CompleteMarkets
Latest insurance industry news, with commentary.
NEWS OF THE DAY November 22, 2013

QUOTE OF THE DAY:

“Once you say you're going to settle for second, that's what happens to you in life.

John F. Kennedy 

DIRECT AUTO WRITERS CONTINUE MARKET SHARE GAINS
INN Breaking News, 
November 19, 2013
Increasing competitiveness in Personal Lines Auto is prompting more aggressive rates among large insurers, including Travelers and Allstate, Moody’s said; AIG sees highest Q3 net income among P&C insurers.
Given their lower expense structure and the resulting ability to offer more competitive rates to price-sensitive consumers, direct Auto writers continue to gain market share, according to Moody’s third-quarter financials review for U.S. P&C insurers.
In response Travelers outlined plans to lower expenses and set rates more competitively, and Allstate experienced its second-straight quarter of sequential auto policy-in-force growth for the first time in six years as they implemented more competitive Auto rates and eased Homeowners pricing after years of price increases. Large-scale agency writers, armed with strong infrastructure and long-standing customer relationships, will address competition from the direct writers by lowering operating costs and prices, according to the ratings firm.
AIG was the only insurer in Moody’s ratings universe to top $1 billion in net income for the third quarter 2013. ACE Limited came closest, with $916 million, followed by Travelers, with $864 million, Allstate with $656 million and Chubb, with $541 million rounding out the top five.
Overall, net income for Moody’s-rated U.S. P/C insurers in the third quarter of 2013 increased 11% year-over-year. The ratings firm said the improvement was driven primarily by lower catastrophe losses and better underwriting margins, with the majority of companies producing an underwriting profit.
Within Moody’s ratings universe, Liberty Mutual ($9.36 billion) had the most net written premiums in the third quarter, followed by AIG ($8.66 billion), Allstate ($7.44 billion), Travelers ($5.71 billion) and Progressive ($4.46 billion) in the top five.
Net premiums increased by 4%, a likely byproduct of steadily rising rates, which are outpacing loss cost trends (investment income fell 3%) and leading to improved combined ratios. However, while Commercial Lines reports indicate mid-to-high single-digit rate increases for most segments, Moody’s believes Casualty rates may have peaked, “given the market’s abundant capacity.” Also, Property rates have moderated, according to Moody’s, with some insurers indicating increased competition for large accounts is affecting rates.
Rate increases in the “highly competitive” Personal Auto lines moderated as well; having reached rate adequacy in many states with loss cost trends in check, insurers such as Travelers and Allstate have expressed intentions to pursue growth more actively.
Homeowners insurers reported mid-to-high single-digit rate increases in Q3, depending on geography. Moody’s said it expects insurers to continue raising rates, increasing deductibles and tightening terms and conditions into 2014 in order to further improve margins.

WORKERS COMP INSURERS BOOST RESULTS, BUT RESERVES LAG: BEST'S

Business Insurance
November 18, 2013 
by Sheena Harrison


Workers Compensation insurers' financial results improved in 2012, as net written premiums increased and combined ratios decreased for the first time in six years, but Comp reserves continued a years long decline, A.M. Best Co. Inc. said Monday in a report.
Net written Workers Comp premiums reached $41 billion in 2012, up 9.5% from $37.5 billion in 2011, the Oldwick, N.J.-based rating agency said in its Comp “Segment Review” report.
Meanwhile, Comp insurers saw their combined ratio decline to 110.3% in 2012, down from 117.8% in 2011, and the first combined ratio decline for the U.S. comp industry since 2006.
“Sustained growth in 2012 premium reflects the increasing payroll base as economic conditions improve; ongoing rate increases in an improving pricing environment; and firming market conditions,” Best said in the analysis.
Despite improved results, Best estimated that Comp industry reserves were underfunded by $27.8 billion in 2012, slightly worse than the $26.7 billion in underfunding in 2011.
“Although the majority of the deficiency is due to statutory discounting, the ultimate adequacy of the industry's reserves remains uncertain for accident years when rates were at their low point,” Best said

TIMELY ADVICE FOR CLIENTS AND PROSPECTS

EIGHT TIPS FOR AVOIDING A THANKSGIVING LAWSUIT

By Hannah Bender 

PropertyCasualty360.Com

November 21, 2013 

The Thanksgiving holiday can come with unexpected risks. Provide hosts with preventative tips and tricks.

