Horse cents
Barbaro, the colt that was seriously injured during the Preakness just two weeks after winning the Kentucky Derby, is insured. According to owner Roy Jackson, the cost of the insurance jumped after Barbaro won the Florida Derby and the Kentucky Derby. But the Jacksons appear more interested in nursing Barbaro back to health than in making any insurance claim.
The Jacksons likely would have collected on their policy if they had decided not to go through the expense of trying to save Barbaro. "If they went to the insurance company and said they made a decision to destroy the horse, there would be no questions," Dan Rosenberg, president of Three Chimneys in Midway, Ky., where Smarty Jones stands for a stud fee of $100,000, told Associated Press racing writer Richard Rosenblatt. "But they didn't."
Rosenblatt reported that money is usually the major issue in deciding whether to save an animal. Barbaro might be expected to gain millions in stud fees. The Jacksons reportedly turned down stallion-rights offers for Barbaro before the Derby. Smarty Jones, who won the 2004 Derby and Preakness, was syndicated for $40 million.
Nobody knows for certain how much Barbaro would fetch had he won the Triple Crown. But Dr. Dean Richardson, who pinned together the leg bones the 3-year-old shattered in the Preakness, told Rosenblatt that Barbaro's owners are not considering the money.
"If this horse could have absolutely no reproductive value, they would have saved this horse's life," said Richardson, who works at the George D. Widener Hospital for Large Animals at the University of Pennsylvania's New Bolton Center.
Richardson put the costs of Barbaro's surgery and recovery time at "tens of thousands of dollars -- many tens of thousands of dollars." (Associated Press)
Rising legal, medical costs and speedy payments mark region's WC systems
While medical and litigation expenses are causing workers compensation insurers' costs to creep up in the Northeast, there are some positive signs amid the claims trends for insurers and injured workers in several key states.
Average total costs per workers' compensation claim in Pennsylvania showed steady growth, increasing more than 8 percent for claims evaluated in mid 2004 with 12 months' maturity, according to the Cambridge, Mass-based Workers Compensation Research Institute (WCRI).
But the WCRI study also reported that costs per claim in Pennsylvania were around 10 percent lower than the median of 13 states studied.
Also, the 8 percent rate of growth in costs per claim in Pennsylvania was similar to the median growth rate of the 13 states in the WCRI study. In the most recent period studied, medical payments per claim and indemnity benefits--wage replacement payments for lost-time injuries--per claim with more than seven days of lost time showed moderate growth (5 to 6 percent), the report said.
One reason for Pennsylvania's lower costs per claim was that there were fewer claims with more than seven days of lost time from the workplace. In Pennsylvania, only 18 percent of workers' compensation claims involved more than seven days of lost time, compared to 21 percent for the 13-state median.
In addition, average medical payments per claim with more than seven days of lost time were 16 to 18 percent lower in Pennsylvania than the median of the study states. Lower medical costs per claim were mainly the result of lower medical prices and lower utilization of physician services, according to other WCRI research.
Within 21 days of their injury, 45 percent of Pennsylvania workers received their first indemnity check --typical among the 13 study states. The speed of injury reporting was faster than typical of the 13 states, but the speed of payments once the payor received notice of injury was slightly slower than typical.
On a negative note, double-digit growth in claims management expenses continued in Pennsylvania. Expenses to manage claims including litigation were 13 percent higher in Pennsylvania than the 13-state median for the more mature claims.
The study, CompScope Benchmarks for Pennsylvania, 6th Edition, is part of a WCRI research series that compares the workers' compensation systems in 13 states: Arkansas, California, Florida, Illinois, Indiana, Louisiana, Maryland, Massachusetts, Pennsylvania, North Carolina, Tennessee, Texas and Wisconsin. These states represent more than 50 percent of the nation's workers' compensation benefit payments.
Massachusetts results
The WCRI Massachusetts study shows that the costs per claim rose 8 percent for claims evaluated mid 2004 with an average of 12 months' maturity. This contrasts with more rapid annual growth of 9 to 11 percent in the two prior years.
