Spring 2012 - Claims Journal

Transcription

SPRING 2012 | VOL. 1, NO. 2
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SPRING 2012 | VOL. 1, NO. 2
CONTENTS
CLAIMS REVIEW
Report: Tornado and Hail Risk Extends Far Beyond Great Plains States 8
Head Injuries Most Common Injury in Teen Crashes 10
Fraud Focus: State Legislatures Make Headway in Battle Against Fraud 12
Made-Whole Interpretations Leave Insurers Feeling Empty 14
Sharing Information to Recover Stolen Cargo 18
SPECIAL REPORT
Seeing Green: Defining Undefined Loss Exposures 20
Claims Tales from Joplin 22
The Population Cost 28
Tips on Commercial Roofing Evaluations 31
IDEA EXCHANGE
Good Faith in Handling First Party Property Claims 32
Temporary Housing Provides a Permanent, Needed Service 34
How to Improve Risk Management with Better Claims Data 36
When to Allocate Defense Costs in Covered and Non-Covered Claims 38
Essentials: Examinations Under Oath 40
2012 Guide to Claims Education & Training 45
Final Offer: Cyber Risks 54
4 Claims Journal | Spring 2012
8
12
34
28
CLAIMS DEPARTMENTS
6
Opening Note
10 Dollars & Sense
13 People
16 Snapshot
17 Business Moves
42 Web Exchange
43 Calendar of Events
54 Final Offer
32
Spring 2012 | Claims Journal 5
OPENING NOTE
EDITORIAL
Seat at the Table
D
isaster response is at the core of the claims professionals’ mission and
purpose. It is in times of disaster when claims adjusters can mean the
most to policyholders.
As we approach the one year anniversary of one of the most devastating
tornado disasters of all time— the EF-5 (Enhanced Fujita Scale) tornado that
struck Joplin, Missouri, on May 22, 2011 — the industry and communities
nationwide should think about how to
better prepare and respond for the next
‘As we look to 2012
catastrophe.
we need to work
Part of that preparation is ensuring that homeowners and tenants have
together as a team.’
coverage in place with adequate limits to
restore their lives after a natural catastrophe. Yet, despite the critical benefit that insurance provides in a post-disaster
world, many people will continue to forgo purchasing needed coverages.
This is where U.S. governmental emergency management teams must step
in. But while the Federal Emergency Management Agency (FEMA) makes
news headlines for responding — or even not responding — to natural catastrophes, the private sector is often overlooked.
FEMA’s top leader says the story of the private sector’s role in disaster
response is one that’s often untold.
“When we look at the disasters last year, the unreported story was how the
private sector was a part of the recovery team,” said Craig Fugate, FEMA’s top
administrator.
The private sector should be engaged early and often in preparing for and
responding to natural disasters like hurricanes, Fugate said. That means teamwork between the federal government and the private industry.
“We need to give the private sector a seat at the table,” Fugate told participants at the recent National Hurricane Conference in Orlando. “The sooner we
can get private businesses — and government-backed infrastructure — up and
running, the sooner communities will recover.”
Governmental emergency management teams should
work inclusively with all partners to meet the needs of the
whole community when responding to and recovering from
disasters, he said.
Fugate discussed the work that federal, state, local and
tribal governments and voluntary organizations do on a
regular basis in preparation each year. He also focused his
remarks on the importance of engaging the private sector
early and often.
“Last year proved that the effects of hurricanes can
impact areas beyond just the coast,” Fugate said. “As we
Andrea Wells
look to 2012 we need to work together as a team, with all
Editor-in-Chief
[email protected]
our partners, the private sector and the public to ensure that
communities are prepared no matter where tropical storms
impact.”
Editor-in-Chief
Andrea Ortega-Wells | [email protected]
ClaimsJournal.com Editor
Denise Johnson | [email protected]
Vice President Content
Andrew Simpson | [email protected]
Insurance Journal East Editor
Young Ha | [email protected]
Insurance Journal Southeast Editor
Michael Adams | [email protected]
Insurance Journal South Central Editor/Midwest Editor
Stephanie K. Jones | [email protected]
Insurance Journal West Editor
Don Jergler | [email protected]
Insurance Journal International Editor
Charles E. Boyle | [email protected]
MyNewMarkets.com Associate Editor
Amy O’Connor | [email protected]
Columnists
Steven Plitt
Contributing Writers Steven Brewer, Anthony Canale, Kenneth
Gilvary, Howard Goldblatt, Hobart Hind, Janakiraman
Jagannathan, Paul Koepff, Stephanie Moore, John Schleiter,
Jeremy Smith, Lori Widmer
SALES
V.P. Sales & Marketing Julie Tinney (800) 897-9965 x148
[email protected]
Claims Journal/Southeast Howard Simkin (800) 897-9965 x162
[email protected]
West Dena Kaplan (800) 897-9965 x115
[email protected]
South Central Mindy Trammell (800) 897-9965 x149
[email protected]
Midwest Lauren Knapp (800) 897-9965 x161
[email protected]
East Dave Molchan (800) 897-9965 x145
[email protected]
New Markets Sales Manager
Kristine Honey | [email protected]
Classified Advertising (800) 897-9965 x125
[email protected]
MARKETING/NEW MEDIA
Marketing Administrator
Gayle Wells | [email protected]
Advertising Coordinator
Erin Burns | [email protected]
(619) 584-1100 x120
New Media Producer
Bobbie Dodge | [email protected]
Videographer/Editor
Matt Tolk | [email protected]
DESIGN/WEB
Vice President/Design
Guy Boccia | [email protected]
Vice President/Technology
Joshua Carlson | [email protected]
Design and Marketing Executive
Derence Walk | [email protected]
Art Director
Jamie Bethell | [email protected]
Web Developer
Jeff Cardrant | [email protected]
Web Developer
Chris Thompson | [email protected]
IJ ACADEMY OF INSURANCE
Director of Education
Christopher J. Boggs | [email protected]
Online Training Coordinator
Barbara Dooley | [email protected]
ADMINISTRATION
Chairman
Mark Wells
Chief Executive Officer
Mitch Dunford
Accounting Manager
Megan Sinclair | [email protected]
Cover Photo: © Reuters 2012
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more information.
CLAIMS REVIEW | NEWS & TRENDS
Tornado and Hail Risk Extends Far Beyond Great Plains States
M
any of the severe weather
events that occurred outside of
the Midwest in 2011, like the
“Super Outbreak” of tornados that devastated much of Arkansas, Mississippi,
Alabama and Virginia, were seen as an
anomaly. According to CoreLogic, however, historical data suggests that the
frequency and severity of storms is more
widespread than commonly believed.
CoreLogic, a provider of information,
analytics and business services, released
a new tornado and hail risk report that
analyzes the risk associated with changing tornado and hail weather patterns
outside of the narrow corridor in the
Midwest known as “Tornado Alley.”
Tornado Alley is typically considered
to encompass the Great Plains states
and surrounding areas, spanning Texas,
Oklahoma, Kansas, Nebraska, Colorado,
North Dakota, South Dakota and Illinois.
The report, “Tornado and Hail Risk
Beyond Tornado Alley,” discusses the
impact of record-breaking hazard events
across the country in the past year, and
provides insight into the extent of severe
tornado and hail risk in geographic
regions beyond the Great Plains.
“The apparent increase in the number
of incidents and shift in geographic distribution of losses that occurred last year
in the U.S. called the long-held notion of
risk concentration in Tornado Alley into
question, and is leading to changes in
risk management policy and procedure,”
said Dr. Howard Botts, vice president
and director of database development
for CoreLogic Spatial Solutions.
The perceived increase in the frequency and severity of tornado and hail
events in recent years could be attributed to a number of factors, including
improved observational tools, broadened
geographic distribution of modern Doppler radar stations, population growth
and migration to suburban areas.
Disaster news reporting 24/7 via television, online coverage and social media
have affected public awareness and
likely heightened sensitivity to severe
weather events in recent years.
There also is growing scientific evidence that there has been an increase in
severe weather outbreaks as the result of
rising global temperatures.
Beyond Tornado Alley
Tornado risk actually extends across
most of the eastern half of the United
States, rather than being confined to the
Midwest. At least 26 states have some
area facing extreme tornado risk.
Estimated property damage within
the Tornado Alley states from 20002011 was approximately $2.5 billion. In
comparison, the 16 states located outside
of Tornado Alley with the next highest
numbers of tornado touchdowns totaled
nearly $15.5 billion in property damage.
Those states extend as far north as parts
of Minnesota and as far south as Florida.
Hail Damage
At least 11 states have significant areas
facing extreme hail risk, and almost
every state east of the Rocky Mountains
has some area facing a moderate or
higher level of hail risk.
The area of highest hail risk extends
outward from the central Great Plains to
include states as far east as Georgia and
the Carolinas.
Hail storms in
Tornadoes
the Tornado Alley
nsured losses from the
region caused approximately $4.3
tornadoes, hail and high
billion in property
winds that struck in late
damage and nearly
February and early March
$1 billion in crop
may climb into the $1 billion
damage between
to $2 billion range, according
2000-2011. The 16
to catastrophe risk modeling
states with the next
firm EQECAT.
It is estimated that more
highest amounts of
than 150 tornadoes touched
hail damage outside
down in two distinct sysof Tornado Alley
tems between Feb. 28 and
revealed about $3.2
March 3, EQECAT said.
billion in property
At least 13 states were
damage and $400
affected by the storms.
million in crop damMany of the tornadoes
age over the same
have been rated EF3 on the
time period.
Enhanced Fujita Scale, acFor a copy of the
cording to Risk Management
report, visit www.
Solutions (RMS). CJ
corelogic.com. CJ
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CLAIMS REVIEW | NEWS & TRENDS
Head Injuries Most Common
Injury in Teen Crashes
Dollars & Sense
$7.8 Billion
The $7.8 billion
settlement deal struck by BP Plc with businesses and individuals suing over the massive
2010 Gulf of Mexico oil spill could speed up
payments to thousands of claimants and offers
lawyers a potential windfall in legal fees. BP
has already paid out about $6.1 billion to compensate about 220,000 plaintiffs from the Gulf
Coast Claims Facility, or GCCF, a trust fund
administered by Kenneth Feinberg. The latest
settlement will be in addition to that.
$3.8 Billion
A
mong the more than 55,000 teen
drivers and their passengers
seriously injured each year in
2009 and 2010, 30 percent suffered head
injuries, including concussion, skull
fractures and traumatic brain injuries
(TBI), according to a new teen driver
safety report released by The Children’s
Hospital of Philadelphia (CHOP) and
State Farm Insurance.
While the report highlights a decline
in teen driver-related fatalities in the
past six years, researchers are concerned
about the burden of motor vehicle crashrelated brain injury on families and the
nation’s health care system.
Crashes remain the leading cause of
death for teens and kill nearly five times
as many 15- to 19-year-olds as cancer or
poisoning.
“Since full recovery from serious head
injuries is often not achievable, there
can be a significant life-long impact
from these injuries on teens and their
families,” said Dr. Dennis R. Durbin, lead
author of the report and co-scientific
director for the Center for Injury Research and Prevention at The Children’s
Hospital of Philadelphia. “The brain is
the organ that is least able to heal, so
prevention is the best medicine.”
In 2010, 1,849 fewer teen drivers and
their passengers perished in crashes as
compared to 2005, according to the report. Researchers said this is a substantial public health achievement for those
State Farm Insurance
averages about 800,000 catastrophe claims annually, with payouts averaging $3.8 billion. In
2008, when State Farm saw more than one million catastrophe claims, those losses totaled an
unusually high $6.3 billion.
in traffic safety.
The researchers noted significant
variation in fatality rates among states
— ranging from a low of 3.9 deaths per
100,000 teens in Massachusetts to a high
of 29.1 per 100,000 teens in Montana in
2009-2010. The average annual fatality
rate for all 50 states was 9.5 deaths per
100,000 teens.
It’s in this variation that researchers
see opportunities to realize further reductions in fatality rates. The dramatic
variation is due, at least in part, to the
strength of a state’s GDL law, the report
indicated.
Twelve states implemented comprehensive GDL policy and other programs
to reduce their teen fatality rate by more
than 50 percent in just six years. Six
states — Arizona, Connecticut, Massachusetts, New Jersey, New York, and
Rhode Island — have maintained rates
of less than 10 crash-related deaths per
100,000 teens since 2005-2006. All six
states have comprehensive GDL laws,
according to the report.
“States with comprehensive GDL
laws have lower fatality rates than those
with weaker laws,” said Chris Mullen,
director of technology research for
Strategic Resources at State Farm Insurance. “Primary seat belt laws and teenfocused initiatives to increase seat belt
use will also help further reduce deaths
and injuries, even if a crash occurs,” he
said. CJ
1,600
Texas and Oklahoma experienced a record number of wildfires in 2011.
The Bastrop fire in Texas alone resulted in
more than 1,600 homes and structures being
destroyed and 34,000 acres being burned.
Persistent and intensifying drought conditions
forecast for a large section of the United States
for the coming year is expected to intensify
and spread wildfire activity in early 2012.
18
Statistics released by the National
Weather Service show that 18 Arkansans died
in floods in 2011 — the largest amount out
of any state in the nation. The state with the
second-highest fatality number resulting from
floods was Pennsylvania, with 16. Out of all
the surrounding states, Missouri had the highest amount with three deaths.
25,083
A recent report from the
National Insurance Crime Bureau (NICB)
identified 25,083 insurance claims for theft of
copper and other metals compared with only
13,861 identified from the 2006-2008 report
— an 81 percent increase. The top five states
that generated the most metal theft claims, according to the recent report, are Ohio (2,398);
Texas (2,023); Georgia (1,481); California (1,348);
and Illinois (1,284).
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CLAIMS REVIEW | FRAUD FOCUS
State Legislatures Make
Headway in Battle Against Fraud
By Howard Goldblatt
L
awmakers in several states are
trying to squeeze crash rings that
bedevil auto insurers with bogus
injury claims. Shady wheel deals steal
billions of dollars each year. But reforms
have no certainty of passage despite large
public benefits, as interest group politics
can poison the best proposals.
Florida, New Jersey and Michigan are
three hotspots. There, staged crash rings
and rogue clinics are being targeted.
Especially, several bills would whack
the recruiters (also called runners) who
send the gangs patients. Some of these
bills tackle an emerging trend: Parasitic
recruiters are badgering real crash vicA proposal aims to tackle the exploitatims for treatment at shady clinics.
tion of crash victims and stymie sleazy
This scam diversifies the old busitactics aimed at recruiting crash victims
ness model of stuffing a car with cronies
to sham clinics. Two proposals would
who pretend they’re injured to soak auto get rid of unwanted phone calls, knocks
insurers. Real crash victims are now
on doors, letters and other pushy tactics.
cash cows as well. Consumers thus may
The temporary freezes would last for
receive substandard, inflated or unneces- 30 days after a crash. Often-traumatized
sary treatment at sham clinics.
victims thus will gain time to choose the
Florida. The Sunshine State is
best medical and legal options without a
ground zero for no-fault fraud in the
pushy recruiter bugging them. The proviUnited States.
sions would:
Widespread stagedRestrict broad
Real crash victims are •solicitation
crash rings are
of crash
bleeding no-fault invictims; and
now cash cows for
surers. Clinics often
access to poauto insurance fraud. •liceLimit
are shams designed
accident reports,
solely to churn out
which recruiters use
dishonest injury claims. Two-car families to identify and locate crash victims.
pay a nearly $100 fraud tax each year, the
Meanwhile, a separate auto provision
Insurance Information Institute said.
unrelated to crash rings would make it a
Promising anti-fraud reforms passed
crime for drivers to illegally lower their
as part a larger no-fault bill March 10. As
auto premiums by lying about where
a result, clinics will face tighter licensing they garage their vehicles.
standards. Medical providers convicted
Michigan. Two measures could help
of fraud could be booted from the noMichigan battle crash gangs. First, the
fault system. And insurers will have
governor has signed a bill making it a
more time to investigate claims before
crime to recruit for crash rings, and for
paying. The right of insurers to conduct
the kingpins to hire recruiters.
examinations under oath was reaffirmed.
