they have turned to the ballot initiative in part because state law has been so weakened, it is nearly impossible for state regulators to influence rates.
Bowman said insurance companies are making "windfall" profits. She said other individuals or groups will be involved with the ballot drive but said she could not disclose them right now. It takes money if supporters decide to hire a firm to gather signatures.
"I don't believe getting signatures will be an issue on this one," Bowman said.
In 2006, Democratic Gov. Jennifer Granholm called for legislation to roll back insurance rates by 20 percent. It went nowhere in a Legislature that was then completely controlled by Republicans.
The ballot proposal would cut insurance premiums for good drivers another 20 percent on top of the original 20 percent rollback. Insurers could no longer base premiums on drivers' credit history, occupation or education. The measure also includes various consumer protections.
Kuhnmuench acknowledged it would be a challenge fighting the proposal should it be on the ballot, though another industry spokesman thought it would not be tough to defeat at all -- arguing the measure as a whole would help drivers in Detroit and other urban areas at the expense of suburban motorists and residents elsewhere in the state.
Michigan's $1,067 average annual auto premium ranks 14th-highest nationally, Kuhnmuench said. A state insurance advocate appointed by Granholm has said the average premium ranks second-highest, however.
It is the only state to require unlimited personal injury protection benefits, which policyholders pay for through a per-vehicle annual fee. The insurance industry has unsuccessfully called for lawmakers to let drivers choose less medical coverage.
Copyright 2009 Associated Press. All rights reserved.
Fewer Cars, More Traffic Fatalities
June 17, 2009
Nearly half of the 1.2 million people killed in traffic accidents around the world each year are not in cars. They are on motorcycles and bicycles or walking along roadsides.
That finding, released in a report yesterday, may help explain why 90 percent of the world's traffic fatalities occur in a group of countries that together have fewer than half of the world's cars.
The country-by-country survey of traffic injuries and deaths was published by the World Health Organization. Its 287-page report focuses on an overlooked problem in public health, and it gives a sense of where 178 countries stand in their use of such safety measures as speed limits, helmet laws and blood alcohol restrictions.
Traffic accidents were the 10th-leading cause of death in the world in 2004, behind lung cancer and ahead of diabetes, and they are on track to become the fifth-leading cause by 2030.
Five years ago, the United Nations agency published a report that presented the evidence for the usefulness of legal, medical and road-engineering interventions, such as speed bumps, to prevent accidents or reduce fatalities. The agency did not know how widely the strategies were used.
The data were gathered last year from transportation, health and police officials from around the world, who met under WHO auspices to pool information and answer a questionnaire.
One of the more surprising discoveries was the toll on pedestrians, bicyclists and motorcycle riders crowding the roads in developing countries, who accounted for 46 percent of all traffic deaths.
High-income countries, such as the United States and most of the nations in Europe, have about 52 percent of registered cars but only 8.5 percent of traffic deaths. For low-income countries, including most of sub-Saharan Africa and Southeast Asia, the statistics are nearly reversed. They have 9 percent of the world's cars but almost 42 percent of the traffic deaths.
Until the current recession, auto sales in some developing countries were increasing by more than 10 percent a year. The authors hope the report will help stimulate governments and engineers to design roads that can accommodate a huge influx of cars but also out-of-car users.
The report identified five risk factors for injury on the road, each of which can be lessened by well-enforced laws: speed, drunken driving, helmets, seat belts and child restraints.
Only 48 percent of countries have laws addressing all five risk factors, and only 15 percent have laws that, in the authors' views, address them optimally.
© 2009 The Washington Post Company
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