Millions of Americans will celebrate their Thanksgiving with a feast of turkey, festive side dishes, and holiday drinks. Although this time of year is usually a time of merry gatherings, many party hosts are unaware of the risks involved when inviting guests to their homes and serving food and drinks.  
“All hosts should be aware that if someone drives drunk or becomes sick after consuming food at a holiday party, the host could actually be liable,” says Robert A. Rusbuldt, Big “I” president & CEO. “In fact, a casserole could bring just as many risks as a cocktail.”
A lawsuit might be the last thing on a host’s mind when planning a holiday party, but agents can help hosts prepare for the worst-case scenario by warning them of the risks involved in hosting a holiday party.

1. Watch What You Eat and Feed Others:

Trusted Choice reported in 2012 that nearly 111 million Americans outsource their food for the Thanksgiving holiday. But just because a caterer, another guest or a local restaurant is preparing the food, the host is no less liable for food poisoning.
Hosts are still responsible, even if they didn’t prepare the food themselves. Hosts should check the food, being careful not to serve anything that appears to be undercooked, spoiled, or contaminated. Using reputable purveyors and following proper food-handling and storage recommendations can help hosts prevent food-borne illness.
When in doubt, throw it out

2. Mix up the Activities, not just the Cocktails:

Parties that center on drinking often result in guests drinking more, and although the holidays are a time for celebration, too much drinking could result in drunk-driving accidents, for which the host could be responsible
Providing activities or entertainment that don’t involve alcohol, serving filling food and non-alcoholic beverages for guests and making sure ahead of time that designated drivers are available cab help prevent accidents

3.Party Elsewhere:
Hosting a party at a public location, such as a restaurant or bar that has a liquor license, can help decrease liability for hosts.

4. Call a Cab, Get a Room or Have a Slumber Party:

Arranging transportation or overnight accommodations for guests are far safer alternatives to drinking and driving.

5. Just Say No:

Hosts should be on the lookout for any guests who appear visibly intoxicated in order to prevent accidents. Encouraging party hosts to stop serving alcohol at least one hour before the party is scheduled to end or hiring an off-duty police officer or bouncer to monitor guests’ sobriety and handle any alcohol-related problems are possible solutions for hosts looking to lower their risk.

6. Do Your Homework: 

Homeowners should look at their Homeowners or Renters policy to gain a thorough understanding of how far their coverage extends if they’re sued and found liable for accidents involving a guest who drinks or becomes ill after consuming food in their home. Reviewing Liability limits to ensure adequate coverage can give hosts peace of mind in the midst of planning their holiday party.

7. Know Your State Laws and Statutes:

Laws differ from state to state. In some states, hosts can be held liable if a guest is involved in an alcohol-related accident. Courts have found hosts liable for damages as a result of guests being involved in alcohol related accidents.

Additionally, some statues can be interpreted as mandating Non-Commercial Social Host Liability. This means that if a guest or a third party is injured due to alcohol consumption linked to a party, the host, as the provider, could be held responsible for medical bills, vehicle repair costs, lost time from work, and even wrongful death claims.

8. Consider an Umbrella Policy: 

Although holiday partygoers and hosts are expected to behave responsibly, some don’t always know their limits. Hosts can take preventative measures, but risks can’t be eliminated entirely. Planning ahead can be the best defense for Thanksgiving dinner hosts, and purchasing a Personal Umbrella Liability policy might be a good option for those who frequently host dinners and get-togethers.
“Thanksgiving dinner or even a neighborhood holiday potluck could have disastrous results for the host if someone is stricken with food-poisoning,” says Madelyn Flannagan, Big “I” vice president for education and research. “Whether the food served came from your kitchen, a five-star caterer, or a pizza delivery truck, if you serve it, you could be liable if anyone gets sick.”

Jack Nordhaus
Other articles by: Jack Nordhaus
Categories: General Information
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