The recent Massachusetts trend in overall costs was due to a noticeable increase in the proportion of claims with more than seven days of lost time and a slower rate of growth in medical costs per claim with more than seven days of lost time, the report said.
Growth in indemnity payments per claim with more than seven days of lost time showed little change in the latest year (less than 1 percent) after 7 to 11 percent growth in the two prior years.
A small increase in the average wage of injured workers (1.6 percent) offset a slight decrease in the duration of temporary disability (1.8 percent or 0.2 weeks), the study said. Wage growth in the state also slowed (1 percent decrease in the latest year compared to 7 to 11 percent increase in each of the three prior years).
In Massachusetts, benefit delivery expenses were slightly lower than typical among the 13 study states, largely because of lower medical cost containment expenses per claim.
The study also reported that average total costs per claim in Massachusetts were typical compared with other study.
The average indemnity payment per claim was 11 percent lower than the study, while the average medical payment per claim was the lowest of the states studied -- 54 percent lower than the median.
Other WCRI studies found that the lower medical payments in Massachusetts resulted from both lower medical prices and lower utilization of medical services.
The speed at which injured workers in Massachusetts were sent their first indemnity payment continued to improve; the state already had the fastest time from injury to first indemnity payment among the 13 states.
Maryland issues
WCRI also reported on Maryland, where costs per claim grew very rapidly, with medical costs and an increase in the proportion of claims with more than seven days of lost time cited as the major causes.
Maryland's workers' compensation costs per claim grew an average of nearly 14 percent per year, showing acceleration over the two previous years when the growth rate averaged 5 to11 percent.
Growth in Maryland's indemnity payments per claim with more than seven days of lost time rose in the latest year (6 percent), after little change in the previous year. The main driver of that increase was a rise in the average permanent partial disability (PPD)/lump-sum payment per claim of 17 percent, the study said.
Average total costs per claim in Maryland were typical compared with other states.
In terms of positive news in Maryland, the average medical payment per claim with more than seven days of lost time was 41 percent lower than the 13-state median for the more mature claims. Only Massachusetts was lower.
However, the study also found that the average time it took for an injured worker to receive the first indemnity payment was among the slowest of the 13 study states. The main reason for this was that the speed of payments once payors received notice of injury was the slowest among the 13 states studied. Claims were reported to payors faster than in most study states, however.
The average benefit delivery expense per claim with more than seven days of lost time rose just 3 percent in 2003 claims as of 2004, much slower than the annual growth of 8 to 15 percent in the four previous years. Medical cost containment expenses continued to rise, and litigation expenses were higher than typical.
The Workers Compensation Research Institute is a nonprofit organization of employers, insurers, insurance regulators, state administrative agencies and labor organizations. It can be found online at www.wcrinet.org.
N.J. court: Guaranty fund to pay illegal aliens' accident costs
New Jersey's Supreme Court has unanimously ruled that illegal immigrants injured by uninsured drivers can have medical costs covered by the state's insurance guaranty fund.
The 7-0 decision by New Jersey highest court, which reverses two lower court rulings, came as lawmakers in Washington and Trenton consider how to deal with illegal immigration.
"It's a victory for a lot of injured people who were being denied benefits because they are not legal residents,'" said Victor M. Covelli, a lawyer for Victor Manuel Caballero, a Mexican who was a car passenger when hurt in 2001, five months after he came to live with family members in Bradley Beach.
The decision could have statewide financial impact. Covelli said he had 20 clients who might now qualify for benefits. New Jersey has about 360,000 illegal immigrants, or about 4 percent of the population, according to the Pew Hispanic Center.
Caballero sought compensation from the Unsatisfied Claim and Judgment Fund. He was denied when a trial judge and an appellate panel found he did not satisfy the fund's residency requirement. The trial judge, state Superior Court Judge Jamie S. Perri, said Caballero's "tenuous ties to the state of New Jersey during the five months before the accident, coupled with his status as an illegal immigrant, evidence a relationship with the state that falls short of those of a bona fide resident."