A second measure would create an
New Jersey. Shady no-fault clinics
auto fraud prevention authority. Michihave sprouted around the Garden State.
gan’s lack of a fraud bureau has ham-
pered efforts to take down crash rings.
The unit would fund investigations and
prosecutions. Drivers would fund the
unit with higher vehicle registrations.
There is a broader trend cropping
up with greater frequency among states
of fraudsters lassoing bona fide crash
victims for fake-injury schemes. This is
another way for crash gangs to diversify
their illicit revenue streams. State houses
are taking two counter-approaches:
• Block access to crash reports.
• Limit solicitation of victims.
Texas blocks most solicitation of any
kind. Florida limits access to crash reports for 60 days. Georgia forbids reports
to be used for “commercial purposes.”
But similar bills have fizzled in other
states recently. Ironically, police have stymied crash report bills in several states,
possibly because they are protecting
revenue they earn from selling reports.
Protecting crash victims from being
victimized needs far more attention,
study and protective legislation. The
well-being of policyholders and continued large losses for auto insurers both
are on the line. CJ
Goldblatt is the director of government affairs for the
Coalition Against Insurance Fraud. Website: www.
insurancefraud.org.
DEPARTMENTS
PEOPLE
Cincinnati, Ohio-based Great American Insurance Group promoted Aaron Latto to senior vice
president. He will lead the property and casualty
group’s corporate claims function and will be responsible for oversight of all U.S. and international claims
operations, including execution of claims strategy,
philosophy and quality management.
Latto joined the company in 2010 as a divisional
senior vice president in the corporate claims division
in Cincinnati.
Prior to joining Great American, Latto was a vice
president with Travelers Insurance, where he managed the business torts claim organization. Prior to
that, he was a lawyer in private practice, with a concentration in nationwide representation of insurers.
Before joining Harleysville, Phillion spent 31 years
with OneBeacon Insurance Co.
Pennsylvania-based Erie Insurance promoted Bill
Matrogran to vice president of claims training. He
will focus on continuing to improve the claims organization’s technical skills and enhancing development
opportunities.
Matrogran has been with Erie since 1993, and most
recently was section supervisor for property and
subrogation.
In addition, Jim Vrooman was promoted to vice
president of crisis prevention and management. He
will lead Erie’s business continuity, disaster recovery
and facility security groups.
He has been with Erie since 2011 and most recently
was director of crisis management.
OneBeacon Insurance Group Ltd. appointed
Maureen A. Phillips senior vice president and
general counsel. Phillips succeeds Brad Rich in this
role, who will continue with the company until his
retirement later this year.
Phillips’ legal career within the insurance industry
spans nearly 30 years. She was most recently chief
legal officer at Allianz Life Insurance. She also previously worked for Fairview Health Services and St. Paul
Travelers.
Edgewood Partners Insurance Center (EPIC)
has added Hilton Brown to oversee client claims and
advocacy in the company’s Los Angeles and Irvine,
Calif., offices. Brown will also provide claims support
for sister company PowerGuard Insurance Services,
located in Irvine.
Brown brings 22 years of claims management and
client advocacy experience to EPIC. Before joining
EPIC, he spent nine years with Marsh Inc., where he
managed client advocacy, negotiations with insurers
and adjusters, vendor relations, settlement support,
and claims oversight for general liability and property
loss throughout Marsh’s western region.
Harleysville Insurance named David J. Phillion assistant vice president of planning and analysis.
He will be responsible for information technology
(IT) finance and budgets, IT governance and process
improvement, project management office methodology, and the processing, reporting and tracking of
corporate performance metrics.
Ohio-based Mariposa Insurance Services promoted Stacey Henry to vice president of field services and client relations, where she will be responsible
for managing all field adjusting operations performed
for insurance carrier clients. She is responsible for the
deployment of adjusters, managers, quality assurance
staff, and all equipment and infrastructure to respond
to large natural catastrophes such as hurricanes, wildfires or earthquakes.
Henry joined Mariposa in 2005 as review manager
and subrogation specialist, and most recently served
as senior manager of field services.
John Elbl was appointed vice president of AIR’s
Business Development Group. He will assist with service and support for AIR’s commercial insurer clients,
as well as aid in developing software and models to
better meet the needs of commercial insurers.
Elbl joins AIR after 13 years with Zurich Insurance.
Aaron Latto
Bill Matrogran
Jim Vrooman
Pat Van Bakel was appointed chief operating
officer of Crawford & Co. (Canada) Inc. In his
new role, he is responsible for services supplied to the
Canadian property and casualty insurance market.
Van Bakel has been with the company for more
than 20 years and most recently served as senior vice
president, operations, insurer markets.
Hilton Brown
Polygon, provider of temporary humidity control
and disaster restoration services with 23 offices in
North America, named Jeran Hopkins director of
Large Loss.
Hopkins will be responsible for directing sales for
large commercial losses within North America and
play a lead role in Polygon’s catastrophe response programs. He will report to John Campanelli, president
of North America and Asia for Polygon, and will be
based in the company’s Dallas office. CJ
David J. Phillion
CLAIMS REVIEW | SUBROGATION
Made-Whole
Interpretations Leave
Insurers Feeling Empty
By John Schleiter and Hobart (Hobie) Hind
T
here is a growing trend among state courts to interpret the made-whole doctrine in ways that have the
potential to make it difficult for insurers to effectively
exercise their subrogation rights. In recent years, state courts’
decisions have increasingly created hurdles for insurers before
they are able to actively pursue recovery for payments made
to their insured. These requirements could have a potentially
chilling effect on the field of insurance subrogation.
The most recent state to join this trend is Arkansas. In
2011, the Supreme Court of Arkansas decided Riley v. State
Farm Mutual Automobile Insurance Company 2011 Ark. 256 (2011).
In its decision, the court held that before an insurer could
initiate an action for subrogation, the insured must be “made
whole.” While the made-whole doctrine is not a novel concept
in the insurance arena, this court took a very novel and narrow approach as to when an insured has been made whole.
The court ruled that there are only two ways to determine
whether an insured has been made whole: 1) by a declaration
in agreement between the insurer and insured that the latter
had been made whole; or 2) by a judicial determination.
One of these two events must occur before a subrogation
lien can even arise, and premature pursuit of a subrogation
action before either one of these events occurs is automatic
grounds for dismissal for failure to state a claim, and the possible award of fees and costs in favor of the defendant.
in a property claim is different from that analysis in a medical
claim, workers’ compensation claim, liability/indemnity claim
and auto claim.
Using a typical property claim as an example, if the
property carrier has paid 100 percent of the money it owes to
its insured under its policy, what valid reason is there for not
allowing the carrier to pursue its rights of recovery? Likewise,
if an insured is asking for damages that are not provable or not
recoverable, why should a valid subrogation claim ever stand
behind that claim in pursuit of a tortfeasor?
Ruling Concerns
What is troubling about this ruling is that in cases in which
insureds refuse to admit they have been fully compensated for
an injury, the insurer is forced to have the issue fully litigated
before it is able to commence a recovery action. In effect, this
opens the door for those insureds to become unjustly enriched
by way of double recovery if the insureds receive payment
from both the liable tortfeasor and their insurer who determines that it is not worthwhile to pursue litigation to obtain a
judicial determination before pursuing a recovery action. The
ruling has the potential to create the very outcomes that the
laws of subrogation were first created to prevent.
In addition, while the Riley case involved a medical payment benefit (hence the word “lien” in this case), it would be
easy for courts to apply this case across all lines of recovery
within the insurance industry. As all claims professionals
know, the analysis of when an insured has been “made whole”
Burden of Proof
It is troubling to survey cases in every state that have discussed the made-whole doctrine to see how seldom the courts
“drill down” to the core concepts of what “made whole” means
within each genre of recovery across the insurance landscape.
The court’s ruling in Riley also left unanswered the question of who has the burden of proving an insured has been
made whole. While the circuit court ruled that it would be
left to the insured to prove that she had not been fully compensated for her injury, the Supreme Court of Arkansas did
not address the issue.
The issue of who has the burden of proving whether the
insured has been made whole is unclear in other states as
well. For example, in a recent Montana state court case involving an insured’s action to prevent the insurance company
from enforcing its subrogation rights, the court noted that “it
appeared” the burden fell on the insurer to prove that the in-
sured had been made whole, but did not
address the issue any further. Poppleton v.
United Services Automobile Association, 2011
Mont. Dist. LEXIS 52 (18th Dist. 2011). Determining which party carries the burden
of establishing whether an insured has
been made whole may have a large impact
on whether an insurer decides to pursue
litigation for a judicial determination.
Other state courts have applied a similarly strict definition of when an insured
has been made whole. For example, Montana courts have ruled that an insurer is
precluded from bringing a subrogation action when the insured has independently
negotiated a settlement agreement with a
tortfeasor for less than the insured’s total
loss. The reasoning behind the ruling is
the same as is applied in Arkansas — the
insured was never made whole.
Montana Ruling
Instructive of the position of Montana courts on this issue is the Supreme
Court of Montana’s decision in Swanson v.
Hartford Insurance Company of the Midwest,
2002 Mt. 81 (2002). The court ruled that
the insurer had no subrogation rights
even after noting that the tortfeasor’s
“limits of liability exceeded the amount
of the settlement reached between the
[insured] and the [tortfeasor].” This ruling
effectively allows an insured to negotiate
a settlement with a third party without
giving any consideration to its insurer’s
rights to subrogation. By agreeing to settle a claim for less than the total amount
of the damages sustained by the insured,
the tortfeasor effectively insulates itself
from further liability in a subrogation action. This ruling leaves insurers without
any recourse to recover payments made
and, again, allows for the possibility that
the insured will receive double payment.
As is evident from this situation, the
subrogating carrier, having fulfilled each
and every obligation it has to its insured,
may still be powerless to seek recovery
even when there is no true public policy
argument against recovery (one could see
a valid public policy argument against
recovery where a tortfeasor has very
low liability policy limits and where the
insured’s uninsured losses exceed those
limits).
The National Association of Subrogation Professionals (NASP) is aware of
these and other threats to an insurer’s
right to pursue subrogation. To this end,
NASP’s Amicus Committee has developed
and implemented the Subrogation Rapid
Response Team (SRRT) to respond to
proposed legislation and recent decisional
law that has the potential to negatively
affect subrogation rights. For information,
visit www.subrogation.org. CJ
Schleiter is an attorney and partner in the Chicago office of
Grotefeld, Hoffmann, Schleiter, Gordon & Ochoa LLP. Hind
is an attorney and partner in the Tampa office of Butler
Pappas. Both work extensively on property subrogation matters, are members of the National Association of Subrogation
Professionals board of directors.
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CLAIMS REVIEW | SNAPSHOT
Before and After: Beatles Poster
Value: $3,000
Treatment Cost: $800
T
he damaged Beatles poster was
brought to The Conservation Center
due to an impact in which a client
inadvertently threw the poster away in the
trash. Once recovered, a paper conservator responded to the tears by relaxing the
deformations in the sheet where it was torn
and crumpled. The poster underwent passive humidification treatment in a Gortex
package. It was then placed between cotton
blotters to wick away moisture while it flattened under weights. The tears were carefully realigned and mended using Japanese
tissue and wheat starch paste, an archival
adhesive. The poster was then backed to a
secondary mount, which offered structural
support for the compromised paper and
kept the poster flat. Finally, areas of loss to
the printed inks were retouched to reduce
the visibility of the damage. CJ
discussions on technology
& claims management
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DEPARTMENTS
BUSINESS MOVES
LWG Consulting
LWG Consulting has merged with
Newark, N.J.-based Electronic Loss Consultants.
Prior to the merger, Electronic Loss
Consultants, managed by Stephen
Aghaei, offered equipment loss consulting and equipment restoration services to
insurance claims professionals primarily
along the East Coast of the United States.
With this merger, LWG added Stephen
Aghaei as a senior technical consultant,
based out of the Newark office. Aghaei
joins LWG with more than two decades
of experience providing evaluation and
assessment of electronic and electrical
equipment following disasters.
Trinity Insurance Services Group
Trinity Insurance Services Group,
a national independent adjusting and
third-party administration firm, has
added office locations in Austin, Houston,
Dallas and San Antonio, Texas.
With the recent purchase and integration of Axcel Claims, the company has
an adjusting staff of 65 to handle Texas
claims.
Mutual Service Office (MSO),
Mariposa Insurance
The Mutual Service Office Inc. (MSO),
a property/casualty rating service bureau,
has partnered with Mariposa Insurance
Services Ltd., an independent adjusting
firm.
For more than 15 years, Mariposa has
offered catastrophe and daily adjusting
services to insurance companies through
a nationwide network of adjusters. Mariposa specializes in daily property and
casualty claims and complete catastrophe
support.
against losses from individual hurricane
events in Hawaii, Puerto Rico and along
the Gulf and Eastern Coasts of the United
States.
Additional details regarding Assurant’s
Catastrophe Reinsurance Program for
2012 will be announced after the placement of the program with reinsurers this
summer.
Assurant
Assurant Inc., a provider of specialty
insurance and insurance-related products
and services, announced that some of its
subsidiaries have entered into reinsurance
agreements providing for $130 million in
three-year, fully collateralized reinsurance
from Ibis Re II Ltd., a special purpose
reinsurance company domiciled in the
Cayman Islands. Bonds issued by Ibis Re
Ltd. in 2009 for $150 million will expire in
May 2012.
Ibis Re II financed the property catastrophe reinsurance coverage by issuing
$130 million in catastrophe bonds to
qualified institutional buyers. The coverage complements Assurant’s traditional
catastrophe reinsurance, which provides
protection from catastrophic storm activity.
As a component of Assurant’s comprehensive risk management program,
the Ibis Re II reinsurance consists of two
separate layers of coverage for protection
Symbility Solutions, MSB
Symbility Solutions acquired Marshall
& Swift/Boeckh’s (MSB)’s claims division,
including contracts, claims employees,
software and analytics assets. In consideration for these assets and a cash investment, MSB’s parent company, Decision
Insight Information Group, will become
the largest shareholder with a one-third
equity stake in Symbility’s parent company, Automated Benefits Corp.
Symbility Solutions and MSB will
integrate their property claims workflow
software, claims loss estimating solutions
and process analytics.
MSB also has entered into a long-term
strategic license agreement with Symbility to integrate MSB’s claims estimation
data into Symbility’s mobile claims software.
Decision Insight is a TPG Capital
portfolio company, and representatives of
both organizations will join the Automated Benefits’ board of directors. CJ
CLAIMS REVIEW | CARGO
Sharing Information to Recover Stolen Cargo
I
n the past several years, cargo theft has evolved from a regional opportunistic problem to an organized national epidemic. From the 1970s through the mid-1990s, local gangs
would target a high-value trailer here and
there, and its contents would be distributed
back into the local gray market. Nowadays,
international crime syndicates use a more organized approach that includes taking orders
from gray and black market outlets, conductBy Anthony Canale ing surveillance (and counter-surveillance),
and executing thefts professionally and
efficiently at a warehouse or while cargo is in transit.
Cargo theft costs the U.S. economy billions of dollars per
year and is paid for by manufacturers, retailers, insurers and
consumers. To combat this costly problem, the property/casualty insurance industry launched a CargoNet initiative in 2010
as a way to overcome the data-sharing challenges between the
public and private sectors. Through collaboration between the
National Insurance Crime Bureau and Verisk Crime Analytics,
CargoNet helps to prevent cargo theft and to improve recovery
rates using secure and controlled information sharing between theft victims, their business partners and law enforcement. The utility and security of the system encourages insurers and policyholders to provide quick, detailed information
that can be quality controlled, shared with law enforcement,
and made part of the CargoNet database.
At CargoNet’s core is a national database and secure
information-sharing system managed by crime analysts and
subject-matter experts. By applying a synchronized, layered
approach, CargoNet exploits the weakness of cargo thieves
at multiple points through integrated databases, a theft alert
system, task force and investigations support, and a tractor/
trailer theft deterrence program.
Since cargo theft incident data collection began in 2010, the
amount of reported incidents has grown significantly each
year. In 2011, CargoNet collected 1,215 cargo theft incidents
from across the United States — a 23 percent increase from
data collected in 2010. However, the increase in theft data collected does not necessarily indicate an increase in the cargo
theft problem. Instead, it reflects the improved collaboration between the public and private sectors.
