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Dr. Jack Nordhaus – News of the Day

Latest insurance industry news, with commentary.

NEWS OF THE DAY January 31, 2014

Jack Nordhaus Jack Nordhaus , 1/31/2014
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"The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions."

Peter Drucker
Management guru



January 30, 2014 -

This year should present a “stable to somewhat competitive environment for Business insurance,” according to a study released Thursday by Wells Fargo Insurance Services USA Inc.
In fact, the insurance market for Commercial businesses and public institutions looks relatively stable for each line of business, with only a few lines of business expected to experience rate increases or decreases of 10% or more, according to Wells Fargo's “2014 Insurance Market Outlook.”
The analysis pointed out that insurers enjoyed a profitable year in 2013, with the industry combined ratio improving to 95.8% during the first nine months of the year from 100.7% during the same period a year earlier. In addition, industry-wide return on average surplus rose through the first nine months to 9.5% from 6.5% during the same period in 2012. Net written premium “grew modestly, as did investment returns, and policyholders surplus has reached an all-time high,” according to the analysis.

Pressure on insurers' rates of return

But it also noted that, although 2013 showed marked improvement over 2012, “overall insurer rate of return still remains lower than it has been historically,” – which means that insurers still face pressure to increase their rate of return.
The report pointed out that market capacity is at an all-time high for most major lines of business. In addition, the analysis noted that the insurance-linked securities market for catastrophe perils has grown by 16% annually during the past three years, “as hedge funds and other capital market investors find these vehicles increasingly attractive as an uncorrelated area of risk with generally superior returns.”
If this rate of growth continues, alternative capacity could reach a global market share of approximately 25% by 2020, Wells Fargo predicted


Live Insurance News

January 30, 2014

by Gloria Turner

According to a recent rate report, Homeowners insurance premiums are experiencing declines as of the start of 2014.
By the close of 2013, the average annual Homeowners insurance premium in the U. S.  had fallen to $822, compared to the year before, which was about $900. This represents a drop of approximately 9.5% . Furthermore, from the third to the fourth quarter of the year, the average annual premium dropped by about $26. Since March 2013, there the average premiums have fallen every month, according to vice president Jana Bell, 
There are many reasons that Homeowners insurance rates have fallen, 
A number of factors determine the premium for any individual customer. For this reason, Bell pointed out that “It’s difficult to find one reason that costs have fallen, but we’re happy that policyholders have gotten more educated about finding good prices for coverage.”
According to Standard & Poor’s/Case-Shiller Home Price Index, the cost of homes is on its way up. This means that, although consumers might be paying more to buy the property, they won’t necessarily fork out as much for Homeowners insurance.
Despite the fact that the average price of a Homeowners policy for a year has fallen, 28 states saw decreases, 10 experienced increases, and 12 t essentially remained the same. Delaware experienced the greatest increase, according to the report, with New Jersey in a distant second place. Tennessee saw the greatest decreases, with Mississippi coming in second.



Live Insurance News\

January 30, 2014

 By Gloria Turner

From the moment that recreational marijuana became legal in Colorado and Washington sSate, some of the largest cannabis-derived food and drug developers saw their shares skyrocket, as other sectors, such as the insurance industry, began a notable transformation 
There have been two primary impacts on the insurance industry from the legalization of marijuana: Commercial Lines and Health Insurance.
In the former, insurers are developing new specialty coverages for a number of niche markets, 
This new trend will also impact Health insurance.  There’s an increasing need for rehab from marijuana addiction – as with alcohol abuse. Also, new drug plans will cover marijuana prescriptions. Changes in this sector, which is already undergoing massive changes due to the ACA, will keep insurers, policyholders, and investors on their toe