The judge added that "without the legal ability or authority to remain in the state, plaintiff was incapable of reasonably forming the requisite intent to remain for any length of time in New Jersey."
Meaning of 'resident'
The Supreme Court disagreed, asserting that the meaning of "resident" is not constant under New Jersey law, but depends on the context.
"A person may be a 'resident' even if the intent to remain ultimately is not realized," Justice James R. Zazzali wrote for the court, adding, '"Other jurisdictions have determined that illegal aliens can qualify as residents under various state statutes.'"
The high court determined that Caballero's intention to remain in New Jersey satisfied the fund's residency requirement and sent the case back to the trial judge. His lawyer said they would seek a jury trial on how much benefits he could collect.
The fund's administrator, the nonprofit New Jersey Guaranty Association, and its lawyer had no immediate comment. The association is comprised of insurance companies.
Caballero sustained injuries and was hospitalized for a week after a co-worker giving him a ride to work fell asleep and struck a parked tractor-trailer. The co-worker was driving an uninsured and unregistered vehicle. None of Caballero's family has insurance.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Northeast warned against complacency as hurricane season advances
After years of the Gulf and Southeast coasts feeling the brunt of hurricanes, this could be the year when the Northeast gets whacked, warn forecasters, who are worried that the residents north of the Carolinas up into New England may be unprepared for such a disaster.
The AccuWeather.com Hur-ricane Center in State College, Pa., led by its chief forecaster, Joe Bastardi, is predicting an active hurricane season that could have major repercussions for the U.S. economy and the one in six Americans who live on the Eastern Seaboard or along the western Gulf of Mexico.
"The 2006 season will be a creeping threat," says Bastardi. "Early in the season--June and July--the Texas Gulf Coast faces the highest likelihood of a hurricane strike, possibly putting Gulf energy production in the line of fire. As early as July, and through much of the rest of the season, the highest level of risk shifts to the Carolinas.
"From mid-August into early October, the window is open for hurricane strikes to spread northward to the more densely populated Northeast coast," Bastardi predicted. "At the very end of the season, southern Florida also faces significant hurricane risk."
For the 2006 Hurricane Season--June 1 through Nov. 30--Bastardi and his team are forecasting that six tropical cyclones will make landfall in the U.S. Five of these land-falling storms are likely to be hurricanes, with three being major hurricanes of Category 3 or greater.
Not alone
Bastardi is not alone in his warnings.
The National Oceanic and Atmospheric Administration's 2006 Atlantic hurricane season outlook released May 22 by the National Weather Service Climate Prediction Center forecasts 13 to 16 named storms, eight to 10 hurricanes and four to six major hurricanes.
NOAA says there is an 80 percent chance for an above-normal hurricane season.
"There are few areas of the U.S. East Coast and Gulf of Mexico that will not be in
the bull's eye at some point this season," said Ken Reeves, AccuWeather's director of forecast operations.
"Ironically, though, the region that was hammered the hardest last year--the central and eastern Gulf Coast--has one of the lower probabilities of receiving another major hurricane strike in 2006," Reeves said.
"This is not to say that hard-hit New Orleans has nothing to worry about. Because the city's defenses have been so compromised by Hurricane Katrina, even a glancing blow from a hurricane elsewhere could spell trouble for the city."
Compared to 2005
Following on the heels of 2005's record-shattering hurricane season, 2006 will feature fewer storms, but will still be a season of above-average storm frequency. "There were 28 named storms last year, and we are expecting far fewer storms during this season. But keep in mind that it is not the number of storms that is significant, it is where they make landfall that sets the tone for the season," Reeves said.
For this year, the AccuWeather.com Hurricane Center forecasts six land-falling storms--five hurricanes and a tropical storm-- with three of the hurricanes being major upon landfall.
"With the exception of the southern tip of the Florida peninsula, almost all the damage wrought by last year's storms in the U.S. occurred along the Gulf Coast," Bernie Rayno, AccuWeather.com Hurricane Center meteorologist noted. "In recent history, it is the Gulf coast and the East Coast from the Carolinas southward that have borne the brunt of U.S. hurricane strikes.