While data comparisons between 2011 and 2010 may
not necessarily provide full insight into theft growth
trends, the overall data is still telling. Following
are statistics from 2011 and lessons
that insurers should draw from
the data.
Cargo Theft by Location
The top states where cargo
theft incidents were reported in
2011 include California, Texas, Florida, New York/New Jersey,
Illinois, Georgia, Tennessee and Pennsylvania.
Top States for Reported Cargo Theft Incidents in 2011
State
Reported Incidents
California
304
Texas
173
Florida
146
New York/New Jersey
147
Illinois
88
Georgia
76
Tennessee
32
Pennsylvania
29
These states report more reported cargo theft incidents
than others, first, because of their geographic locations; these
states have a high flow of cargo because they include large cities, active ports, transit choke points and distribution centers.
Second, most of these states have dedicated cargo theft task
forces, so they are more likely to report cargo thefts than a
local police department, although recoveries also are higher.
As public safety budgets shrink, such task forces will
be under significant budgetary pressure, and the insurance
industry must be prepared to find new and innovative ways of
supporting law enforcement. Putting better policyholder and
claims reporting mechanisms in place is a good starting point.
Cargo Theft by Day of Week and Location Type
The days with the highest number of reported cargo theft
incidents in 2011 were: Friday, Saturday, Sunday and Monday.
Days With Highest Reported Cargo Thefts
Day
Reported Incidents
Friday
211
Saturday
195
Sunday
183
Monday
164
Most theft likely occurs over the weekend because most businesses are closed and warehouses are unstaffed, forcing many
drivers to hold cargo until the next business day. As a result,
some drivers may leave full trailers unattended at truck stops
(139 reported incidents), warehouses or distribution centers
(122), public parking lots (115), and carrier or terminal lots
(94). Understanding that the most critical time in a cargo theft
investigation is the first 24 hours, insurers need to assess their
capabilities to operate 24/7 to support policyholders.
Cargo Theft by Commodity
The top product types stolen in 2011 were prepared foods and
beverages; electronics, base metals; and clothing and accessories.
Top Product Types Stolen in 2011
Product
Reported Incidents
Foods and Beverages
242
Electronics
224
Base Metals
115
Clothing and Accessories
104
These four commodities have always been near the top of the
list of most-stolen commodities because they are easily sold on
the gray and black markets. The past two years have shown an
increase in the theft of base metals because of the rise of base
metal value within the economic marketplace. Different types
and layers of security are needed for different shipments — one
size does not fit all. Underwriters can influence such decisions.
Cargo Theft by Loss Value
The total loss value for cargo theft incidents reported to
CargoNet in 2011 was approximately $123 million. Of that total,
electronics had the highest total loss value at approximately $58
million; clothing and accessories had the second highest loss
value at about $14 million; and prepared foods and beverages had
the third highest loss value at approximately $12 million.
To effectively mitigate cargo theft losses, information sharing between theft victims, their business partners, and law
enforcement must continue to improve. Information sharing not
only helps recover stolen cargo, but it also helps transportation
companies optimize security measures and prevent cargo theft. CJ
Chief of Police (Ret.) Canale is general manager of CargoNet, a division of the Verisk
Crime Analytics unit. Website: www.cargonet.com/insurance.html.
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SPECIAL REPORT | GREEN
WORKPLACE
CONSTRUCTION
INJURIES
SEEING GREEN:
Defining Undefined Loss
Exposures in Green Construction
As eco-friendly building and renovating increases in popularity, the adjusting
community tries to wrap its arms around what exactly constitutes damage.
A
green heating system that doesn’t heat. LEED-certiThe crux of the complaint was Gifford’s contention that green
fied units that meet fewer than half the requirements
energy was not more efficient than regular energy options.
for certification. Clients suing construction firms
The $100 million suit was dismissed because the court found
because of lost tax breaks from promised green buildings.
that the plaintiffs in the class action suit did not show
Welcome to green construction. Even as the green conUSGBC caused them any harm. Still, Gifford has managed to
struction movement is taking wing, legal
get the industry talking about what constiexperts are warning of the dangerous
green and just what is bought when
Courts and insurers tutes
territory ahead.
one purchases a LEED-certified property.
Some such territory includes lawsuits
What seems to be the most telling statestruggle to define
like this: A builder is sued by the client
ment by the ruling judge Leonard Sand
green construction.
because the client lost a tax break for
spells out one of the primary issues with
Leadership in Energy and Environmental
green construction: “Because there is no
Design (LEED) certification, because the building ultimately
requirement that a builder hire LEED-accredited professiondid not meet the LEED level asked for by the client. Other
als to attain LEED certification, it is not plausible that each
lawsuits include a luxury condominium complex in Batcustomer who opts for LEED certification is a customer lost
tery Park City, N.Y., where its owners are suing developers
to plaintiffs.”
for $1.5 million for fraud and breach of contract, stating the
building isn’t as green as advertised.
The Uncertainty of ‘Green’
Probably the most prominent lawsuit was one filed against
That speaks to the crux of the green problem. What makes
the U.S. Green Building Council (USGBC) by Henry Gifford,
a building green and who’s deciding it? That question still
owner of Gifford Fuel Savings. He claimed the organization
goes unanswered as courts and insurers alike struggle to wrap
committed fraud, created unfair competition, practiced
definitions around green construction. For a building to be
deceptive trade practices and engaged in false advertising.
certified as a LEED design, it must meet a checklist of require-
ments, and the point values assigned to each requirement
ers, he said, are writing endorsements and providing property
determines the level of certification.
insurance specific to the green construction exposures. While
Aside from a LEED certification, the definition of “green”
such coverage will be at a premium, that premium may be
becomes a bit more dicey. According to the California Demodestly higher. Farber has a client currently who will pay
partment of Resources Recycling and Recovery (CalRecycle),
just 5 percent over a standard endorsement due to the size
“A green building, also known as a sustainable building, is
and level of green in the building.
a structure that is designed, built, renovated, operated or
Premiums aside, what constitutes loss seems to be the largreused in an ecological and resource-efficient manner. Green
er question. Farber gives the example of an expectation of a
buildings are designed to meet certain objectives such as
gold-standard building, but having a silver-standard property
protecting occupant health; improving employee productivdelivered. “Is the damage based on the loss of the gold, or is it
ity; using energy, water and other resources more efficiently;
limited to the costs of bringing that up to the gold standard?”
and reducing the overall impact to the environment.”
he asked.
Just what those objectives are and
Separating what is a green-related loss
what constitutes “resource-efficient” use
and a traditional loss is a sticking point for
What constitutes a
has yet to be defined clearly.
many insurers. Jim Cooper, co-chair of the
Policyholder Insurance Group at Gardere
green-related loss
Feds Offer No Help
Wynne Sewell LLP, said insurers will often
and a traditional loss deny coverage for building defects or when
Don’t look to the federal government
to clarify things.
is often at question. something goes wrong that damages the
The Environmental Protection
building itself or the product installed.
Agency’s own definition of green building, presented in 2008,
Cooper, who works with builders and contractors, said he
is “the practice of maximizing the efficiency with which
hasn’t seen much case law just related to LEED or green
buildings and their sites use resources — energy, water and
projects.
materials — while minimizing building impacts on human health and the environment, throughout the complete
The Million-Dollar Question
building life cycle — from siting, design, and construction to
How do we determine damages? With few cases to turn to
operation, renovation and reuse.”
for precedent, experts think that answer is a long way from
There’s a reason for being vague, and Stephen Del Percio
perfected. Cooper said he would examine a defect in this way:
thinks it’s a good thing.
“Is that the product not working or the product damaging
Del Percio, a construction and real estate attorney in New
something?” The former is a product claim; the latter could
York who blogs regularly on green property issues, thinks
be a green claim if “the failure to work properly diminishes
the definition should match the needs of the owner and any
the value of the building or causes the owner to evacuate the
regional circumstances. He explains: “In the desert Southbuilding for a significant amount of time.”
west, a green building could be one that doesn’t consume
Cooper said many green property policies do cover loss of
a lot of water.” He said LEED certification now comes in a
use and can cover diminution of value. What he sees as chalregional credit system to address where the building sits and
lenging is finding the property damage.
what those needs are.
Del Percio sees the same problem. “If a building doesn’t
Even who is ultimately deciding what the standard is has
earn certification, do you look at what the per square foot valquestion marks surrounding it. Lawyers, in Stuart Farber’s
ue of a LEED rating is versus a non-LEED? The real problem
view, are working out the details case by case and contracthas been there hasn’t been a case where this kind of scenario
by contract. Farber, CEO and chair of Preferred Concepts,
has played out.”
an insurance services and program administration firm, said
Without clear parameters, insurance adjusters and the
there’s plenty to work out. Including direct financial loss,
insurance industry are left to define damages on a case-byzoning and ordinance noncompliance, lawsuits and legal
case basis. Forget looking to claims history — according
entanglements are beginning to blossom.
to Del Percio, there have been only very few claims to date
“Many lenders, both mortgagees and in some cases leases,
under insurance policies. Most of those claims have related to
are requiring a targeted LEED rating,” Farber said. “If that is
advanced building systems used in green construction.
not met, where’s the breach? Where’s the damage? Who pays
The challenge for adjusters and the insurance industry, he
for it? And who’s responsible?”
said, is to understand what those technologies are, how they
Also, the owner of the green building is paying for green
work, and what their performance shortcomings have been.
construction, Farber said, which comes at a higher price tag.
“Most of the issues that sustainable construction presents
Materials costs, construction techniques, industrial hygiene,
are within new technologies and advanced technologies that
and LEED architect/engineering help jack-up the costs
people may not have familiarity with at this point,” he added.
quickly. All of these elements and more become relevant
Contracts, he believes, will be the ultimate deciding factor.
when upgrading or building within green standards.
“How [green] is defined is going to be in the contract between
How this affects insurance is still fleshing itself out. Insurthe owner and professional.” CJ
SPECIAL REPORT | JOPLIN TORNADO
JOPLIN
How Insurance Adjusters Helped Missouri Tornado Victims Cope
By Denise Johnson
“
ONE OF THE EERIEST THINGS WAS … THE LACK OF
NOISE. THERE WERE NO BIRDS. THERE WAS NO SOUND. THERE
WAS NO VEGETATION. THERE WAS NOTHING. THERE WERE NO
DOGS. THERE WERE NO CARS. IT WAS JUST MOUNDS OF RUBBLE
THAT RAN 10 OR 12 MILES … AND ANYWHERE FROM A MILE AND A
HALF TO 2 MILES WIDE,
”
... said Steve Keeney, catastrophe response team adjuster for
Shelter Insurance, describing the aftermath of the devastating EF-5 (Enhanced Fujita Scale) tornado with winds
more than 200 mph that struck Joplin, Missouri, at 5:41 the
evening of May 22, 2011.
Emergency responders from 14 states aided Missouri’s
fourth largest city after the spring storm wiped out a third
of the community, causing 161 deaths.
More than 500 residential properties, 35 miles of roadway and 700 city blocks were destroyed. Also, 1.2 million
cubic yards of debris had to be cleared from 2,700 lots.
Police sought the help of insurance claims adjusters,
cross-referencing policyholders making claims with their
list of the missing.
Dean Welton, catastrophe claims field manager for the
Madison, Wis.-based American Family, grew up in southern Missouri. He was on his way to visit field adjusters in
Minnesota when he had to turn around and head back to
Missouri. Having worked in the catastrophe department
since 2003, he’s seen his fair share of devastation, but nothing prepared him for Joplin.
It took a day to drive down and another day to get to
the scene due to access issues, Welton said. In addition
to using its cat vehicle, his company set up shop in local
agents’ offices. Many of the hotels were already booked
with displaced homeowners, so the adjusters stayed in the
neighboring towns of Springfield and Rogers, Ark.
“When I first arrived down there, a lot of the local office
adjusters and local field management were at one of the
offices up on the north side of Joplin,” Welton said. “Usually
in other situations, in other tornadoes, you talk to one or
two people that have lived through this traumatic situation
but in Joplin, it was everybody you talked to. Everybody
had felt the brunt of the storm.”
According to Welton, half the city was gone. He compared the scene to a war zone.
“It was just a situation that, again, in most tornadoes,
continued on page 24
© Reuters 2012
Claims Tales, continued from page 23
you can see where a tornado hits a neighborhood or hits a
certain area of the town, but usually, it’s pretty concentrated
the damage is. But with Joplin, it was just like the whole
city ... a bomb had been dropped, and just blew. It was like
you were watching CNN in a country that was experiencing
warlike conditions, and not something a tornado would have
happen. It was pretty mind-blowing,” Welton said. “I’ve been
with the ‘cat’ department since 2003, so I’d worked several
tornadoes, and several of them large, but nothing like this.”
Comparing an average catastrophe loss to Joplin, while it
usually takes a half-day to locate the perimeter of the loss,
it took almost three days because of access issues and the
scope of the damage. Welton estimated that claims involving
homes that were a total loss were resolved within 10 days to
two weeks. Contents losses took longer. Normally, adjusters
working catastrophe losses put in 12-hour days. In this case,
American Family’s cat team worked 16- to 18-hour days.
American Family’s catastrophe response team processed
nearly 2,300 claims and paid more than $100 million in property, auto and commercial claims.
Keeney, the adjuster with Shelter Insurance’s catastrophe
response team, was already in the Joplin area handling hail
claims when the skies began darkening that fateful Sunday.
“On Sundays, we typically work two or three claims,”
Keeney said. “I was on my last one at about five o’clock, just a
few miles north of Joplin. It had been an extremely hot and
humid day. The humidity was so high that you just knew
that it was eventually going to result in a rain. It was one of
those things in the back of my mind I kept thinking, eventually once it comes, it’ll bring some relief to that humidity
and knock it down a little bit. So along about four o’clock or
so, I could see that the sky was getting dark, and the storm
was coming in.
‘When you start seeing all these
people going through what they’re
going through, it just kind of takes
your breath away.’
“I had just finished my last roof at about 4:30 or 5, and
I was staying over in Springfield, Mo.,” Keeney continued.
“Rather than come down and hit I-44 coming through the
heart of Joplin, I decided to take some back county roads because the storm looked so dark that I thought I would avoid
driving through the heavy rain and try and get ahead of it as
I was heading east back towards Springfield. Then once I got
back to Springfield at about 6:30 and turned the TV on, then
[I] realized that what I had [seen] and what I was trying to
get ahead of was in actuality the F5 tornado.”
Keeney put in 12-hour days and worked Joplin claims for
seven months. “I was there right up until the week before
Christmas, working three week straight rotation and then
five days off, and then back for another three weeks,” he said.
“This thing was just like a tsunami of wind that just leveled everything in its path. There was no structure standing;
7,000 structures were leveled — businesses, hospitals, office
complexes, apartments, sheds, garage, outbuildings, trees,
shrubs. There was virtually nothing left standing,” Keeney
said.
Elisabeth Sobczak, a trainer with property claims experience, drove Shelter Insurance’s storm van down to Joplin
on Sunday evening. She was one of the first to arrive on the
scene along with emergency medical personal.
“It didn’t seem chaotic. It just seemed like people were
trying to get their world back,” Sobczak said.
She helped storm victims change tires, and provided
food, water and even handed out trash bags so people could
collect their belongings. “It would amaze you the value of a
Hefty bag. Their possessions are just everywhere and those
that were lucky enough to have it, still on their property
… were trying to pick through the debris to see what they
could salvage, and it was only what they could carry in
their arms because they had no place to put it. People were
crying, saying thank you because they at least had a place to
start collecting their belongings,” she said.
Sobczak described holding Joplin residents who needed
someone to listen and a shoulder to cry on.
Some Frustration with
Payment Delays, Reductions
“You hug people and you don’t let go. You let go when you
feel them let go,” Sobczak said.
The day after, Sobczak described a big black wall cloud that
unleashed a powerful rain and hail storm to the already weary
Midwestern town. Joplin ended up being under a tornado
watch most of the week after the initial tornado struck.
“For days on end it just kept looking like another tornado was
going to fall out of the sky,” Sobczak said. “People … were just
traumatized. Some people didn’t know where to begin. They
were very thankful for their lives. There was anger in some.”
