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Dr. Jack Nordhaus – News of the Day

Latest insurance industry news, with commentary.

NEWS OF THE DAY July 8, 2013

Jack Nordhaus Jack Nordhaus , 7/9/2013
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QUOTE OF THE DAY:

"Few things are harder to put up with than a good example."

 Mark Twain (1835-1910)

ANOTHER SIGN OF HARDENING MARKET

COMMERCIAL INSURANCE RATES UP 5% AGAIN IN JUNE: MARKETSCOUT

Insurance Journal

July 8, 2013 

Increases for Commercial Property/Casualty insurance rates in the U.S. were again about 5% during June, the fourth straight month at that pace.
According to the latest composite index from MarketScout, all coverages, industry groups, and account sizes held within a plus 1 to minus 1 percent range compared to last month.
By coverage classification, Commercial Auto had the highest rate increases at 6%.  Property, general Liability, Directors and Officers and Employment Practices Liability (EPLI) followed at 5%. EPLI has made the most significant upward rate adjustment in the last four months.
Small accounts (under $25,000 premium) were assessed the largest rate increases at 6 %. Jumbo accounts (those over $1,000,000 premium) enjoyed the best composite rate increases at 2%
Contracting and service segments were the largest increases by industry class at 6%.
“The market is steady right now,” said MarketScout CEO Richard Kerr in a statement accompanying the report. “There were no big surprises in July 1 treaty renewals and even the impact of Superstorm Sandy seems to have been forgotten by most property insurers.”
The National Alliance for Insurance Education and Research conducts the pricing surveys that are used in MarketScout’s analysis.

ASIANA BOEING 777 INSURED FOR MORE THAN $2B

By Mark E. Ruquet, 

PropertyCasualty360.Com

July 8, 2013 

A consortium of underwriters led by AIG insured the Asiana Airlines Boeing 777 that crashed Saturday in San Francisco for $2.3 billion, with 10 Korean insurers sharing about 4 % of the potential loss, says Korea’s Financial Supervisory Service.
The Asia Insurance Review reports that in addition to the 10 Korean insurers, 30 foreign insurers share in the risk that covers $130 million for the hull and $3 million for crew liability. Coverage for facility damages and human casualties makes up $2.2 billion of the policy.
Flight 214 was carrying 291 passengers and 16 crew members including 61 U.S. citizens, said Asiana Airlines, when the jet crashed Saturday as it landed at San Francisco International Airport. Two young women died and 182 were injured. Asiana says that 48 people still remain hospitalized.
During a press conference yesterday, U.S. National Transportation Safety Board Chairman Deborah A.P. Hersman said that preliminary information from the flight data recorders indicate that the plane was flying “significantly” below the target landing speed of 137 knots. Seven seconds before the crash, there was a call from one of the crew to increase the jet’s speed. At four seconds, there was a “stick shaker” (when the plane’s yoke vibrates) indicating that the plane was in danger of stalling. At 1.5 seconds before impact, there was an order from the crew to go around and abort the landing.
Hersman said the flight data recorders show that the plane's speed dropped to 106 knots before impact. She added that some of the crew reported problems with the aircraft's emergency escape systems which need further investigation. Specifically, some of them reported that the escape chutes deployed into the plane. 
Hersman said the information is still preliminary and needs corroboration by additional data before a conclusion of whether human or mechanical error caused the crash.
Photographs of the scene from the NTSB Website show the charred remains of the plane with its tail torn off. Other photos taken after the crash show passengers streaming out of the aircraft as smoked billowed from one side.
A current focus of press reports is the pilot at the controls, Lee Kang-guk, who was making his first landing at San Francisco Airport and had only 43 hours flying time with the 777. However, there has been no official statement that his unfamiliarity with the plane and airport contributed to the crash.
On its Website, the Federal Aviation Administration says that Asiana Airlines, in business for 21 years, flies 12 Boeing 777s. The aircraft has a very good safety record, with few hull losses.