Northeast unaware
"Because of this, people may be unaware that portions of the Northeast coast have been severely damaged by major hurricanes in the past, and that there is a dramatically increased likelihood that over the next five years the Northeast could be hit by a major hurricane. This could be the year."
Rayno noted that in general, the fast-moving nature of tropical cyclones in the Northeast would leave little time to protect property and lives. "Preparation is the key, since time is a perishable commodity when a hurricane is approaching the coast."
"Because it has been decades since the Northeast was hit by a major hurricane, some residents in the Northeast have become complacent regarding the threat of a hurricane," Bastardi explained.
"It is for this reason that we have been warning of elevated danger from hurricanes in the Northeast since March, when we first identified that patterns that could lead to such an occurrence this year or in the near future," Bastardi said.
Reeves said last year's hurricane season had a tremendous impact on the U.S. economy, with the flooding of New Orleans, severe damage to many Gulf Coast communities, and the huge jump in energy prices that resulted when oil and natural gas production was disrupted.
"While the effects from last season will not be exactly repeated, there are many scenarios that could lead 2006 to be another costly season for the U.S.-another major strike in the western Gulf could again hamper energy production, or a hurricane along the heavily developed Northeast coast could lead to widespread property damage and put many lives at risk," Reeves added.
New England's flood recovery
Residents, business owners and public officials in Massachusetts, New Hampshire and southern Maine faced the daunting task of cleaning up after the worst flooding since the 1930s. The floods came after nearly a week of heavy rains.
The flooding hit the northern Massachusetts communities of Peabody, Methuen and Lawrence near the Merrimack, Ipswich and Spickett rivers particularly hard, turning backyards and basements into lakes and closing roads, schools and businesses. One estimate held that 14,00 homes in Massachusetts were affected.
New Hampshire Gov. John Lynch estimated that about 600 roads in his state were closed, and many of them were damaged. Further north in Rochester, Maine, some 2,000 homes were evacuated.
After appeals from the states' governors and visits by the Federal Emergency Management Agency, the Bush Administration approved federal disaster relief for the stricken communities. Residents thus became eligible for funds to pay for essential repairs. Cities and towns became eligible for aid for infrastructure repairs.
The hopes of many turned to government aid because most businesses and homeowners lack flood insurance. Massachusetts, New Hampshire, and Maine have relatively low participation in a federal flood insurance program.
The Bay State's total of 44,731 policies is a small fraction of property owners in a state with 6.4 million people. The policies represent about $8.2 billion of coverage in force statewide, at a cost of about $35 million in premiums, according to National Flood Insurance Program figures.
NFIP reports that less-populous New Hampshire has 6,692 policies ($1 billion coverage; $4.1 million in premiums) and Maine has 7,396 ($1.2 billion in force; $4.9 million in premium).
Many of the areas hardest hit are away from the coastline.
"Many inland homeowners never thought they would be susceptible to the flooding," said Chris Goetcheus, a spokesman for the Massachusetts Division of Insurance.
Disaster backstop talk
At last month's Big "I" National Legislative Conference & Convention, panelists differed over a federal natural disaster backstop:
"Allstate supports state pools that aren't taxpayer funded but are put together by organizations whose welfare depends on good real estate markets," said Edward M. Liddy, CEO, Allstate Corporation. "It wouldn't be an industry bailout; it would be good for America, and good for Americans to know they are protected. Americans have an important emotional and physical connection to their houses and they need to know that they are protected."
"As an industry we should think long and hard before inviting the federal government into our businesses," countered Gary R. Gregg, CEO, Liberty Mutual Agency Markets. "We've been able to deal with catastrophe as an industry for a long time. I'm very concerned about federalizing something that is regulated at the state level."
The CEOs agreed that the catastrophe risk is not tapering anytime soon. "The baby boomers are about to retire. Seventy-eight million Americans will retire soon," said Ramani Ayer, chairman and CEO, Hartford Financial Services Group, Inc. "Guess where they're going? Not Chicago--but the coastal areas."