She described an 18- or 19-year-old girl whose mother was
found underneath a car in her house. The teen had to identify
her mom’s body. “Here’s a young lady who had to identify her
mom,” Sobczak said. “It’s very sobering because it really brings
to light people’s mortality.”
Larry Potalivo, a catastrophe adjuster with Crawford & Co.,
a global independent adjusting firm, was assigned to Joplin
about two weeks after the EF-5 tornado struck. He stayed there
for two months.
“I’ve never seen the kind of destruction that I’ve seen there.
It was overwhelming,” he said.
In the hardest hit area, he saw there were very few homes
with walls that were still standing. A hospital was destroyed.
“There was just no safe place to be in a house in an EF-5
tornado,” Potalivo said.
He described another incident where the powerful tornado
threw a car into a family home.
“There was a man and his 30-year-old son, and they were in
their house. They heard the noise, that freight train sound that
continued on page 27
W
hile insurers responded quickly after the tornado struck
Joplin, issuing payments for destroyed homes within
weeks, they took longer to resolve contents payouts.
According to Ron Richard, a Missouri state senator who sponsored legislation (SB 619) designed to address the issue, there is a
loophole in Missouri law regulating how insurers calculate payouts
on homes destroyed in disasters. Currently, insurers are required
to pay out the full value of a homeowner’s policy for both real and
personal property if the home is a total loss and destroyed by fire.
But other disasters like tornadoes aren’t covered by that.
“Insurers only have to pay what the home is worth at the time
of the loss. When the housing market is down, as it is now, people
are getting far less for their homes than what they paid on their
policies,” Richard said.
His legislation also addresses contents claims issues where
insureds have no inventory or where it has been destroyed.
“They [insureds] also have to provide an itemized list of all their
personal property, and justify the value, to receive their personal
property coverage from the insurer,” Richard said. “This is simply
not right. People who have lost everything — their home, their
possessions, in some cases their livelihoods — should get the full
value of their policy.”
The bill proposes to modify the state statute to include wind
or tornado disaster, requiring insurers to pay policyholders the
total face value of the policy for loss or damage to a home from any
disaster covered under the policy without claiming diminished
value on the property.
Larry Potalivo, a catastrophe adjuster with Crawford & Co.,
recommends policyholders keep an inventory list in a safe deposit
box to avoid content claims delays.
Missouri’s insurance director is reviewing the bill. CJ
Researchers Explore Joplin Residents’ Coping Strategies
T
he May 22 tornado that hit Joplin, Mo., killed 161 people,
and it also affected thousands of others physically
and mentally, according to Drury University
researchers. The Springfield, Mo., school is analyzing how survivors dealt with the physical,
mental and emotional stress in the aftermath of the tornado.
The Joplin Project, led by psychology
professor Jennifer Silva Brown, and her
students, interviewed and submitted
surveys to 80 Joplin tornado victims last
fall.
The researchers hope the questionnaire will help them determine if the
victims were suffering from depression,
anxiety, post-traumatic stress disorder or
other stress-related maladies.
“We’re trying to distinguish those who are struggling from those who are resilient and healthy,” Brown said. “We
also look at how survivors coped with the tornado, by asking
if they turned to such things as exercise, prayer, interaction
with friends or family, and use of drugs and/or alcohol.
The ultimate goal is to understand which characteristics promote a healthy adjustment to postdisaster life.”
Brown’s students are just beginning
to draw conclusions from the resulting
statistics.
“Those individuals that report the
greatest satisfaction with their social
support actually report the lowest levels
of psychological distress. So they report
the lowest levels of depression, anxiety and
post-traumatic distress. Those individuals also
report the greatest resilience over time,” Professor Brown said. “We can actually say social support
is instrumental in fostering psychological help following
a disaster.” CJ
1.2 million cubic yards of debris
cleared from 2,700 lots.
Shelter Insurance spent about
$72 million on approximately
2,200 Joplin claims.
More than 40% of Joplin residents
affected by the tornado were tenants
who had no renters insurance.
7,000 structures leveled
600 FEMA trailers
currently house
displaced tenants.
More than 500 residential
properties, 35 miles of roadway,
and 700 city blocks destroyed.
NOAA
Emergency responders from 14
states came to Joplin’s aid.
Joplin Tornado Losses
(as of Jan. 31, 2012)
Claims Received
2,043
8,437
314
6,721
292
1,477
19,284
Line of Business
Commercial Property
Residential Property
Commercial Auto
Private Auto
Other Commercial
County Mutuals
Total
Losses Paid
$780,048,881
$503,774,104
$4,197,591
$46,811,709
$13,050,359
$61,789,887
$1,409,672,531
Source: Missouri Department of Public Safety
Lessons Learned After the Storm
Claims Tales, continued from page 26
everybody talks about,” Potalivo said. “He
grabbed his son and they ran down to the
basement, and the next thing he knew his
son was pulling him out from underneath
the car that had come through their house
and into their basement.”
Both miraculously survived with minor
injuries.
Potalivo described the glazed look in
the eyes of survivors, which he likened to
that seen in soldiers who have suffered
through battles with fatal consequences.
Potalivo spent two hours with a
distraught 74-year-old widow who never
dealt with insurance matters before. He sat
down with her under a tree and just let her
talk through the ordeal.
“I get a lot of satisfaction out of helping
these people and seeing the look in their
eyes when they realize that I actually care
about their lives and are trying to get them
back together again,” Potalivo said. “That
goes a long way to being successful in this
business in that when people feel that you
care about them, they are going to be much
M
ore than half of Americans don’t have a home inventory of their possessions,
according to a February 2012 survey from the National Association of Insurance
Commissioners. This was highlighted by the many Joplin residents who were
underinsured when the tornado destroyed homes and apartment buildings.
“Some consumer issues we were not able to help people with because they simply did not
have an adequate amount of coverage,” said Missouri Insurance Director John M. Huff.
Of the 7,000 people who were displaced within the tornado zone, slightly more than 40
percent had no insurance, said Steve Keeney, a Shelter Insurance catastrophe adjuster.
“That resulted in the 600 FEMA trailers that are now on the north side of Joplin to house
and accommodate those that were displaced,” Keeney said.
The insurance issues have spawned a consumer awareness campaign, Huff said. CJ
‘You hug people and you
don’t let go. You let go
when you feel them let go.’
more inclined to be appreciative and to let
their agents and their insurance companies
know that this person went out of their
way to help me out. It makes me do a better job and makes for a better situation.” .
The tornado was the largest insurance
event in state history, according to Missouri
Insurance Director John Huff. The final
payout on insured losses will be just shy
of $2 billion. Slightly more than $1 billion
had been paid within just 100 days after the
tornado struck.
“The claims in the personal lines private
passenger auto and homeowner claims,
those are very close to final resolution.
Some of the commercial claims take longer
to resolve,” Huff explained.
That schools opened in time for the
fall semester was a sign of the spirit and
dedication of Joplin residents, Huff said.
To recognize the city’s rebuilding efforts, President Obama is expected to give
the commencement speech to Joplin High
School’s 2012 graduating class. CJ
SPECIAL REPORT | CATASTROPHES & FLOODS
Weather events and natural disasters seem to be striking the very core of our
population as towns disappear and cities are rocked.
Yet what’s the real cause of damages?
By Lori Widmer
O
n March 2, 2012, tornadoes
ripped through 10 Southern and
Midwestern states, killing 39
people. Fueled by a warm winter, the
storms leveled neighborhoods and in a
few cases, obliterated entire towns. At
this writing, the National Oceanic and
Atmospheric Administration (NOAA)
estimates a total of 42 tornadoes were
recorded that day, although numbers are
expected to climb as high as 100.
Storms are turning more deadly, it
would seem. According to data from
NOAA, the number of events exceeding
$1 billion in damages has spiked from
four events in 2010 to 14 events in 2011.
Damages in 2010 were in the $50 billion
range. In 2011, that number skyrocketed
to $200 billion.
Why, instead of brushing by metropolitan areas, are tornadoes taking a direct
path through towns, destroying entire
communities in a few short minutes? No
clearer was this demonstrated than in
Joplin, Mo., where a tornado struck in
2011, killing 160 people and wiping out
nearly one-fourth of the town. The final
expected insurance bill for the storm is
about $2.2 billion.
Likewise in Greensburg, Kan., where
in 2007 a tornado leveled the town of
1,574 people, killing 11, damages were
$260 million, but the real cost was to the
community. More than half the residents
had to relocate rather than rebuild.
Can the increase in devastation and
cost be blamed on more violent weather
patterns? Not necessarily, say the experts. In fact, there are enough human
and economic factors contributing to the
rise in storm damage to say that perhaps
weather and natural events aren’t necessarily to blame at all.
For example, a 2000 U.S. Geological Survey shows that New Orleans is
sinking at a rate of one-third inch per
year. Warnings had been up long before
Katrina came to town about the city’s
potential for disaster should a Category
4 or greater hurricane make a direct hit
on the city, which is effectively sitting at
the bottom of a fishbowl. When Katrina
hit New Orleans, it was a Category 3
storm.
While many continue to point at failures in the emergency response systems
and post-Katrina federal response, the
crux of the problem was that the city
was, and remains, exposed daily to flood
risk not from hurricanes, but from damage to the flood walls that sit above the
city, the very walls that were breached
immediately following Katrina. Katrina
became the costliest hurricane in U.S.
history, coming with a damage price tag
of $108 billion.
Seismic Population Shifts
Much of the increase in losses from
perils seen over the past three to four decades is due to socioeconomic factors in
the United States, said Mark Bove, senior
meteorologist in the Risk Accumulation
Department at Munich Re America. He
said that as populations move toward
coasts and southern locales, that exposes
a greater population to hurricane and
severe thunderstorm events.
Urban and suburban sprawl are
also factors, Bove said. With growing
populations come dense accumulations
of exposure that are more susceptible to
the impact of storm damage. “A tornado
that 20 years ago would have gone over
an open field is now hitting a new residential development,” he said.
Increased property values, as well
as the increase in real property values
and accumulation, also have contributed
to higher claims payouts. So has the
amount in personal property, as people
acquire more high-ticket items and
electronics. Electronics in particular,
Bove said, have contributed to a rise in
lightning-related loss.
It’s also about where we build, Bove
said. “We have a tendency to build in
coastal areas that are vulnerable to storm
surge and high winds due to hurricanes,
and we also continue to build in flood
plains, as well.”
Moreover, some state building codes do
little to improve the situation. “Building
codes in many states are not sufficient to
protect homes from relatively weak windstorms, and some don’t have statewide
residential building codes at all,” he added.
The state has to enforce the rules it puts in
place. However, enforcement hasn’t always
been consistent, leading to more exposure.
According to the Institute for Business and Home Safety (IBHS), while some
coastal states are doing a good job of adopting and enforcing stronger building codes,
some are falling far behind.
The IBHS report, titled “Rating the
States: An Assessment of Residential
Building Code and Enforcement Systems
for Life Safety and Property Protection
in Hurricane-Prone Regions,” said five of
the nation’s most vulnerable states garner
less than a 50 percent rating in areas such
as adoption, enforcement and contractor
licensing requirements. Of the 18 coastal
states measured, only Florida, Virginia,
and New Jersey scored higher than 90
percent (95 percent, 95 percent and 93
percent, respectively) on the IBHS scale
(See “Room for Improvement” on page 30).
Costlier Claims, Better Response
Steve Hatch, chief claims officer at
Zurich North America Commercial, sees
population density along the coastlines
as areas of concentrated vulnerability.
With 139 million people exposed to storm
damage and flooding, the effects on claims
costs are significant. Hatch thinks it’s a
combination of the increasing costs, frequency and magnitude of storms.
“We are in a period of heightened severe
weather activity as evidenced by the recent serious tornado outbreak which looks
similar to what we experienced in 2011,”
he said.
Supply chain interruption is a cost, he
said, as well as demand on much-needed
supplies and qualified repair and remedia-
tion contractors.
Volume, he said, drives cost. “The challenge is what would have been a less-costly
claim becomes more costly and complex
because of the time it takes to get even the
basic repairs done.”
He uses the example of Katrina, where
repairs had to wait until water was channeled away from damaged properties and
business and homeowners returned to an
evacuated and devastated city with limited
utilities and municipal support.
Still, not all ills can be traced to population shifts.
Russ Opferkuch, managing director of
Aon Global Risk Consulting, thinks the
increase may be slightly overstated. “Are
exposures truly increasing or is it that
we’re recognizing and quantifying them
better or differently?” he asked. “Or is it
that things like FEMA flood zone maps are
being updated and areas that weren’t in
flood zones before are now?” He believes
these inherent changes are in part showing
SPECIAL REPORT | CATASTROPHES & FLOODS
up as increased exposures.
As Hatch said, preparedness is evolving, as well. As new twists and experiences occur, adjusters add to their best
practices and build that experience into
their models. Adjusters, he said, have
to be able to react quickly, be flexible
in handling claims and have specialized
knowledge of CATs, including how to
communicate with customers when
there are power shortages and limited
access to telephones or email.
“As an industry, if we’re not able to
react quickly to that changing environment, it becomes more complicated for
our customers and the industry,” Hatch
said.
Richard Pankhurst, head of claims for
PriceWaterhouseCoopers, sees preparedness improving, as well. Pankhurst, who
is an expert in flood research, particularly in Australia, said government social
cost benefit analyses can be used to
create regulations that keep flood areas
from being used in ways that could create high losses.
That regulation, along with pricing,
helps. Pankhurst said the insurance
industry’s supplying of claims history
and data has helped the government
with the creation of these tighter regulations. He said that pricing of insurance
products is another way the industry
controls people moving into highly
exposed areas.
In his ideal world, communication
would be at the core of any disaster
plan.
“If I had communications at my
fingertips, the ability to understand and
have access to policy information, all the
tools I’d need as a claims adjuster, better
access to a repair network, mobilization
of people in the field as quickly as possible, that to me would be the ultimate,”
he said.
There’s already a great response by
some insurers, Pankhurst said, with
companies putting buses with computer
stations, cell phone capabilities and satellite uplink capabilities, speeding the
claims gathering and response efforts.
“The insurance industry has responded
in a really nice way with these catas-
Room for Improvement
A
cross the insurance industry, adjusters and insurers
alike are better prepared to respond when disaster
strikes. However, damage trends recorded by the
Insurance Institute for Business and Home Safety (IBHS)
shows a steady increase. According to the IBHS, the reasons
are a “disproportionate number” of residents along coastal
areas, and the equally disproportionate cost of homes in
coastal areas. According to AIR Worldwide data, coastal
property values in 2007 are $8.9 trillion, or 17 percent of all
insured property in all states.
Yet current building codes are lacking. Of 18 coastal
states, only three get a near-perfect rating by the IBHS. The
organization measured state building codes in 18 coastal
states with regard to hurricane damage. The results are
shown to the right. CJ
trophe teams, plus this is how the
industry can be a value-added part of the
economy — just by helping people.”
Hatch said the problem goes beyond
national borders. Disasters in other parts
of the world can create costly claims
in terms of supply chain and business
interruptions. The response, Hatch said,
must be the same.
“When you think about an earthquake
or a hurricane, there can economic
impacts worldwide regardless; it doesn’t
really matter where it happens,” he said.
“For a global insurer like Zurich, many
of our customers in North America were
impacted by the tsunami in Japan. Manufacturers, for example, had significant
interruptions in their supply chains. It
really demonstrates our global economy
and how interconnected commerce is
today.”
Pankhurst agrees. He said the best response comes from an increased awareness on the ground by everyone involved.
“Around the world, the key to disaster
recovery is to get the right people on the
scene as quickly as possible.” CJ
SPECIAL REPORT | FORENSICS
Tips on Commercial Roofing Evaluations
By Kenneth R. Gilvary
C
ommercial roofing is one of the most demanding
areas for expertise in the insurance industry today,
as there are millions of commercial structures and
hundreds of different roofing systems and variations in application. The history of a building’s roof may have a significant
influence on its performance. There may be multiple layers
of roofing on a single building, and the materials and their
applications have changed over the years.
Roofing Systems
The three most common roofing systems are built-up roofing, modified bitumen roofing and single-ply roofing.
