If you’re looking for more information on the credit crisis and its impact on insurance, look no further than a new dedicated section on the Geneva Association Web site. The online section includes articles, papers and background materials from a variety of sources including insurers, trade associations and other partners. Geneva Association contributions include 10 Frequently Asked Questions on the Credit Crisis and Insurance. In the Q&A the Association notes that the direct impact of the crisis on insurance was limited, not least due to the wide diversification in insurers’ investment portfolios. It also makes the point that the credit crisis has not questioned the basic business model of the industry, i.e. insurance risk underwriting. These are all important considerations. Check out an I.I.I. report on the impact of the financial crisis by Dr Robert Hartwig, I.I.I. president, plus background info on the insurance guaranty funds.

Five major U.S. corporations have teamed up with investor coalition Ceres to launch a new business alliance calling for strong U.S. climate and energy legislation in early 2009. The group’s key principles include stimulating renewable energy, promoting energy efficiency and green jobs, requiring 100 percent auction of carbon allowances and limiting new coal-fired power plants to those that capture and store carbon emissions. The founding members of the Business for Innovative Climate and Energy Policy (BICEP) include such household names as Starbucks and Nike. The group says it will push the Federal government to enact legislative changes to spur a clean energy economy and reduce global warming pollution. Check out the I.I.I. background paper on climate change and insurance issues.

After a temporary hiatus, tort costs in the United States are rising again. The 2008 Update on U.S. Tort Costs by Towers Perrin finds that U.S. tort costs rose by 2.1 percent or $5.1 billion in 2007, fueled by the first increase in auto accident frequency since 1999. It follows a 5.6 percent decline in tort costs in 2006. Further, due to the current financial crisis and a bunch of other factors such as the potential for increased activity in the area of employment practices liability, Towers Perrin predicts that tort costs will increase by 4 percent in 2008 and an additional 5 percent in both 2009 and 2010. The 2.1 percent increase in tort costs in 2007 compares with an overall gross domestic product (GDP) growth rate of 4.8 percent. Since 1950 growth in tort costs has exceeded growth in GDP by an average of two percentage points. The upshot is that the U.S. tort system cost $252 billion in 2007, which translates to $835 per person – $9 per person more than in 2006. Everywhere we look the call is for more litigation. Check out further I.I.I. info on the liability system. 

Despite current economic conditions, nearly three in five (58 percent) women business owners predict their organizations’ revenues will grow in 2009 and nearly one-half (44 percent) do not expect difficulty in obtaining access to credit, according to a survey conducted by Chubb and the Women Presidents’ Organization (WPO). However, the same activities that will help grow their businesses may also increase their companies’ exposure to liability risk. Small to medium-size firms with more limited resources may be particularly vulnerable to the costs associated with a liability lawsuit, Chubb said. It highlighted product liability, errors and omissions (E&O) and employment practices liability (EPL) as areas to watch. For example, economic conditions can have a negative impact on employment-related claims and lawsuits. Even though the majority of survey respondents (89 percent) indicated they are not concerned about EPL risk increasing in 2009, Chubb noted that when companies lay off employees or reduce employee benefits there is generally a resulting spike in EPL lawsuits as well as incidents of workplace violence. Greater exposure to liability risks is probably a factor for all businesses right now. Check out the I.I.I. small businessowners’ guide to insurance and I.I.I. facts & stats on litigiousness for more information.

As three major wildfires (known as the Triangle Complex fire, the Sayre fire and the Tea fire) continue to burn in Southern California, homeowners and businesses that need evacuation preparation or claims filing tips should check out information from the Insurance Information Network of California. I.I.I. research shows that most of the large fires with significant property damage have occurred in California where some of the fastest developing counties are in forest areas. In fact eight of the 10 most costly wildfires in United States history occurred in California. Check out I.I.I. wildfire statistics.  