Charges and denials
Connecticut insurance broker R.C. Knox has paid the state $754,804 to settle allegations that it accepted undisclosed compensation from insurance carriers in exchange for placing insurance for the state. Attorney General Richard Blumenthal said R.C. Knox accepted $415,058 in "improper concealed compensation" from insurers for placing the state insurance. Brent DiGiorgio, a spokesman for People's Bank, which owns R.C. Knox, denied wrongdoing and said the firm settled "to avoid the uncertainty and expense of contesting possible claims the attorney general may have had in connection with this issue." R.C. Knox also agreed to no longer accept contingent commissions...
Larry Silverstein, the World Trade Center site's developer, has charged that insurance companies are slowing the rebuilding at ground zero by challenging payments he needs. But Kenneth Ringler of the port authority that owns the site said, "We don't believe there's an issue there." Swiss Reinsurance Co., which provides the largest share of insurance for the trade center, "will continue to honor our obligations under the terms of our coverage," the company said.
N.H., Vt. low in work injuries
New Hampshire and Vermont have the second-lowest workplace fatality rate in the nation.
A study by the AFL-CIO says New Hampshire had 15 on-the-job fatalities in 2004, about 2.1 deaths per 100,000 workers. Vermont had seven deaths. The number of deaths in New Hampshire from 2002 and 2003, when 19 died on the job. Vermont's deaths also were down from the previous two years.
Nationally, the rate and number of fatalities has increased slightly the past three years.
The study said seven of New Hampshire's deaths in 2004 were transportation-related, while three workers died in falls. Five deaths were unclassified.
N.Y. Supt. Mills supports tax-deferred catastrophe reserves
The country may not need a natural catastrophe backup fund like it has for terrorism exposures, provided government allows insurers to create catastrophe reserves on a tax-deferred basis, according to New York's insurance regulator.
New York State Superintendent of Insurance Howard Mills told an agents' group on Long Island that the insurance industry has the capacity to handle natural disasters, if a few conditions are met, including the use of a tax-deferred catastrophe reserve.
"This would enable the industry to set aside money [from insurance premiums] for certain specific disasters in certain specific regions so when a disaster hits, there is a dedicated pool of resources from the industry," said Mills.
Mills said the nation's catastrophe strategy should also include improving risk-based pricing, encouraging more personal responsibility on the part of insureds, and improving and standardizing building codes.
"I am not sold that we need a federal backstop, as we do with terrorism insurance, because the capacity is there, but we need to enable the industry to do more. We need to encourage the industry to develop its infrastructure and then the federal government has to rely upon the infrastructure that the private sector, that the insurance industry has developed," Mills said.
Mills spoke at the Professional Insurance Agents of New York State Inc.'s Long Island Regional Awareness Program.
R.I. eyes requiring higher limits for taxis, shuttles
The Rhode Island Senate has approved legislation to require taxis and airport shuttles to carry $300,000 worth of personal injury and property damage insurance.
The bill, introduced by Sen. William A. Walaska (D-Warwick), increases the manadtory minimum coverage from the $25,000 to a $300,000 combined single limit for both personal injury and property damage, or $250,000 per person, $500,000 per accident bodily injury and $100,000 property damage split limit.
The bill covers taxis, jitneys (a bus or van with a predetermined route, such as an airport shuttle) and limited public motor vehicles, such as taxis that must be dispatched.
The measure has been sent to the House of Representatives for consideration.
Workers' comp 2005 results 'excellent,' but caution advised, say experts
The workers' compensation insurance industry had another excellent year in 2005 on an accident-year basis, said Steve Klingel, NCCI Holdings Inc.'s president and CEO, at the recent National Council on Compensation Insurance's May 11-12 Annual Issues Symposium in Orlando, Fla. The organization estimates the combined ratios for both 2004 and 2005 accident years to be about 90 percent, the best results in recent memory, and a 50-point improvement since the 140 percent peak in 1999.
NCCIexperts reported that this is the third consecutive year of accident year underwriting profits for the workers' compensation market.