Built-up roofing comprises multiple layers of felt sandwiched together with molten asphalt, and typically covered
with a protective coating or a roll-roofing cap-sheet. Built-up
systems offer redundancy because of layers of reinforcements.
Modified bitumen roofing systems normally comprise a
felt base sheet covered with a modified bitumen cap sheet.
The modified bitumen cap sheet comprises reinforcement
coated with asphalt mixed with a plastic or rubber to make
the bitumen more tough and tear-resistant. The modified bitumen is covered with a protective coating such as aluminum-rich paint or granules to protect it from sun exposure.
Single-ply roof systems comprise a variety of plastics
and rubbers: ethylene propylene diene monomer (EPDM),
thermoplastic olefin/polyolefin (TPO) and polyvinyl chloride
(PVC). These systems are single-layer applications of roofing
sheets bonded along their seams with heat or adhesive. The
seam bonds keep water from infiltrating the roofing. Singleply systems are designed for direct exposure to sunlight.
When evaluating a roof system it is important to determine the constituents and attachment of the system.
Hail Damage
Hail storms typically have a predominant fall direction.
The direction can be determined by examining building features on and off the roof. Hail can leave spatter marks on oxidized surfaces, such as electric junction boxes, and often leave
evidence of impact as dents in metals such as air-conditioner
cooling fins, roof vents and flashing. Roofing surfaces exposed
to the predominant direction of hail-fall will exhibit damage
first, and this damage should be the most severe.
Roofing systems installed over softer substrates are more
susceptible to hail than those installed over stiffer substrates,
which provide additional resistance to hail. Further, areas
of ponded water can accelerate the deterioration of roofing
membranes and make these areas more susceptible to impact.
Evaluation of large hail strikes against built-up and modified bitumen roof systems often requires the removal of roofing cores, which are transported to a lab. There, the sample
is examined under magnification and the bitumen is removed
from the core with solvent to examine the reinforcing for
strain and tears characteristic of impacts. Hail damage to
single-ply roofing systems typically is discernible in the field,
but it may be helpful to remove cores from the roofing and examine certain areas with a microscope and/or high intensity
backlighting to identify fractures caused by hailstone impacts.
Wind Damage
A building has widely varying force levels on its roof
surfaces, and it is reasonable to expect the most severe wind
damage to occur at the windward corners and edges of the
roof where wind forces are the strongest. Building codes
require more uplift resistance capacity for roofing in these
areas. It is not uncommon for roof fastener patterns on shoreline structures and tall buildings to require 50 percent more
fasteners along the edges and 100 percent more fasteners in
roofing corners than in the field of the roof.
If wind forces have reached levels strong enough to damage
the common commercial roofing systems, there typically is
some combination of lifted, torn, and/or peeled back roofing concentrated where wind forces are the strongest at the
windward edges and corners of the roof.
Additionally, examine roofing at roof penetrations looking
for wrinkles and tears or any other evidence of roof membrane displacement. If roofing failure has occurred at wind
speeds less than expected, examine and document the roof
system attachment within those areas. Often premature failure occurs due to inadequate fasteners, inadequate adhesion,
or some combination of the two. Situations such as these may
be significant subrogation opportunities.
The layers of roofing, their attachments and their performance tell the story; we just have to know how to read it. CJ
Gilvary is a senior engineer at Haag Engineering.
IDEA EXCHANGE | BEST PRACTICES
Good Faith in
Handling First Party
Property Claims
By Denise Johnson
I
f there is one thing that is the scourge of claims handlers,
it is the allegation of bad faith. And contrary to what
insured attorneys want their clients to believe, breaches of
good faith are rarely on purpose.
It’s “usually a sin of omission, rather than commission,”
according to Michael A. Troisi, a partner at Rivkin Radler.
“It’s not one thing. It’s usually a perfect storm, a confluence of
events that allows a lawyer down the road to spin it.”
Carriers have a duty of good faith because the policy of
insurance is an adhesion contract that is non-negotiable, according to Troisi.
Typically, bad faith occurs as a result of a delay in decision
or action, an unfair or unreasonable value or as a result of a
coverage issue, he added.
With regard to day-to-day claims handling, it is difficult to
have every piece of paper and log entry dissected.
“It’s not possible to do everything perfectly,” Troisi said.
“It’s what is reasonable. There is no such thing as a perfect
claim file.”
If bad faith is alleged, it is usually the result of an error,
something missed or a mistake, he said. “The goal is to try to
minimize those things.”
In addition, there is the difficulty in dealing with insureds
who may have unreasonable demands, according to Tony
Clark, vice president of the property claims department for
Allianz. He recommends claims handlers discuss a difficult
situation with a supervisor, even if an adjuster may be operating within his or her authority, when an insured disagrees
with an insurer’s stance.
Adjusters must know an insurer’s claim handling guidelines. “Know them, study them,” Clark said. If a task is set
out in the guidelines and an adjuster has failed to do it, the
adjuster risks having that error caught in a deposition.
It is important to approach each claim with an open mind.
“Too many times I see pre-determination made in log entries,”
Troisi said. “Avoid pre-determination of coverage until the investigation has been conducted and evaluation has been made.”
Common Bad Faith Issues
Some issues related to bad faith allegations include claims
involving engineers. While both parties may retain an engineer,
some adjusters choose to ignore findings of an insured’s engineer. “What you do with that report and how you handle it and
what you say about it reflects a fair and balanced investigation,”
Troisi said.
Bad faith allegations frequently arise out of undue delay.
“Delay is the killer,” Troisi said. “Half or more involve delay.”
Some carriers are reluctant to pay anything until all issues
are resolved. “[Carriers may be] reluctant because some believe
it funds a lawsuit against you, doesn’t matter, you don’t want to
be in bad faith,” Clark said.
Yet another issue involves lowball offers during settlement
negotiations. “Pay the insured what you think the claim is
worth,” Clark said. “If you don’t, the first thing they will do
after a [bad faith] lawsuit is filed is ask. Statutes will put you in
bad faith.”
As adjusters gain experience, there can be a problem with
documenting the file. While many claim scenarios appear to be
similar, it’s important to note the facts unique to the loss under
investigation. “When you go into a claim, you know what you
have seen … Make sure to document facts,” Clark said.
To assist adjusters in avoiding allegations of bad faith, consider the following tips on good faith claims handling:
•Don’t ask the insured to do your job. Although there is a cooperation clause, Troisi said an adjuster “still needs to investigate
a claim. If you can get something as easily as the insured can, do
so.” This is where undue delay can be avoided.
•“Pay undisputed amounts early and often.” Troisi emphasizes
the importance of reserving rights when there is a question
involving coverage. “There is no justification for lowballing an
insured in the context of a first party claim,” Troisi said. “Don’t
offer less than the estimate.”
•Avoid crossing into the underwriter’s role. This happens
when there is a crossover between claims and underwriting.
•Avoid repetitive and duplicative investigation. According
to Clark and Troisi, this is a favorite of policyholder lawyers
because they will use it as a sign of undue delay. It frequently
happens when there is a change in adjusters or when a file is
referred out to counsel. To avoid this, Troisi recommends reviewing the claim file and communicating with counsel on what
investigation has been completed and what is still needed.
•Provide fair evaluation of the evidence. A claim file should
reflect a thorough and fairly balanced investigation. “The file
should always reflect how an adjuster has dealt with the evidence an insured has presented,” Troisi said.
‘Good faith claims handling is
absolutely synonymous with
good business.’
•Don’t handle a claim too fast. Troisi recommended avoiding
unexplained delays in a claim file by documenting the cause of
the delay. If a claim is handled too fast it could be a sign of prejudgment, as in a no coverage letter prepared prior to a site visit.
•Remember loose lips sink ships. The claim file should include
facts and reasons why certain action is taken, free of editorial
comment. While every company may have a different decision
methodology, problems arise when decisions come through in
stream of consciousness written emails.
•Do what you promise. If an adjuster tells an insured to expect
a call, then the adjuster should keep his or her word.
•Document. If it is not written, it did not happen, Troisi said.
He recommends documenting the file in real time because it reflects that an adjuster is keeping current in the investigation and
responding to correspondence in a timely manner.
In the end, handling a claim fairly and in a timely fashion
reflects an insurer’s respect for its customer. “Good faith claims
handling is absolutely synonymous with good business,” Troisi
said. “You have a right to be wrong about coverage analysis. It
doesn’t mean you committed bad faith. Slipshod investigation,
without a fair and balanced investigation equals bad faith.” CJ
Clark and Troisi were speakers at the Property Loss Research Bureau’s Large Loss
Conference in Chicago.
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commercial diasaster recovery experts
spread across over 600 domestic and
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Management offer vast resources to
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ServiceMaster can mobilize a team to
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www.claimsjournal.com/servicemaster/
Temporary Housing Provides a Permanent,
Needed Service for the Claims Industry
By Stephanie Moore
T
he insurance housing industry got its start 23 years
ago when a few bright entrepreneurs realized there
was a temporary housing need for policyholders who
lost the use of their homes. Since the mid-1980s, a lot has
changed. The insurance housing industry is helping carriers,
adjusters and policyholders in times of disasters, as well as
for everyday claims nationwide. The insurance housing industry continues to expand as more and more carriers find the
value of temporary housing services essential to their property claims. These services provide efficiency and a choice of
options that can be tailored to each claim’s needs.
There are a variety of housing options for policyholders
that have been displaced from their home. With many insurance housing services available 24 hours per day, seven days
per week, solutions are available any time from emergency
hotel services to long-term housing, providing plenty of
choices for both urban and rural policyholders. Emergency
hotel services accommodate policyholders with smaller
losses looking to stay as little as one day in a temporary
placement. Most requests for cooking facilities, kitchenettes,
pet-friendly rooms and special requirements can be accommodated. Hotels are booked at a preferred rate, ensuring
cost-saving for the policyholder as well as the carrier.
Long-term housing solutions include single-family homes,
apartments, condominiums, townhomes, mobile homes and
travel trailers for displaced families who will be out of their
home for a minimum of 30 days. Strong temporary housing companies can facilitate and accommodate lease terms
starting at one month. Furniture, housewares and appliances,
if needed, can be included in a long-term solution. Most
temporary housing companies offer financial transaction
preferences, such as preferred invoicing methods and security
deposit handling to fit the needs of the insurer.
Temporary Housing Vendors
Why choose a temporary housing vendor versus an adjuster
or policyholder setting up housing on their own or using a
local realtor?
First, there is the benefit of time savings. Temporary housing companies are experts at placing families into short- and
Others get too wrapped up in
the numbers. We discover and
define financial value.
Our Forensic Accountants analyze claims to establish the
correct facts and determine the accurate loss amount.
We specialize in:
ȩ Property Claims
> Business Interruption/
Extra Expense
> Business Personal
1. 888.RGL.4CPA
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Property/Inventory
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ȩ Catastrophe Response
United States
Europe
Asia Pacific
ȩ Fidelity/Surety Bond
Claims
ȩ Liability Claims
> Product Liability
> Personal Injury/
Wrongful Death
ȩ Subrogation
long-term housing options quickly and efficiently. Most
temporary housing companies are able to secure hotel accommodations within one hour and rental accommodations
within 72 hours. Temporary housing companies can accomplish this quick turnaround based on many facets — hotel
and landlord networks, expert knowledge in facilitating the
requested terms and leverage due to volume.
Second, there is the cost-savings passed on to the insurance company and policyholders. Volume discounts for
hotels, as well as furniture are passed along to the insurance
company and policyholder, making it close to impossible
for a local realtor or policyholder to be able to secure such
unbeatable pricing.
Temporary housing companies can
offer assistance to adjusters, carriers
and policyholders in times of need.
Finally, and arguably the most important benefit is that
temporary housing companies are able to fully focus on
customer service. Temporary housing companies take the
stress off of the adjuster and policyholder by answering questions such as “Where do I go for the night? Will I be able to
bring my pets? Or where will I stay while my home is under
repair?”
A temporary housing company will present an immediate
and customized housing solution, putting the policyholder at
ease with just one call and providing one point of contact for
both adjusters and policyholders.
Once the family is comfortably settled in their temporary
home, customer service is available 24 hours per day, seven
days per week, for any unforeseen situation that arises,
making certain the policyholder is under the best of care
throughout the life of the claim.
When choosing a temporary housing company, a carrier
will want to consider a few key items.
Coverage Area — A nationwide company handles more
volume and has stronger networks; therefore, can pass on
more cost-savings to the adjuster, carrier and policyholder.
Customer Service Statistics — The average customer service satisfaction rating should be higher than 90 percent.
Time Metrics — A strong temporary housing company
should have impressive statistics on their response and placement time metrics. Questions to ask include: “How quickly
does this company place a policyholder?” And “Are they
available at all hours of the day for customer service for both
myself and my policyholder?”
Tenure of Established Business — How long the temporary housing company has been in business is important. In
most cases, companies that have been in business longest have
a proven track record.
Catastrophe Services — The temporary housing company chosen should be capable of handling claims at every
level, even the volume increase that occurs from a catastrophic disaster, so the adjuster and policyholder will be taken care
of with the same exceptional timeliness and service.
Temporary housing companies have been assisting the
insurance housing industry for years and will continue to play
an integral part in the life of property claims across the nation. The choice is left to the insurance carrier and adjuster to
decide to utilize the high quality services temporary housing
companies offer, which will in turn benefit all those involved
in the claim. CJ
Moore has been in the insurance housing industry since 2007. She is the sales and
marketing director at CRS Temporary Housing, a nationwide provider of temporary
housing located in Arizona. Email: [email protected]. Website: www.
crstemphousing.com.
How to Improve Risk Management with Better Claims Data
By Steven Brewer and Janakiraman Jagannathan
A
s insurance carriers strive to achieve better financial
results on their homeowners’ business line, it is critical
that loss mitigation efforts are proactively managed as
an enterprise initiative from both the claims and underwriting side of the business. Every potential claim that can be
prevented or mitigated not only helps the carrier, but more
importantly delivers a value to the policyholder.
Consider how the success and failure of a mission-critical
predictive model-based optimization solution for the homeowners’ field inspection program depends on the quality of
data points captured by claims adjusters. Setting up the right
workflow to capture comprehensive data on the cause of loss,
as well as thoroughly analyzing the severity and frequency of
past claims that are associated with condition hazard issues,
will help carriers appreciate the magnitude of the opportunity
and the critical role a claims organization plays in enterprise
risk management efforts.
The Business Problem
U.S. property/casualty insurance carriers spend approximately $200 million per year on homeowners’ inspection
programs. Historically, carriers have invested proportionately
little resources in optimizing inspection operations. In the past
few years, however, as carriers return their strategic focus to
profitability, many are looking at their inspection program and
finding opportunity to drive financial value by optimizing their
approach and by focusing on condition hazards.
In 2011, industry research by Marshall & Swift/Boeckh
(MSB) revealed that approximately 30 percent of inspection
dollars yield an actionable underwriting outcome. Essentially,
70 cents on every inspection dollar gets wasted. The majority
of carriers are using random risk selection, simple home-grown
guidelines or business rules engines to order field inspections.
Some forward-looking carriers, on the other hand, have
developed predictive models that yield good results on predicting Insurance to Values (ITV) deviations and condition hazards.
The carriers that recognized this problem, but have either abandoned the initiative or are currently struggling with the model’s
performance have one factor in common: poor data quality. One
of the key reasons the carriers failed in their predictive modeling efforts was the fact that critical claims information like
cause of loss was not captured on every transaction, and data
was not archived in a way that was fit for modeling efforts.
MSB has created a framework to help carriers benchmark
themselves against different levels of inspection program maturity that is experienced across the industry. The MSB Inspection
Optimization Maturity Model outlines the progression path of
increasing effectiveness of a carrier’s inspection program.
The four dimensions that
form the foundation of the
assessment model are: Inspection Selection, Data Use,
Workflow Integration, and
Inspection Method. Each
dimension includes steps
of increasing sophistication
up to a fully optimized approach. While each carrier’s
approach is unique and may
align to varying levels across
each dimension, a carrier’s
overall Inspection Maturity
Level can be assessed by taking the average rating across
all dimensions.
Claims Professionals.
It’s Good to Have Options.