By Christopher Tidball

January 31, 2014 

This year’s Super Bowl might be one of the more difficult to handicap in recent memory.. Whether Peyton Manning can outmaneuver the smothering Seattle defense remains to be seen. One thing is certain: The matc=hup should provide one of the more entertaining big games in recent memory.  
There are lessons that we should take away, as well. These two teams have earned their place in history. Broncos quarterback Peyton Manning was all but written off a couple years ago after neck surgery. His resilience has stunned even his most ardent supporters. This future Hall Of Famer will undoubtedly go down in history as one of the best, if not the best, quarterbacks in history.  
One the other side of the line is the smothering Seahawks defense. Although they might not be the 1976 Steelers or 1985 Bears, they’re darn good! Just look at the statistics: fewest yards allowed, fewest yards per game, fewest points allowed, and most interceptions. Given the claims industry's penchant for benchmarking to specific metrics, we can learn a number of lessons that can be learned about measuring the right things and holding people accountable. This is the sure recipe for optimal results.   
First, people matter. Of all the rosters in the NFL, the two facing off in this year’s Super Bowl are arguably the best two teams. It’s an epic showdown between the number-one offense and the top defense. These teams earned these ranks because their people consistently executed basic fundamentals.
People are the foundation of every organization. The right ones will give you a competitive edge because they will execute consistently. That said, the wrong people will leave your organization at a competitive disadvantage, largely due to inconsistent performance. Just as the NFL isn’t for everyone, neither is a career in claims.  Business leaders must ensure they have the most talented people in every position, be it an executive, claims manager, adjuster or assistant.
Beyond  people, there’s  attitude. The Broncos bring years of experience and an air of positivity. This is what every organization needs. Imagine the success of any organization with leaders and visionaries who can execute in the trenches and the boardroom. Counter that with a more physical approach that is hands on, high intensity, every step of the way. Just as claims organizations can have different philosophies on how to attain success, so can NFL franchises. The key to success is to have a winning attitude and a will to succeed 24/7. As Vince Lombardi said, “The difference between a successful person and others is not a lack of strength, not a lack of knowledge, but rather in a lack of will.” 
Think of the potential in not only a claims organization, but any organization, if it were stacked with positive attitudes and a will to succeed. This translates to victory both on and off the field  Rather than focusing on points scored and games won, our business concentrates effective investigations and accurate claims resolutions. Instead of a stadium full of cheering fans, we seek to win adoring customers who are delighted with us and eager to renew their loyalty for another season. 
 insurance carriers that have adopted this mantra are growing exponentially. There are others who have not, often stuck in the status quo simply because it works. This is a difference in paradigm between what will get me to the Super Bowl versus can I get by with another .500 season. 
Whatever the outcome on Sunday, these are two outstanding teams. They have taken tremendous steps to get from pretty darn ordinary to extraordinary. Usually, I would put my money on a defense to win championships,--  but I do have some reservations. given the chess master on the other side. The Seattle defense plays a lot of single high safety and presses the outside. They’ve gotten away with this because of the strength of their pass rush. This could be their downfall against Denver, which has the ability to block, giving Manning some time to engage in his aerial circus. 
It could actually be Seattle’s offense that determines the outcome, if they execute on sustained drives, thus keeping the Broncos’ offense on the sidelines. If that happens, look for the Seahawks to win. If not, look for a Mile High celebration. If I must make the call, it will be Seahawks 27, Broncos 24.

By Staff Writer
January 30, 2014 

Google and VSP, the nation’s largest optical health insurance provider, have struck a deal to offer subsidized frames and prescription lenses for Google Glass, the Internet-connected eyewear, according to a recent article in The New York Times
The announcement could take wearable devices out of the realm of science fiction and into the mainstream by making them more affordable and giving them a medical stamp of approval. It also opens the door to a new level of cooperation between the health care and consumer electronics industries, which could lead to a world in which people wear or even ingest computers, the Times states.
With traditional-style frames and prescription lenses, which Glass did not have before, the computer and screen for the device are less evident and the device looks less exotic--and is available even to people who wear glasses.