Calendar year results also looked better, said NCCI Chief Actuary Dennis Mealy. The most recent calendar year figures indicate a 102 percent combined loss ratio for 2005, a five point improvement from 2004 and the best result since 1997, according to NCCI's annual "State of the Line" preliminary Workers' Compensation Market Analysis.
"The year 2005 was another year of significant accomplishments for the workers' compensation insurance industry," said Mealy. "All of the major financial performance measures for the line experienced significant improvement. Even the workers' compensation calendar year combined ratio, which has remained stubbornly higher than most other major lines of insurance during this recovery cycle, has finally improved to a range that allows the industry to show a reasonable, albeit not outstanding, return on the surplus supporting the business.
In fact, workers' compensation was the only major line of insurance that had an improved combined ratio in 2005."
Despite the good news, Klingel urged caution in the face of changing times.
"NCCI's longer view remains guarded due to the long term challenges facing the business," Klingel explained. "Those challenges include such issues as controlling skyrocketing medical costs, passing and maintaining legislative reform initiatives and continuing to reduce the size of the residual market."
He said the industry also faces "nontraditional forces" including the threat of another terrorist attack and new forms of health care service delivery, whether through government or private programs.
"To continue to achieve the industry's recent positive outcomes, we will need to rely on our collective ability to understand that our market is changing in significant ways and to adopt new plans to address those changes," Klingel advised.
Positive developments
Klingel said positive workers' compensation market developments include: loss reserve position, increased premium, improved claim frequency trends, and tort reform measures in several states.
The loss reserve position of private carriers improved last year, Klingel said. The deficiency, which peaked at $21 billion at year-end 2001, had declined to $9 billion at year-end 2005.
Net written premium also increased about 9 percent for private carriers in 2005. This was the sixth consecutive year of increases for private insurance carriers. Premiums were up a more modest 2.5 percent when state funds are included.
This apparent anomaly was caused by the private carriers' growth in the California market at the expense of the state fund following the successful reforms in that state, NCCIsaid.
Claim frequency trends continue to be favorable, continuing a decade-long decline. Based on a preliminary analysis of data in NCCI states, the frequency of lost-time claims declined another 4.5 percent in 2005. The moderation in indemnity claim cost increases observed in recent years also continued. Even medical claim cost increases moderated somewhat last year, although they remain much higher than the Medical Consumer Price Index.
Finally, recently enacted reforms in several states including, California and Florida, appear to be positively impacting the results in those jurisdictions -- as well as the countrywide numbers. In Florida, for example, the reforms led to consecutive rate reductions of 14 percent in 2003, 5.2 percent in 2005, and 13.5 percent in 2006.
Areas of concern
However, even in a time of relatively good financial results, NCCI does identify several areas of concern for the industry.
While interest rates continue to rise, there has been limited impact on industry investment yields. The Federal Reserve has continued to raise short-term interest rates since June 2004. Although this has raised the market rates on short-term securities, the long-term rates have only recently started to move upward slightly, with the 10-year Treasury note exceeding 5 percent in April 2006. This is the first time the 10-year note has been above 5 percent since June 2002 -- meaning that the Fed's actions have had limited impact on the yields of the industry's investment portfolio. NCCI's models indicate that combined ratios at or near 100 percent are needed for carriers to earn their cost of capital in workers' compensation.
While improving, residual market volumes in some states remain at unacceptably high levels. The industry is finally starting to see some significant depopulation of many states' residual markets, particularly for larger policy sizes. Data for first quarter 2006 indicates that the number of policies over $100,000 in the residual markets administered by NCCI is down 36 percent from first quarter 2005. However, several states are still experiencing growth in their residual markets as they react to escalating costs and inadequate loss costs or rates.
Medical inflation continues at a double-digit pace. Medical cost increases, while moderating somewhat, have increased at or near double-digit rates in the last few years. Today, these increases have pushed medical losses to nearly 60 percent of the total losses in workers' comp for NCCI states. Because of the rising tide of medical costs, many states have been looking for ways to control medical costs in their workers' comp systems.