Data Quality
Risk management is the art of clearly
understanding and quantifying risk inherent in the portfolio and taking actions to
manage the portfolio’s performance. The
right blend of powerful analytic techniques
and differentiated data can provide clarity
to focus on a simple set of metrics and
make right decisions the first time and
every time. This promise heavily leans on
the assumption that a carrier has good
data. A well-designed claims data collection process not only has value in efficient
claims settlement, but also downstream
holds the key to strategic advantages in
analytics, risk management, and pricing. CJ
Brewer is senior vice president of underwriting solutions,
and Jagannathan is director of analytics at Marshall &
Swift/Boeckh (MSB).
Claims Education for Your Unique Needs
We know the claims function can be challenging, even on
the good days. That’s why The Institutes offer a range of
professional development options (including the multi-tracked
Associate in Claims designation) to help claims professionals
be more efficient and effective no matter where they are on
their career roads.
s
© 2012 American Institute For Chartered Property Casualty Underwriters
The ability to rank policies based on
ITV and condition hazard risks, select the
right set of polices to inspect, identify the
most effective inspection method, then use
an automated order and fulfillment process
represent the optimized state of inspection management. Carriers who advance
the maturity levels with the homeowners’
inspection program are transforming their
inspection operations into a strategic profit
center.
Over the next two years, it is predicted
that a significant number of carriers will
see inspection optimization as a key competitive differentiator and quickly mature
their approaches to enjoy the significant
financial and operational benefits.
Based on a recent survey (250 respondents) conducted by MSB, data showed
that 79 percent of the homeowners insurance industry continues to have a significant upside opportunity in optimizing
inspection processes.
The impact from proactively identifying
and mitigating condition hazards is significantly higher than the returns from ITV
premium uptick. A company’s predictive
model’s ability to effectively identify and
quantify condition hazards risks depends
on good historical claims data.
)NSURANCE%SSENTIALS
s
)NTRODUCTIONTO#LAIMS
s
!SSOCIATEIN'ENERAL)NSURANCE!).3®)
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!SSOCIATEIN#LAIMS!)#
s
/NLINE#%
s
#HARTERED0ROPERTY#ASUALTY5NDERWRITER#0#5®)
Don’t wait. Log on to learn more
at www.TheInstitutes.org/claims
And check out these videos for
some helpful claims career ideas
or watch them at
www.YouTube.com/TheInstitutes
720 Providence Road, Suite 100 | Malvern, PA 19355
(800) 644-2101 | [email protected]
www.TheInstitutes.org
IDEA EXCHANGE | COVERAGE CORNER
When to Allocate Defense Costs
in Covered and Non-Covered Claims
By Paul R. Koepff
I
t is commonplace for an insured to incur defense costs with respect to defending against
covered and non-covered claims. This may happen, for example, when the plaintiff asserts
negligence claims and also intentional tort claims, or where there are claims for conduct that
are uninsurable or excluded but other claims that are potentially covered.
As the claims are being defended, the amounts incurred in defending covered and noncovered defense costs escalate. Seldom, if ever, does the insured or its defense counsel segregate
or allocate defense costs for covered claims and defense costs for non-covered claims. The claims
handler for the insurance company must decide whether and to what extent the insurance
company will indemnify the insured for defense costs in this situation.
Understand the Policy
Claims handlers should be
The starting point is the policy, which may contain a provision that
expressly permits the insurer to allocate defense costs between covered and
familiar with applicable policy
non-covered claims. Under New York law, an allocation provision controls.
language and applicable law
See Clifford Chance LLP v. Indian Harbor Ins. Co., 14 Misc. 3d 1209(A), 2006 WL
3821841, at *3 (Sup. Ct. N.Y. Co. Dec. 27, 2006), aff’d, 41 A.D.3d 214, 838 N.Y.S.2d
when determining whether
62 (1st Dep’t 2007). Therefore, where the insurance policy specifically provides
to allocate defense costs.
that the defense costs for covered and non-covered claims must be allocated,
the insured must abide by such provision.
For example, the current version of the Bermuda Form provides:
“If liabilities, losses, costs and/or expenses are in part covered by this Policy and in part not
covered by this policy, the insured and company shall use their best efforts to agree upon a fair
and proper allocation thereof between covered and uncovered amounts, and the insured shall
cooperate with such efforts by providing all pertinent information with respect thereto.”
The rationale behind the rule is that an insurer contracts to pay the entire cost of defending
a claim that is covered under the policy. The insurer has not contracted to pay defense costs
for claims that are not covered by the policy or when another insurer also has an obligation to
defend.
Under New York law, even absent express policy provisions, it is well-established that under
an indemnity policy, there is no obligation to indemnify defense
costs incurred in defending non-covered claims. See Vigilant Ins.
Co. v. Credit Suisse First Boston Corp., 10 A.D.3d 528, 782 N.Y.S.2d
19 (1st Dep’t 2004); Millennium Partners, L.P. v. Select Ins. Co., 24
Misc.3d 212, 882 N.Y.S.2d 849 (Sup. Ct. N.Y. Co. 2009), aff’d, 68
A.D.3d 420, 889 N.Y.S.2d 575 (1st Dep’t 2009). This principle has
been followed by courts in other jurisdictions. See, e.g., Security
Ins. Co. of Hartford v. Lumbermens Mut. Cas. Co., 264 Conn. 688, 826
A.2d 107 (2003) (Connecticut law).
If it is determined that the insured is seeking to recover
defense costs for both covered and non-covered claims, then a
methodology must be applied to determine how to allocate the
costs between the covered and non-covered claims. If the insurance policy provides for a particular allocation methodology, that
will control. See Clifford Chance, 2006 WL 3821841, at *2.
Methodology
On the other hand, where the insurance policy does not
provide for a particular methodology, it is not always clear how
defense costs should be allocated between covered and non-covered claims. There is little New York case law on the methods to
be used in allocating defense costs for covered and non-covered
claims, and New York has never adopted a preferred method of
allocation between covered and non-covered claims.
There are several alternative ways to allocate. One way is to
allocate defense costs equally between covered and non-covered
claims, assuming there is a reasonable basis for such equal al-
location. Another way is to allocate defense costs pro rata to the
number of covered claims and the number of non-covered claims,
again assuming there is a reasonable basis for such an allocation.
This may be an appropriate method where the costs appear to
have been incurred in defending all claims, for example, those
costs incurred in taking a deposition.
Depending upon the number and nature of covered and noncovered claims, it may be more appropriate to allocate defense
costs under a “weighted” methodology, whereby there is an
equitable allocation of defense costs for covered and non-covered
claims. There may be situations where defense costs are allocated
where they were incurred on behalf of an insured and also a noninsured. In this situation, it may be appropriate to allocate defense
costs pro rata among insureds and non-insureds.
Finally, yet another method of allocating defense costs is to
look at the magnitude of damages sought in the covered and noncovered claims, and then make equitable allocation based on the
relative value of claims.
Whether and to what extent defense costs for covered and noncovered claims are to be allocated could well turn on applicable
law. Therefore, in determining whether to allocate defense costs,
claims handlers should fully familiarize themselves with applicable policy language and also applicable law. CJ
Koepff, Esq., is a senior equity partner at Clyde & Co US LLP in New York. This article
contains the personal views of the author only. The content does not necessarily represent
the views of the firm or its clients.
IDEA EXCHANGE | COVERAGE CORNER
Essentials: Examinations Under Oath
I
nsurance companies have an early opportunity to obtain
information and material that may be in the insured’s possession regarding a claim through the examination under
oath (EUO) process. An EUO is an important investigative tool which permits an
insurer to determine the merits of legitimate
claims while exposing fraudulent claims and
fraudulently inflated losses. The right to acquire an EUO emanates from the insurance
contract and finds its origin in the New York
By Steven Plitt standard fire policy, which has been adopted
by statute in most states.
An EUO is not a deposition. There are distinct differences
between discovery depositions and EUOs.
As an example, during an EUO the insured’s attorney (or
other representative) is technically not authorized to ask
questions or make objections. In litigation, state Rules of Civil
Procedure permit discovery depositions from persons having
relevant information and knowledge to the case at issue. Unlike depositions taken in discovery during litigation, the individuals who can be subjected to an EUO is more limited. The
insurance company is entitled to examine named insureds, as
well as individuals who fall within the policy’s general definition of an insured (e.g., a spouse, family member, business
partner, manager, or key employee).
Failure to Submit
In GuideOne Mut. Ins. Co. v. Rock, 2009 WL 1854452 (N.D.
Miss., June 29, 2009) (applying Mississippi law), the insureds
refused to produce their children for an EUO in a claim involving a fire loss. The court held that the policyholders’ refusal
to produce their children for an EUO was not a breach of the
homeowner’s policy.
The court began its analysis by observing that clauses in
insurance policies that require policyholders to submit to
an EUO were reasonable and valid in Mississippi. Failure to
submit to an EUO when obligated under the policy precluded
coverage of the loss as a matter of law. However, the obligation
was contractual in nature, and therefore persons with information material to the investigation of a fire loss were not required
to submit to an EUO if not required to do so by the policy.
The court looked at the definition of insured under the
policy, which did not qualify the children as insureds.
Where an EUO involves a corporation, an insurance company
is entitled to examine officers, managing agents, and in some
cases key employees of the insured. This permissive scope exists because a corporation can only act through its officers and
agents where the insured under the policy is a corporation.
In some cases insureds will refuse an EUO and as an alternative they will offer to provide answers to written questions
supplied in advance. However, this is not compliant with the
insured’s duty to submit to an EUO under the policy.
In some jurisdictions where the insured refuses to submit
to an EUO, the insured forfeits the right to pursue the claim in
issue.
Insureds must attend the EUO on the scheduled date or
at least make an attempt to reschedule the EUO as a condition precedent to the claim. At least one court has found that
where the insured repeatedly interposes scheduling conflicts
that prevent the completion of an EUO, the insured constituted
a “willful and material” breach of the policy. See, e.g., Rosenthal v.
Prudential Property & Cas. Co., 928 F.2d 493, 495 (2nd Cir. 1991).
Generally, where the insured is unable to attend an EUO for
a valid reason, the insured must at least offer to submit to the
EUO as soon as possible. However, some courts have held that
coverage is forfeited as a result of the insured’s failure to submit
to an EUO only in those situations where the insurer can establish that it has been prejudiced by the delay.
Courts are split on whether separate EUOs of co-insureds can
take place outside the presence of the other insured.
An insurance company is entitled to inquire into any matter
which is material to the existence and extent of the insurance
company’s liability under the policy. Courts have recognized that
the relevant inquiry is broad and includes any matter that has
a bearing on the insurance loss. Where fraud is suspected, the
insurer may be entitled to a more searching EUO.
EUO vs. Litigation
Faced with having to attend an EUO, some insureds decide
to bring a lawsuit against the insurer, instead. This strategy
subjects the insured to only one swearing under oath in the form
a litigation deposition.
The question of whether an insured can avoid an assertion of
non-cooperation by refusing to attend the EUO and subsequently
filing litigation was recently considered by the court in Wells v.
Farmers Alliance Mut. Ins. Co., 2009 WL 1259977 at *3 (E.D. Mo.,
May 4, 2009).
In Wells, the insurer had sought an EUO from its policyholder.
The policyholder filed suit prior to the EUO date and did not
appear for the scheduled EUO. Although the court held that the
cooperation clause of the policy was valid and enforceable under
Missouri law, the question of whether the policyholder breached
the cooperation clause by failing to appear for the scheduled EUO
was a question of fact for the jury.
The court concluded that the jury should determine whether
the policyholder satisfied the requirements of the cooperation
clause in those situations where the policyholder provided the
requested information being sought by the insurer through a
litigation deposition accompanied by written discovery presented
during the litigation of the case itself.
The question arises as to whether the obligation to submit to
an EUO is a condition precedent to recovery under the policy. If
so, then avoiding the EUO by initiating litigation may not fulfill
the condition precedent. CJ
Plitt is a nationally recognized expert in insurance law. He has authored numerous
insurance treatises and articles, including contributions to Insurance Journal and Claims
Journal. He has a national expert witness practice. Email: [email protected].
May 15–17, 2012 Rosen Shingle Creek Orlando, Florida
Register now at acordlomaforum.org
Get Connected with
Thought
g Leaders.
TECHNOLOGY
INNOVATION
CONNECTIONS
BUSINESS
DEPARTMENTS
WEB EXCHANGE
Michael Klausner
Susanne Murray
Paul Quinn
IJ Video Highlights
In a Reader’s View
Who Pays for Securities Actions? Directors? Insurers?
http://www.insurancejournal.tv/videos/6530/
Michael Klausner, professor of Business and Law at
Stanford Law School, has collected data on securities actions, including how many actually are dismissed, how many
are settled, and who pays if there is a settlement? Klausner
answers these questions at this year’s Professional Liability
Underwriting Society’s (PLUS) D&O conference.
Driving Under the Influence of Marijuana
Marijuana use is at its highest level among eighth to 12th
graders in 30 years, according to a Liberty Mutual and Students Against Destructive Decisions (SADD) study.
One in five (19 percent) teen drivers reports that they have
driven under the influence of marijuana. In fact, marijuana
influence is significantly more prevalent among teen drivers
than alcohol, as compared to the 13 percent of teens surveyed
who report that they have driven after drinking.
The study highlights that many teens don’t consider marijuana use as a distraction to their driving. More than one-third
(36 percent) of teens who have driven after using marijuana
say the drug presents no distraction. Among the teens who
say they have driven after drinking, 19 percent of them believe
alcohol use does not present a driving distraction.
The story generated a number of comments among readers.
The Evolution of D&O Coverage and Investigations
Director and officers liability coverage continues to evolve.
Susanne Murray, an executive vice president for Alliant Insurance Services, knows all about this evolution in her work
focusing on executive risk liability exposures. In her interview
at the recent Professional Liability Underwriting Society’s
D&O conference, Murray discusses the evolution of D&O,
beginning with how policies are responding to investigations
— formal and informal, third party and internal.
Podcast Highlights
Farmers’ Paul Quinn Discusses the Role of Social Media
in Disaster Communication
Paul Quinn, assistant vice president of claims communications for Farmers Insurance, discusses the development of
the company’s catastrophe response playbook, social media’s
impact on claims communications during a catastrophe and
the importance of education in disaster preparedness.
Investigating and Evaluating Hail Damage Claims
In this Forensic Guide podcast, Jerry Mercer, vice president
of the property construction division for Rimkus Consulting
Group, discusses issues relating to the evaluation of hail damage for both residential and commercial buildings.
Robert says:
This study seems to be only about attitudes. In order to
determine whether marijuana use affects driving, the only
scientific basis is a double blind study pitting users under the
influence and not under the influence in driving tests. CJ
ClaimsJournal.com Reader Poll
An Arkansas court ruled that Facebook photos could be used as
evidence to deny further workers’ compensation benefits. Should
social media be used in claims investigations?
0
10
20
30
40
50
60
70
80
90
100
Yes, if it’s in the public domain it is fair game. 80.7% (736 votes)
Yes, in some cases it should be used.
7.57% (69 votes)
No, it’s an invasion of privacy.
9.87% (90 votes)
Not sure.
1.862% (17 votes)
Total Votes: 912
DEPARTMENTS
EVENT CALENDAR
April 2012
July 2012
PLRB/LIRB Claims Conference & Insurance
Services Expo
The annual conference, offering educational and networking opportunities, offers nearly 100 claims-related sessions
in 12 curriculum tracks, including property, casualty, general
interest, large loss, property coverage, subrogation, special
investigations/fraud, claim management and technology.
April 15-18, 2012
Orlando, FL
Contact: Valerie Berka, Meetings Manager, [email protected], 630724-2227
ACIC General Counsel Seminar
Association of California Insurance Companies’ annual
seminar provides informative discussions by leading industry
speakers from the legal, insurance and regulatory communities. It also offers timely information on a wide range of insurance issues important to insurers and insurance professionals
doing business in California.
July 25-27, 2012
Las Vegas, NV
Contact: Sue Makimoto at 916-449-1370
May 2012
NICB Special Investigations Academy – Basic and
Specialized Tracks
The SI Academy offers basic and specialized tracks concurrently at the same location and date, with practical information for on-the-job use. Attendance is restricted to the direct
(not contracted) employees of member companies, NICB,
government agencies and law enforcement.
