SYNOPSIS ALL INDUSTRY CONFERENCE CALL November 10, 2010

Wall Street Journal reports low interest rates could adversely impact insurer profits:

P/C and life insurer profits could be adversely impacted if interest rates remain low for an extended period of time, according to this Monday, November 8, article in The Wall Street Journal (subscription required).  The decline in investment income is a factor in some life insurers’ decisions to change the design and pricing of some products, the WSJ reports, with others scaling back the benefits offered for long-term care insurance as well as retirement income products that guarantee minimum income.

USA Today article cites study showing drowsy driving was a factor in 17 percent of all U.S. fatal car crashes (1999-2008):

An AAA Foundation for Traffic Safety study showed drowsy driving led to more than 5,500 traffic fatalities a year and was a factor in nearly 17 percent of all fatal crashes, according to National Highway Traffic Safety Administration data from 1999 through 2008. The AAA report indicates drowsy driving is a more serious problem than previously estimated, the Monday, November 8, USA Today article states, noting that a 1994 analysis concluded drowsy driving was a factor in only 3.6 percent of all fatal crashes.

New York Times’ special Your Money section examines long-term care (LTC) and longevity insurance:

Ron Lieber wrote a piece on why LTC insurance is such a hard sell and Tara Siegel Bernard found that longevity insurance provides an opportunity to place a bet: Will you live long enough to collect?  The I.I.I.’s Jeanne Salvatore noted that the special section, published on Friday, November 5, also included articles from personal finance writers with an interest in insurance matters, such as Jennifer Saranow Schultz and Beth Kobliner, and that I.I.I. member companies ought to keep all four reporters in mind when pitching stories.

The JD Power and Associates report was issued on Thursday, November 4, and looked at overall consumer satisfaction with the auto insurance claims process related to physical damage losses.  The market research firm found overall consumer satisfaction dropped to 837 (on a 1,000-point scale) in 2010, having stood at 842 in 2009. Still, the 837 figure is higher than the 817 points given to the industry in this category in 2008.

A proposal for the federal government to support state-run catastrophe insurance programs would increase the number of people buying earthquake coverage in California and modestly lower both uninsured losses and government assistance following a major quake, this newly-released RAND study states. RAND, which compiled the document at the behest of the California Earthquake Authority (CEA), predicted that lower premiums would produce a 13.2 percent increase in the purchase of earthquake insurance from the CEA. Only about 12 percent of Californians currently have earthquake insurance coverage, the report notes. RAND’s Wednesday, November 3, news release offered additional details.

New York Times’ ‘Green Blog’ readying piece on potential link between climate change and tidal flooding in Norfolk, Virginia:

Leslie Kaufman (leslie@nytimes.com), author of the NYT’sGreen Blog, is doing research on the issue of tidal flooding in Norfolk, Virginia, and how some believe it is a growing problem in Norfolk because of climate change.  Kaufman indicated she may focus on the issue of property insurance affordability and availability in Norfolk at some point.

Seattle-based Peter Robison of Bloomberg news wire is researching instances in which a building was demolished because of “construction defects.”  Robison told the I.I.I. he is examining the upcoming demise of a 25-story residential/commercial structure in Seattle, Washington, that was built by St. Louis-based McCarthy Building Companies.  The building opened in 2001.  Robison said the fate of the tower was the subject of a contentious legal battle, and a consensus has since emerged among city officials and other interested parties that tearing the building down would be more cost-effective than retrofitting the property.

MSNBC.com’s Seattle-based Allison Linn (Phone: 425-421-9228) requested and received from the I.I.I. homeowners insurance premium rates and policy figures nationally dating back to 2005. Linn, a senior writer with the website, is looking primarily at the turmoil in the residential real estate market but wanted some homeowners market information to flesh out her story.

Dr. Steve Weisbart, the I.I.I.’s chief economist, gave an interview to A.M. Best’s Diana Rosenberg for her upcoming story on auto insurance market place trends, which will be based in part on Dr. Weisbart’s October 2010 PowerPoint presentation on the subject.

The AIA’s views were summarized in the Wednesday, November 10, National Underwriter (subscription required) article and PCI’s observations were the subject of this Tuesday, November 9, news release.

The California Department of Insurance issued this Tuesday, November 9, news release on the matter.

The Seattle Times reported on Monday, November 8, that workers compensation premiums in Washington state could go up by an average of 12 percent next year under a proposal issued by the state Department of Labor and Industries (L&I).  L&I postponed announcing its 2011 proposed rate increase a few months ago as Initiative 1082, a ballot measure aimed at opening the workers compensation market to private-sector insurance carriers, was debated. I-1082 was defeated by a wide margin at the polls earlier this month.

The Office of Insurance Regulation (OIR) report released this week said cumulative sinkhole claims statewide could rise to nearly $2 billion this year, well above the $1.4 billion in sinkhole damages reported four years ago. Pasco and Hernando counties accounted for half of all sinkhole claims in Florida since 2006, the OIR found.  The St. Petersburg Times, the Tampa Tribune and the I.I.I.’s Claire Wilkinson analyzed the state’s findings on Wednesday, November 10.

Florida’s construction slowdown has had little impact on property insurance premiums, front page story in the South Florida Sun-Sentinel reports:

Between 2009 and the first half of 2010, the cost of rebuilding Florida homes decreased about 5 percent. Florida law, however, does not require insurance premiums to be adjusted when rebuilding costs go down, Julie Patel writes. State regulators also do not control how insurers set rebuilding costs, she notes. As the economy declined, insurers contend that other costs, such as claims payments, continued to increase. Insurers say they had to raise rates because premiums were not keeping up with expenses and because they had been too generous in the past with discounts for strengthening homes against hurricanes. Insurers also take into account that the cost of rebuilding an older home can be higher than building a new one, according to this Sunday, November 7, Sun-Sentinel article.

Mississippi’s insurance commissioner may preside at January 2011 hearing on state’s decision to deny Allstate’s request for a homeowners premium rate increase:

Commissioner Mike Chaney talked to the Biloxi Sun Herald about the issue, and it resulted in this Monday, November 8, Associated Press article.

Nonetheless, a quarter of New Orleans’ housing stock remains in either a blighted or empty state, leaving them number one in that category, ahead of cities like Flint and Detroit in Michigan, as well as Cleveland, Ohio, according to an analysis done by the Greater New Orleans Community Data Center (GNOCDC) and reported on in USA Today on Wednesday, November 10.

All the Devils Are Here: The Hidden History of the Financial Crisis (Penguin/Portfolio), to be released on Tuesday, November 16, may generate media attention because the co-authors are Vanity Fair writer Bethany McLean and New York Times columnist Joe Nocera.