The uncertainty surrounding the fate of the Terrorism Risk Insurance Extension Act of 2005 remains. Although Congress extended TRIA through Dec. 31, 2007, it was with significantly higher retentions for the industry and a message that a permanent solution needs to be found. Time is already running short. In a little over six months, policies will be written that will have some exposure after the TRIA extension expires.
Other challenges continue to confront the workers' compensation line. Some individual states have workers' compensations systems that are in disarray due to rapidly escalating benefit costs resulting in poor results and market disruptions. Challenges to recently enacted benefit reforms have been mounted or are being discussed in several states, either through the political process or through the courts. And, the current underwriting cycle is likely at or near its cyclical peak.
Millions of renters lack insurance, says Trusted Choice survey
Almost 25 million U.S. families renting their homes are going bare on insurance coverage, leaving themselves vulnerable to serious property and liability losses. Many renters without coverage own valuable, high-tech equipment and face higher risk related to pets, a national survey conducted by Trusted Choice finds.
The new survey uncovers a persistent lack of awareness or understanding about property and liability risks faced by renters, said Madelyn Flannagan, Trusted Choice spokeswoman. Two-thirds (67 percent) of U.S. families that rent lack coverage.
Some 35 million homes were rented in 2005, or about 31 percent of all American households, according to the National Multi Housing Council.
Among those respondents who said they don't have renters' insurance, 26 percent feel that the coverage is too expensive, and another 17 percent said they didn't know they needed it. Moreover, another 8 percent have never heard of renters' insurance.
"Insurance protection isn't a 'nice-to-have' for renters," Flannagan said. "It's an essential backup for property losses -- such as water and fire damage -- as well as today's liability risks faced by Americans: slips and falls, accidents at parties, pet attacks, and lawsuits by landlords, for example."
Coverage for renters is widely available and affordable in most parts of the country, with the average annual premium about $20 per month for about $20,000 of property coverage and $500,000 of liability coverage, Flannagan said.
Among the results
An overwhelming majority (89 percent) of all renters own one or more valuable electronic devices, such as digital recorder devices, desktop and laptop computers, digital and video cameras and home theater systems. More than half (53 percent) of renters own exercise and/or sports equipment such as a bicycle, exercise equipment or skis. Both groups of owners -- electronic devices and exercise equipment -- are slightly more likely to own renter's insurance than non-owners.
The likelihood of owning renters insurance is much lower (26 percent) among pet owners overall than it is among those who don't own any pets (32 percent).
The likelihood of owning renters insurance is not much higher (31 percent) among those who own and operate a firm out of their rental property than among those who do not (29 percent), the survey found.
World Cup: Most heavily insured sporting event starts in Germany
For the majority of Americans, June 9 is a Friday between June 8 and June 10. But for the rest of the world, that day marks the debut of a month-long football festival -- not the kind played in the United States, but the kind played everywhere else with just a round ball.
Professional soccer hasn't attained the degree of popularity in the United States that it enjoys in the rest of the world. But that doesn't mean Americans are ignoring the World Cup. According to the Federation Internationale de Football Association (FIFA) rankings, the U.S. team is currently 5th in the world -- tied with Spain, but ahead of such traditional soccer powerhouses as England, France, Italy and Germany -- so hopes are high that the team will live up to expectations.
The opening game in the 31-day tournament begins with a match between the hosts, Germany, and Costa Rica in Munich on June 9. Overall, there will be 64 games in 12 cities, which poses both security and coverage problems.
According to Swiss Re, which is a major insurer for the tournament, the World Cup and the Olympic Games are the most heavily insured sporting events. The broadcasting rights alone have an estimated value of $1.66 billion. There's also a great deal of concern with security; 21 of the 64 matches have been classified as "high risk" by Germany's Federal Bureau of Criminal Investigation. The security problems range from hooliganism to outright terrorist threats.
In an interview on the Swiss Re Web site, Peter Luck, head of Underwriting Special Risks, gave details on the coverage. "The German organizers purchased a cover for postponement into 2007 and for total cancellation/ abandonment from a whole syndicate of insurers in the value of approximately $191 million. Another liability cover was purchased to cover damages up to ≠140 million $179 million. Accident covers, were also considered, indemnifying visitors to games in the case of death or disability.