May 7-10, 2012
St. Louis, MO
Contact: www.nicb.org or contact Melitta Kewitz at 800-447-6282
ext. 7024, [email protected]
June 2012
PLRB Eastern Regional Adjusters Conference
One of a series of regional claims adjuster conferences held in
the United States. Network with peers while taking part in
educational sessions designed to improve knowledge of core
claims issues. (Detailed information on sessions TBA)
June 26-27, 2012
Providence, RI
Contact: Alissha Watley, Meetings Manager, [email protected] or
630-724-2228
September 2012
PLRB Central Regional Adjusters Conference
One of a series of regional claims adjuster conferences held in
the United States. Network with peers while taking part in
educational sessions designed to improve knowledge of core
claims issues. (Detailed information on sessions unavailable at
this time)
September 5-6, 2012
Schaumberg, IL
Contact: Alissha Watley, Meetings Manager, [email protected] or call
630-724-2228
NAMIC’s 2012 Annual Convention
Annual members conference sponsored by the national property/casualty insurance trade and political advocacy association. (Detailed information on sessions and tracks unavailable
at this time)
September 16-19, 2012
Grapevine, TX
Contact: [email protected] or call 317-875-5250 ext 1032 CJ
How much are
these common
claim-handling
weaknesses
costing you?
No manager wants their appraisers, adjusters and estimators passing out blank checks, but if their claim-handling skills aren’t sufficient,
the misapplications, oversights and errors they commit could be just as costly. For example, the difference between repairing or replacing
a set of kitchen cabinets when adjusting a fire loss can be anywhere from $3,000 to $12,000. And that’s just one example of the kind of
misjudgments we see both beginners and experienced professionals make all too often.
In fact, we’ve identified five types of weaknesses including: (1) policy interpretation; (2) basic practices; (3) core knowledge; (4) estimating
proficiency and (5) technology application that challenge even the most efficient and profitable claims departments. To see which issues
are the biggest obstacles for your staff and what to do to eliminate them, call us or visit our website today.
ValeTrainingSolutions.com / blankcheck
C ll Toll-free
Ca
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U A & Canada) 80
8000-233-7095
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of the Cunn
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What issues challenge your staff and what to do to eliminate them.
2012
GUIDE TO CLAIMS
EDUCATION AND TRAINING
C
laims Journal is pleased to publish the 2012 Guide to Claims Education and Training. This exclusive resource directory
has been designed to help claims professionals find educational and training opportunities to enhance their professional growth.
Education and training providers, including insurance schools, associations, various vendors and instructors submitted information on their course offerings, online educational capabilities and correspondence education directly to Claims
Journal. Providers were allowed to list up to three programs/courses.
While this directory is only a snapshot of the vast array of education and training courses available to the insurance industry, we hope you find it helpful when searching for the right provider for your organization. We look forward to expanding
and enhancing this directory in the future and welcome your feedback on how we might improve it.
Please send any comments or suggestions about the directory to [email protected].
To submit a listing, e-mail Kristine Honey at: [email protected].
Organization: AdjusterPro
Contact: John O’Brien
Email: [email protected]
Address: P.O. Box 1087, Fort Scott, KS 66701
Phone: 214-329-9030 ; Fax: 214-580-5519
Website: www.adjusterpro.com
Educational Offerings: Professional Ins.
Designation Programs, Individual Courses
Online Courses: yes
Correspondence Courses: no
Course: Texas All-Lines Adjuster PreLicensing
Start Date: Any Time
Location: Classroom or Online
Category: Property Casualty Insurance
Designation: No Designation
Course: Florida Certified Adjuster (CA)
Designation
Course: Indiana Independent Adjuster
PreLicensing
Organization: Affordable Continuing
Education
Contact: Jessie Booth
Address: 2 Corporate Plaza Dr., Ste. 100
Newport Beach, CA 92660
Phone: 949-706-9197 ; Fax: 949-706-9439
Website: www.AffordableCE.com
Online Courses: yes
Correspondence Courses: yes
Course: Contemporary Insurance Topics
Location: All States
Category: Property Casualty & Life/Health Ins
Designation: P&C and L&H Insurance Agents
Course: Personal Lines Total Coverage
Designation: P&C Insurance Agents
Course: Flood Insurance
Organization: Affordable Educators
(California CE and Prelicense Training)
Address: 41890 Enterprise Cir. S, Ste. 100
Temecula, CA 92590
Phone: 800-498-5100
Website: www.ceclass.com
Educational Offerings: Individual Courses
Online Courses: yes
Education and Training Directory
Course: Ins. Marketing Issues (Includes Ethics)
Location: CA
Category: Ethics
Course: Life & Health Pre-Licensing
Location: Many States
Category: Life, Health, Benefits
Designation: Licensing Exam Prep
Course: Garage Risks
Start Date: Sept 13-14, 2012
Location: Newark, NJ
Category: Property Casualty Ins, Surplus Lines
Designation: CIW, CMGA
Course: Preferred Practices
Location: CA
Course: Property & Casualty Pre-Licensing
Course: Under Forty Organization Annual
Meeting
Start Date: Sept 20-22, 2012
Location: Park City, UT
Course: California Ethics Requirement
Location: CA
Category: Ethics
Course: Property Pre-Licensing
Organization: Agency Management Resource
Group
Contact: Jackie Abeyta, Director of Mktg.
Phone: 916-757-6150
Website: www.agencymanagement.com
Organization: American Association of
Insurance Services (AAIS)
Contact: Joseph S. Harrington, CPCU
Address: 1745 S. Naperville Rd.
Wheaton, IL 60189
Phone: 630-681-8347 ; Fax: 630-681-8356
Website: www.AAISonline.com
Online Courses: yes
Course: Another Look at Ethics
Start Date: Multiple
Location: Multiple
Category: Ethics
Course: Additional Insureds and Certificates
of Insurance
Location: Multiple
Educational Offerings: Educational materials
for individual insurance line programs
Online Courses: no
Course: A variety of materials to support the
use of AAIS products
Organization: American Association
of Managing General Agents
Designation Programs, Individual Courses,
Undergrad Ins. Courses/Programs (Accredited)
Online Courses: yes
Course: Insurance Automation and
Technology Conference
Start Date: Mar 2-5, 2013
Location: Scottsdale, AZ
Course: University West
Start Date: Aug 16-17, 2013
Location: Scottsdale, AZ
Organization: ClaimSchool
Contact: Barry Zalma
Address: 4441 Sepulveda Blvd.
Culver City, CA 90230
Phone: 310-390-4455 ; Fax: 310-391-5614
Web: www.claimschool.com & adbanker.com
Online Courses: yes
Location: At Your Location
Course: Errors & Omissions Loss Control
Location: Multiple
Organization: America’s Professor
Contact: Dr. Jack Morton
Address: 1819 Holborn St., Ste. E,
Missoula, MT 59802
Phone: 800-870-3130 ; Fax: 406-549-8560
Website: www.AmericasProfessor.com
Course: Trucking Risks - Advanced
Start Date: Oct 29-30, 2012
Location: Nashville, TN
Contact: Jeffrey D. Henry
Address: 610 Freedom Business Ctr, Ste. 110,
King of Prussia, PA 19406
Phone: 610- 992-0005 ; Fax: 610- 992-0021
Website: www.aamga.org
Online Courses: yes
Course: California Fair Claims Practices
Regulations
Category: Agency Management
Course: Insurance Fraud and Weapons to
Fight Fraud™
Course: Insurance Claims For the Property
Owner or Mortgage Holder
Category: Other
Organization: Crawford & Company
Contact: Joel Sybert
Email: www.kmcondemand.com,
www.kmcondemand.com/ptc
Address: 1001 Summit Blvd.
Atlanta, GA 30319
Phone: 404-300-1251
Website: www.crawfordandcompany.com
Online Courses: yes
Course: Property Technical Cert (PTC I)
Designation: PTC
Course: Workers’ Compensation Program I-IV
Category: Workers’ Compensation
Designation: Other
Course: Basic Workers’ Compensation Virtual
Classroom
Start Date: See Website
Location: Virtual
Designation: Other
Organization: Discovery Detective Academy
Phone: 480-951-6545
Website: discoverydetectiveacademy.org
Online Courses: yes
Course: Professional Investigator
Category: Risk Management & Safety
Designation: ARM-Associate in Risk Mgmt
Course: Fraud Investigations
Designation: ARM-Associate in Risk Mgmt
Course: Advanced Interviewing Techniques
Organization: FastrackCE
Contact: Brad Nevins
Address: 13750 Pipeline Ave.
Chino, CA 91710
Phone: 800-544-3605 ; Fax: 909-465-4195
Website: www.fastrackce.com
Organization: First Party Claims Conference
Contact: David Barrack
Address: 21165 Whitfield, Pl., Ste. 105
Potomac Falls, VA 20165
Phone: 703-433-2520 ; Fax: 703-433-0369
Website: www.firstpartyclaims.com
Online Courses: yes
Online Courses: no
Course: Ethics in Insurance
Category: Ethics, P&C, Life & Health
Course: Flood Insurance Made Simple
Category: Flood Insurance, P&C
Course: Understanding Commercial Lines
Property & Casualty
Category: Property & Casualty
Organization: First Choice Continuing
Education
Contact: Justin Genuino
Phone: 949-706-9463 ; Fax: 949-706-9439
Website: www.FirstChoiceCE.com
Online Courses: yes
Course: Ethics in Property & Casualty
Course: Property & Casualty Personal Basics
Course: First Party Claims Conference
Location: Crowne Plaza Hotel, Warwick, RI
Category: Property Casualty Insurance, Ethics
Designation: 12 CE Credits for Adjusters
(multi-line). Open to accountants, agents,
attorneys, brokers, engineers & others.
Organization: Focal Insurance
Contact: Brenda Austin
Address: P.O. Box 175
Pomona, NY 10970
Phone: 845-354-2036 ; Fax: 845-354-4779
Website: www.focalinsurance.com
Educational Offerings: CE, Individual
Courses & Pre-Licensing Courses
Online Courses: no
Correspondence Courses: yes - self-study
Course: Property & Casualty Pre-Licensing
Start Date: Apr 9–Jul 27, ‘12 (Rockland, NY)
Jul 9 – Jul 27, 2012 (Westchester, NY)
May 27 – Sep 13, 2012 (Brooklyn, NY)
Category: Insurance - P&C; Life Accident &
Health & Annuities; Risk Management
Designation: Broker’s License
Organization: Independent Insurance Agents
of Texas (IIAT)
Contact: Stephanie Freitag, Education Mgr.
Email: [email protected] ; [email protected]
Address: 1115 San Jacinto, Ste. 100
Austin, TX 78701
Phone: 800-880-7428 ; Fax: 512-469-9512
Website: www.iiat.org
Online Courses: yes
Course: Business Interruption
Course: Certified Account Manager Program
Start Date: see schedule online - iiat.org
Location: Many Cities
Category: Customer Service, Technical
Knowledge
Designation: CAM – Certified Account Mgr
Course: Construction Risk & Insurance
Specialist
Location: Many Cities
Category: Commercial Property Casualty,
Property Casualty Ins, Risk Mgmt & Safety
Designation: CRIS - Construction Risk &
Insurance Specialist
Course: Producer Development Program
Location: Austin, TX
Category: Agency Mgmt, Commercial &
Personal P&C, Customer Service, Ethics, Risk
Mgmt & Safety
Organization: Infinity Schools
Contact: Greg Mckewen
Address: 1310 Esplanade, Ste. 317 S
Redondo Beach, CA 90277
Phone: 800-600-2550 ; Fax: 424-247-9050
Website: www.infinityschools.com
Online Courses: yes
Course: Unlimited CE Packages ONLY $36.95
Location: Nationwide
Designation: Continuing Education & PreLicense Training
Course: Ethics the Guide to Success
Category: P&C Insurance – 5 Credit Hours
Course: Understanding Umbrella Coverage
Category: Commercial P&C -15 Credit Hours
Organization: Insurance Agents & Brokers
Contact: Jessica McWilliams
Address: 5050 Ritter Rd.,
Mechanicsburg, PA 17055
Phone: 717-795-9100 ; Fax: 717-795-8347
Website: www.iabgroup.com/education
Online Courses: yes
Course: Insurance Success Seminars
Start Date: May 1-3, Aug 7-9, Oct 30-Nov1
Location: PA
Category: Sales/Marketing
Designation: CPIA – Certified Professional
Insurance Agent
Course: Pa. Licensing Exam Preparation
Location: Pa. - Multiple Locations
Course: Compliance Pitfalls and Ethical
Responsibilities
Location: Anywhere
Category: Ethics
Organization: Insurance Community Center
Contact: Amanda Colby
Em: [email protected]
Address: 78-365 Highway 111, Ste. 388
La Quinta, CA 92253
Phone: 805-776-3755 ; Fax: 760-645-6285
Website: www.insurancecommunitycenter.com
Organization: Insurance Educational
Association
Contact: Patty Gibson Carlson
Address: 725 W. Town & Country Rd., Ste.
430, Orange, CA 92868
Phone: 714-689-0161; Fax: 714-689-0112
Website: www.ieatraining.com
Designation Programs, Individual P&C
Courses & Workshops
Online Courses: yes -Classroom & Onsite too
Course: Online Self Study
Category: Disability Mgmt, Workers’ Comp
Designation: WCCA, WCCP, CPDM
Course: Online Instructor Led (Tele-Learning)
Category: Commercial & Personal P&C, Risk
Management & Safety, Claims
Designation: ARM, CPCU, AIC, AU,
WCCA, WCCP, CPDM
Course: Classroom Training including On-Site
Custom Classes
Start Date: Spring, Summer, Fall
Location: CA, AZ
Category: Commercial & Personal P&C,
Ethics, Life/Health/Benefits, Risk Management
& Safety, Sales/Marketing
Designation: ARM, CPCU, AIC, WCCA,
WCCP, CPDM
Online Courses: yes
Course: Education Tracks
Start Date: Ongoing
Location: Many States, Live, Online
Category: Commercial & Personal Lines,
Employee Benefits, Agriculture & Contractors
Insurance
Designation: Continuing Education
Course: Timely Topics Informational Webinars
Start Date: Ongoing
Location: Live Online
Category: Informational Webinars sharing key
resources, information and tools for insurance
sales and practice management.
Course: Principles of Rainmaking - Producer
Development Series
Start Date: May 2, 2012
Location: Live Online
Category: Sales/Marketing
Organization: Insurance Journal Academy
of Insurance
Contact: Chris Boggs
Phone: 800-897-9965 ; Fax: 619-584-1200
Website: www.IJAcademy.com
Online Courses: yes
Course: Practical Workers’
Compensation: What You Need To Know
Start Date: On Demand
Location: Online
Course: The Proper Care and Feeding of
Certificates of Insurance
Location: Online
Course: The Real Effects of Granting
Additional Insured Status
Location: Online
Category: Property Casualty Insurance, Sales/
Marketing
Course: Practical and Applicable Errors and
Omissions Tips
Location: Online
Course: Using Coverage Gaps to Win New
Customers
Location: Online
Organization: Insurance Training Institute
Contact: Robert Secovnie
Address: 20 Spruce St., Valatie, NY 12184
Phone: 518-758-6609 ; Fax: 518-758-6693
Web: www.ITINY.com
Online Courses: no
Organization: International Association of
Insurance Professionals
Contact: Mark Adams
Address: 9343 E. 95th Ct S, Tulsa, OK 74133
Phone: 918-294-3700 ; Fax: 918-294-3711
Web: internationalinsuranceprofessionals.org
Online Courses: no
Course: Professional Ethics
Category: Ethics
Designation: CIIP- Certified Insurance
Industry Professional
Course: Long Term Care
Course: Underwriting
Organization: International Risk Management
Institute, Inc. (IRMI)
Contact: Millie Workman
Address: 12222 Merit Dr., Ste. 1450
Dallas, TX 75251
Phone: 800-827-4242 ; Fax: 972-371-5120
Web: www.IRMI.com/CE
Online Courses: yes
Course: Construction Risk and Insurance
Specialist (CRIS®)
Category: Risk Management & Safety, Sales/
Marketing
Designation: CRIS® - Construction Risk &
Course: Management Liability Insurance
Specialist (MLIS®)
Category: Sales/Marketing, Prof. Liability,
D&O, EPL and Fiduciary Liability exposures
Designation: MLIS® - Management Liability
Course: General Insurance CE
Category: Commercial & Personal Lines, Life
& Health
Organization: International Society Of
Workers Compensation Specialists
Contact: Bill Reynolds
Address: 6688 Joliet Rd., Ste. 253, Indian
Head Park, IL 60525
Phone: 312-286-1956 ; Fax: 708-401-0755
Web: www.isowcs.org
Designation Programs
Online Courses: yes
Course: Certified Injury Prevention Specialists
Course: Certified Claim Mgmt. Specialists
Course: Certified Premium Audit Specialist
Organization: Kaplan Financial Education
Contact: Rebecca Ray
Address: 1900 Ballpark Way
Arlington, TX 76006
Phone: 800-824-8742
Web: www.kpsTexas.com
Educational Offerings: Insurance & Securities
Courses/Programs (Accredited)
Online Courses: yes
Course: Professional License Courses
Location: TX
Category: Other
Designation: Various
Course: Real Estate Courses
Location: TX
Category: Other
Course: Inspection Courses
Location: TX
Category: Other
Organization: Missouri State University
Contact: Dr. Stan Adamson
Address: 901 S. National, Springfield, MO
65897
Phone: 417-836-6686 ; Fax: 417-836-6224
Web: www.missouristate.edu/academics/details.
aspx?id=81570
Educational Offerings: Undergrad Ins.