We look across the Pond today to a posting on the Lloyd’s risk blog by Trevor Maynard, head of the emerging risks team. It highlights the findings of a new report by the UK’s Royal Commission on the challenges and benefits arising from nanotechnology. The report points to areas of concern about governance and regulation of nanomaterials, such as “the profound ignorance and uncertainty about the behavior of some types of nanomaterial in the environment or the risks they pose for human health.” The Commission suggests that existing regulatory frameworks will need to be adapted to deal with nanomaterials. Here in the United States, the FDA’s Nanotechnology TaskForce report last year recommended the agency consider developing guidance to address the benefits and risks of drugs and medical devices using nanotechnology. As we’ve noted before, new technologies bring with them inherent benefits as well as risks. More than $1.1 trillion of products across a broad range of sectors incorporated nanotechnology in 2007, and this impact could extend to nearly $4 trillion by 2015, according to market research firm Lux Research. Food, drugs, medical devices and cosmetics are just some of the products that may incorporate nanomaterials. On both sides of the Atlantic, the regulation of nanotechnology is an evolving area that insurers will be monitoring. 

We all recognize what a valuable source of data the Internet can be. Whether it’s a Web site or social media such as message boards and blogs, there’s an infinite wealth of data that can be extracted online. A new Web tool from Google written about in the New York Times yesterday is one with potentially useful applications for our industry. According to the article, the tool — known as Google Flu Trends — may be able to detect regional outbreaks of the flu up to 10 days before they are reported by the Centers for Disease Control and Prevention (CDC). How? Well, Google has found a correlation between how many people search for flu-related topics and how many people actually have flu symptoms. It says a pattern emerges when all the flu-related search queries from each state and region are added together. When compared with data from a surveillance system managed by the CDC, Google discovered that some search queries tend to be popular exactly when flu season is happening. By counting how often it sees these search queries, it can estimate how much flu is circulating in various regions of the United States. What this amounts to is an early warning system for influenza outbreaks. We’re wondering what other applications this tool might have for insurers managing pandemic risks… 

Mercer, the consulting arm of Marsh & McLennan Cos (MMC), has introduced a new service to provide its clients with a carbon footprint analysis of their investment portfolios. The initiative is in response to the growing interest institutional investors have expressed in assessing and better managing the risks and opportunities associated with the impact of their investments on the environment and climate change. According to Mercer, the new tool will enable clients to better understand the carbon exposure of their equity investments. A portfolio’s carbon footprint is a measure of the impact that a company has on the environment in terms of the amount of greenhouse gas emissions produced. Mercer is working in partnership with environmental research organization Trucost. Check out the I.I.I. issues update on climate change. 

The non-life insurance sector as a whole appears to have remained relatively isolated from the direct impact of the credit crisis so far, but in the longer-term there are still several uncertainties. The latest outlook on the impact of the credit crisis on insurers comes in the first of a two-part report by Willis. In the 2009 Marketplace Realties & Risk Management Solutions: A Different Kind of Cat, Willis notes that the evidence to date suggests that non-life insurance operations have incurred relatively low exposure to the direct impacts of this credit crunch, despite the impact on some of the less traditional activities of certain insurance groups. Looking ahead, Willis says there will inevitably be some wider impact on the investment portfolios and investment returns of non-life insurers in the coming reporting seasons. In the longer-term, however, several uncertainties remain, including: the impact of current and future government intervention on the financial markets; how the insurance industry would respond to and recapitalize from a mega catastrophe or series of major losses; the extent to which the housing sector continues to deteriorate. Check out an I.I.I. report on the impact of the current financial crisis by Dr. Robert Hartwig, president of the I.I.I. 

In tough economic times there’s always a concern that cost-efficiencies may come at the expense of a company’s customers and employees. A new Web-based survey of claim officers by Towers Perrin conducted immediately prior to the global financial crisis appears to underscore insurers’ focus on strategic, growth-related actions – including the retention of key talent and expansion into new product or service lines – rather than across-the-board staffing cuts. According to its findings, claim officer respondents identified roles such as frontline technical resources (64 percent) and middle management personnel (51 percent) as among the most difficult to staff over the next three to five years. In filling vacant positions, claim officers look for different skills and competencies – problem solving (58 percent) was seen as the top core claim operations skill for those conducting adjusting operations. In contrast, the top skill for call center operators was soft people skills (92 percent). When it comes to retaining their current employees, claim respondents said it is the mix of pay, work/life balance and career advancement/growth opportunities that will keep those employees on board. As for recruiting top-notch candidates, nearly 70 percent said employee referrals are the most effective way to secure top talent. Check out I.I.I. stats on insurance careers and employment.