In 2003, FIFA, on the other hand, issued a catastrophe bond worth an equivalent of $260 million to cover the risk of a cancellation of the World Cup 2006 in Germany. The bond covers marketing revenue that FIFA would have to refund if the matches were cancelled due to natural catastrophes and terrorism."
Soccer is, in some ways, similar to baseball and cricket. You have to have grown up with it (or watched your kids grow up with it) to appreciate it. The fact that more people are fans than any other sport shows that it must have something going for it. According to FIFA, "an accumulated audience of more than 37 billion people watched the France 98 tournament, including approximately 1.3 billion for the final alone." An even greater audience awaits the start of Germany 2006.
Workers' comp market 'guarded' at the moment, expert says
Singer Bob Dylan's song, "The Times, They Are a Changin,'" was cited as a cautionary reminder by Steve Klingel, NCCI Holdings Inc.'s president and CEO, as he gave a positive report on 2005 results for the workers' compensation industry during the National Council on Compensation Insurance's May 11-12 Annual Issues Symposium in Orlando, Fla.
"Although Dylan didn't have workers' compensation or the property and casualty market in mind, it's a perfect mantra for our cyclical business," Klingel said.
"Each year, I have a word to describe my perspective on the workers' compensation industry for the coming year," Klingel said. He said in 2003, the word was optimistic. In 2004 it was cautious, 2005 it was flux, and for 2006, it is guarded.
While recent statistics have been positive, Klingel says the system will find itself out of balance, and may soon revisit results similar to the 1990s.
Klingel explained that traditional issues in virtually every state, such as skyrocketing medical costs, legislative reform initiatives, residual market issues, carrier insolvencies federal intervention continue to be challenges for the market. However, Klingel added that while such familiar issues can be critically important in the moment, he said non-traditional forces at work have the potential to fundamentally change workers' compensation insurance.
He put terrorism at the top of the list as something completely unpredictable with the potential to impact everyone in a myriad of ways on personal, business and societal perspective.
Second on his list was a looming medical crisis that could lead to new forms of health care service delivery, including government or private programs.
"Since workers' compensation represents only 2 to 3 percent of the overall medical pie, we could easily be swept along in any reform effort," Klingel said. "Previous efforts have included proposals for 24-hour coverage, and today, our national leaders are considering new directions and any number of traditional to political systems, from the recently initiated Medicare changes to private health savings accounts."
Klingel said the growth in medical and drug costs continues to be one of NCCI's top concerns for the market and the organization has been making every effort to accurately track and report on new developments. He said it may be necessary to track even more data on medical costs in order to provide the best possible information.
Third, financial markets are becoming even more global in nature, are highly technology enabled and can instantly react to economic, political and natural forces. He said distinctions are fading between insurance lines, reinsurance and other forms of financial risk management.
"Today, banks sell insurance, insurance companies sell investment services and retirement counseling, even Wal-Mart has applied to get into the financial services sector with its own banks," Klingel said. "What's next?"
The ongoing effect of Sarbanes-Oxley was the final item on Klingel's list of non-traditional concerns.
"Because of this act and because of the desire to create greater competition, regulators at state and federal levels have heightened their scrutiny of our industry," Klingel said. "Every transaction, process and financial exchange is more transparent. Over the long term this could be a positive development for all stakeholders. Over the short term, there will be an increased need for clear communication on the best ways to improve regulation while maintaining business goals and opportunities."
Klingel pointed out that workers' comp is not a form of social insurance and it is not untouchable. "It is entirely possible, maybe even likely that the system of 2020 will only faintly resemble the system of 2006," he said.
Klingel said tort reform also appears to be gaining acceptance at state and federal levels. He pointed to Mississippi, North Carolina and Missouri as examples of states where tort reform measures to reduce malpractice suits and restrict benefits for workers injured while under the influence of drugs or alcohol were passed. He also said this spring Florida became the ninth state in the nation to completely ban joint and several liability.