Courses / Programs (Accredited)
Online Courses: yes
Course: INS 313 - Commercial Insurance
Start Date: Aug 2012
Location: Springfield, MO
Category: Commercial Property Casualty
Designation: CPCU – Chartered Property
Casualty Underwriter
Course: INS 211 - Insurance
Start Date: Spring or Fall each year
Location: Springfield, MO and Online
Category: Personal Property Casualty
Designation: Intro to Insurance
Course: INS 415 - Risk Management
Start Date: Jan 2012
Location: Springfield, MO
Category: Risk Management Safety
Designation: ARM – Associate in Risk
Management
Organization: National Flood Insurance
Program - NFIP/FEMA
Contact: L. Savino
Address: P.O. Box 210, Adelphia, NJ 07710
Phone: 732-625-TEACH Fax: 732-625-0828
Website: www.NFIPS.com
Online Courses: yes
Course: FEMA Flood Course
Start Date: Call or Email to Schedule
Designation: Continuing Education Credits
Organization: New Level Partners
Contact: Nancy Langton
Address: 100 Overlook Center, 2nd Fl
Princeton, NJ 08540
Web: www.newlevelpartners.com
Organization: Professional Liability
Underwriting Society
Contact: Deb Ropelewski
Phone: 952-746-2580 ; Fax: 952-746-2599
Website: www.plusweb.org
Online Courses: yes
Educational Offerings: Professional Liability
Ins. Designation Programs
Online Courses: no
Course: Commercial Lines Insurance Basics
(25 course series)
Course: Personal Lines Insurance Basics (12
course series)
Category: Personal Property Casualty
Designation: New hire training
Course: Business Skills for Account Managers
(12 course series)
Category: Customer Service
Designation: New hire training
Organization: North American Training
Group
Contact: Fred Wharton
Address: 1293 Beacon Circle
Wellington, FL 33414
Phone: 888-884-6284 ; Fax: 561-282-6969
Website: www.fraudeducation.com
Educational Offerings: Professional Liability
Ins. Designation Programs, Individual Courses
Online Courses: Yes
Course: Workers’ Compensation Fraud
Category: Insurance Fraud
Course: Auto Insurance Fraud
Course: State Fraud Compliance Training
Course: Registered Professional Liability
Underwriter
Location: All States (Self-study)
Designation: RPLU; RPLU+
Course: PLUS International Conference
Start Date: Nov 7-9, 2012
Location: Chicago, IL
Category: Other
Course: D&O Symposium, MLP Symposium
Start Date: Check website for dates & locations
Category: Other
Organization: Quest CE
Contact: Jessica Kruse
Address: 10850 W. Park Pl., Ste. 1000
Miwaukee, WI 53224
Phone: 877-593-3366 ; Fax: 414-375-3449
Website: www.questce.com
Online Courses: yes
Course: Life Insurance Today
Designation: Chartered Financial Consultant,
Chartered Life Underwriter, CFP & Insurance
Course: A Professional Guide to Ethical
Decision Making
Category: Ethics, Life, Health, Benefits
Course: Introduction to Suitability & the
Senior Protection Model Regulation
Location:All States
Organization: Sandi Kruise Insurance Training
Contact: Robert Kruise
Address: P.O. Box 786, Bonita, CA 91908
Phone: 800-517-7500 ; Fax: 619-421-8171
Website: www.kruise.com
Online Courses: yes
Course: Unlimited CE Subscription, $39.95
Category: Commercial & Personal P&C,
Property Casualty Insurance, Ethics, Life/
Health/Benefits, Risk Management & Safety,
Surplus Lines
Course: Long Term Care Partnership
Category: LTCP, Life/Health/Benefits
Course: Ethics and the Insurance Agent (meets
Ethics requirement)
Category: Ethics, Commercial & Personal
P&C, Life/Health/Benefits
Organization: SNL Center for Financial
Education
Contact: Maureen Hollar
Charlottesville, VA 22902
Phone: 434-951-7786 ; Fax: 434-984-8038
Website: www.snlcenter.com
Online Courses: no
Course: Life and P&C Insurance Statutory
Accounting & Reporting
Start Date: Various throughout the year
Location: New York, NY
Category: Agency Management, Finance
Course: Financial Analysis of Life and P&C
Insurers
Course: Fundamentals of Insurance Company
Credit Analysis
Organization: Society of Insurance Research
Contact: Ed Budd
Address: 631 Eastpointe Dr.
Shelbyville, IN 46176
Phone: 317-398-3684
Website: www.sirnet.org
Online Courses: no
Course: 2012 Spring Seminar
Start Date: Apr 23, 2012
Location: University Club - Chicago, IL
Category: P&C and Health
Designation: Research
Course: 42nd Annual Conference
Start Date: Oct 14, 2012
Location: Pittsburgh, PA
Category: P&C and Health
Designation: Emerging Issues & Research
Organization: Success Continuing Education
Contact: James Burch
Phone: 949-706-9453 ; Fax: 949-706-9439
Website: www.SuccessCE.com
Online Courses: yes
Course: Personal Lines Total Coverage
Course: Homeowners & Automobile Ins.
Course: Surplus Lines Compliance Course
Organization: Sterling Education Services, Inc
Contact: Elizabeth Kramer
Eau Claire, WI 54702
Phone: 715-855-0495 ; Fax: 715-835-5132
Website: www.sterlingeducation.com
Organization: The Agency Trainer
Contact: Vickie Morgan
Address: P.O. Box 11551, Pueblo, CO 81001
Phone: 719-924-9454 ; Fax: 888-840-1250
Website: www.agencytrainer.com
Online Courses: no
Online Courses: no
Course: Workers’ Comp Law & Practice
Start Date: Multiple Dates
Course: Applied Systems Training
Designation: Other
Course: Advanced Workers’ Compensation
Course: Training Assessments, One-on-One
Training, Refresher Training and more!
Designation: Other
Course: Fundamentals of Workers’ Comp
Organization: The National Alliance for
Insurance Education & Research
Address: 3630 North Hills Dr.
Austin, TX 78731
Phone: 800-633-2165 ; Fax: 512-349-6194
Website: www.TheNationalAlliance.com
Online Courses: yes
Course: School for Producer Development
Location: Dallas/Ft. Worth, TX
Category: Commercial Property & Casualty,
Sales/Marketing
Course: Dynamics Sales Training
Category: Insurance Sales, Sales Mgmt
Course: Certified Insurance Service
Representatives (CISR) Online & Classroom
Location: Internet/All States (1200+ per year)
Category: Agency Mgmt, Commercial P&C,
Customer Service, Personal Residential & Auto
Designation: CISR – Certified Insurance
Service Representative
Course: Certified Risk Managers (CRM)
Online & Classroom
Location: Internet/Many States (80+ per year)
Designation: CRM – Certified Risk Manager
Course: Certified Insurance Counselors (CIC)
Location: All States (300+ per year)
Category: Agency Mgmt, Commercial P&C,
Personal Lines, Life & Health
Designation: CIC – Certified Insurance
Counselor
Course: Certified School Risk Managers
(CSRM) Online & Classroom
Location: Internet/Many States (60+ per year)
Designation: CSRM – Certified School Risk
Manager
Organization: The Institutes
Contact: Customer Service
Address: 720 Providence Rd., Ste. 100
Malvern, PA 19355
Phone: 800-644-2101
Website: www.theinstitutes.org
Online Courses: yes
Course: Associate in General Insurance
Designation: AINS - Associate in General Ins.
Course: Associate in Commercial Underwriting
Designation: AU - Associate in Commercial
Underwriting
Course: Chartered Property Casualty
Underwriter
Designation: CPCU - Chartered Property
Casualty Underwriter
Course: Accredited Adviser in Insurance
Designation: AAI - Accredited Adviser in
Insurance
Course: Associate in Claims
Category: Claims
Designation: AIC - Associate in Claims
Course: Associate in Risk Management
Category: Risk Management Safety
Designation: ARM - Associate in Risk
Management
Organization: The Wedge Group
Contact: Marja van Oijen
Address: 5729 Lebanon Rd., Ste. 144 Box
410, Frisco, TX 75034
Phone: 214-446-3209 ; Fax: 972-999-0970
Website: www.thewedge.net
Online Courses: yes
Course: iWin: Leader in Fully Integrated Sales
Training & Management Solutions
Category: Agency Management, Sales
Managers /Producers, Property Casualty/Risk
Mgmt, Employee Benefits, Sales/Marketing
Course: 3-in-1 Workshop - Million Dollar
Producer™, The Wedge®, Red Hot Intros™
Course: iWin Train the Coach - How To Run
effective CRISP™ Sales Meetings
Organization: United Insurance Educators
Contact: Toni Amell
Address: 8213 352nd St. East
Eatonville, WA 98328
Phone: 800-735-1155 ; Fax: 253-846-7536
Web: www.uiece.com or www.CheapCE.com
Online Courses: yes
Course: Dollars and Sense
Location: Online or through home-study
Category: Life and financial planning
Course: FEMA National Flood Ins. Program
Category: Flood (PC)
Course: Partnership Long Term Care Policies
Category: Long-term care selling requirement
Organization: Van Wyhe Group, LLC
Contact: Angela Lingle
Address: P.O. Box 4130 Waukesha, WI 53187
Phone: 800-326-4741 ; Fax: 800-476-2945
Website: www.insurancece.com
Online Courses: yes
Organization: Vale Training Solutions
Contact: Tonya Magalei / Ami Thompson
Address: 2424 E. Randol Mill Rd.,
Arlington, TX 76011
Phone: 817-633-4800 ; Fax: 817-633-2922
Website: www.vale-ts.com
Online Courses: no
Course: Property Adjusting
Course: Self Defense: Documentation
Location: On-Line
Course: Problems When Insuring Condos
Location: On-Line
Organization: WISE Education, Inc.
Contact: Carla Coats
Address: 1501 Cobblestone Ct.
Thorofare, NJ 08086
Phone: 800-577-9888 ; Fax: 856-384-8414
Website: www.wiseeducation.com
Online Courses: yes
Course: Atlantic City “Blitz”
Start Date: Oct 18 & 19, 2012
Location: Caesar’s – New Jersey
Category: Commercial Property Casualty,
Ethics, Risk Mgmt & Safety
Course: Ethics In Insurance
Location: On-Line
Course: Residential Estimating
Course: Casualty Adjusting
Claims Journal Advertisers Index
ACORD LOMA
www.acordlomaforum.org
Agero
www.agero.com
A.M. Best
www.ambest.com
ClaimExpress
www.claimexpress.com
Donan Engineering
www.donan.com
EagleView
www.eagleview.com
Engle, Martin, & Associates, Inc.
www.englemartin.com
IICF
www.iicf.org
41
19
9
56
27
2
3
Motion Computing
www.motioncomputing.com
Pilot
www.pilotcat.com
RGL Forensics
www.rgl.com
The Institutes
www.theinstitutes.org
Vale Training Solutions
www.valetrainingsolutions.com
Wardlaw Claims Services, LLP
www.wardlawclaims.com
Weather Forensics
www.weatherforensics.com
15
11
34
37
44
7
55
39
IDEA EXCHANGE | FINAL OFFER
Is the Industry
Responding Quickly
Enough to Cyber Risks?
I
’m often asked if the insurance market is capable of providing coverage that responds to the rapid pace at which
cyber risks are growing and changing. This is an understandable question if you consider our growing reliance on
new technologies such as cloud computing
and the development of advanced malware,
as criminal gangs and activists seek to use it
for profit, intelligence and publicity.
The spread of cyber risks in recent years
is staggering. The U.K. Information Commissioner’s Oﬃce reported a 58 percent increase
in data breaches last year. Cyber crime costs
By Jeremy Smith
the global economy an estimated $388 billion
— more than the illegal drug trade. Worldwide, 19 people fall
victim to some form of online crime every second, most commonly social network hacking and credit card fraud.
Last year alone: 286 million unique variants of malware
were reported; there was a 93 percent increase in web attacks;
and on average, 260,000 identities were exposed with each
data breach as a result of hacking.
Cyber Liability
Insurance to cover cyber risks first emerged for the U.S.
market around 2002, primarily as a result of the state data
breach notification laws, starting with California’s SB 1386 —
a milestone in corporate data protection requirements.
Initially there were two distinct products offered: privacy
policies and non-physical business interruption polices.
Around five years ago, insurers consolidated these two wordings into one comprehensive off-the-shelf cyber wording.
Since then, insurers have been cautious about developing the
product further. It’s a diﬃcult task to continue to innovate
and broaden coverage when the risks grow each year and
there is poor claims experience to draw on. Coverage needs to
be sustainable or it’s of no use to anyone in the long-term.
Additional cyber solutions have been secured in areas such
as payment card industry (PCI) fines, inclusion of third-party
vendors, increasing the limit for first-party breach costs and
broadening triggers for non-physical business interruption.
And now that the insurance market is more experienced, it
is time to take a fresh look at the wordings and see where we
can look to transfer more of these risks. We also need consistency in wordings so it is possible to build significant limits
for cyber programs that comprehensively cover the risks faced
by businesses. It is all very well obtaining broad coverage
on the primary placement, but if you can’t secure the same
coverage on the excess placement, the client won’t get the real
benefit of the broader coverage. The market as a whole needs
to react and innovate as one to address this issue.
Often we see the market reacting to new trends. At first,
claims resulting from third-party IT vendor security breaches
were not covered, but we can now obtain extensions to cover
third-party IT vendors. On the other hand, some markets have
started to exclude claims resulting from mobile devices due to
the increase in cyber crime against smartphones and tablets.
New Risks
In 2010 we entered a new decade of cyber attacks with
advanced persistent threats (APTs) such as Aurora and Nightdragon. These are insidious, targeted attacks over a sustained
period of time designed to steal trade secrets and intellectual
property. They occur largely without public disclosures and
differ from the immediate financial gratification that drives
most cyber crime. The insurance industry needs to consider
how it will provide coverage for theft of intellectual property
and trade secrets to help businesses mitigate this risk.
Sometimes the market is too slow to react; the recent cyber
phenomenon of hactivism is an example. Hactivists use cyber
attacks to promote political and ideological ends. Groups of
such as Anonymous, Lulzsec and Antisec have targeted organizations including Sony, Universal, the Central Intelligence
Agency, FBI and the UK Serious Organised Crime Unit.
It could be argued that Anonymous, which the U.S. government classifies as a terrorist group, could be excluded from
coverage by terrorism exclusions. Brokers should therefore
try to ensure that the appropriate coverage extension protects
businesses from this growing threat.
The cyber insurance market is still young, but has already
changed a great deal since it began. Continued communication across the insurance market will ensure a constant evolution of risks and products to help mitigate this fast-moving
threat. CJ
Smith is Willis’ Cyber Liabilities practice leader.
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