Archive for October, 2010

Harvard study: Fear of malpractice lawsuits is driving defensive medicine

October 29, 2010 Leave a comment

Fear of malpractice lawsuits is the immeasurable driver behind defensive medicine, according to a Harvard University researchers study published in a recent edition of Health Affairs. This touches on an interesting facet of medical malpractice suits and defensive medicine. The report indicates that focusing reform efforts on money alone, with tort reform and damage cap efforts, may not do enough to reduce the costs associated with defensive medicine.

The report estimates that $45.6 billion was spent on defensive medicine in 2008. A total of 2.4% of the total healthcare spending in the U.S. was attributable to the “medical liability system”. And while this is a staggering sum, it does not quantify one of the leading drivers of these costs. That is fear. Read more…

Long Term Care – pricing has been a consistent problem

The recent announcement from John Hancock Financial to raise their long term care (LTC) premiums by an average of 40% may have come as a shock for some, but for the last decade, pricing for individual LTC has been a tumultuous task for the majority of companies in the LTC market. This market began developing in the mid-80’s with many companies offering basic LTC policies. In 1996 with the passing of HIPPA and the tax incentives placed on tax-qualified long term care policies, carriers enhanced their plans and the competition increased dramatically. The problem was that carriers and their actuaries were not accurate with their pricing assumptions. The first incorrect assumption was the lapse rate for individual long term care (ILTC) policies. ILTC was priced with approximately 8% to 10% lapse ratio, however companies were experiencing less than 4%. This makes sense when you think about the process and investment Read more…

Tips for selecting a third party logistics provider (3PL)

The diligence taken in the process of selecting and retaining a third party logistics (3PL) provider can have meaningful impact as to whether a company has a sound transit risk management program and a good claims experience. If your company is looking for guidance on this issue, here are some guidelines provided by Chubb’s Marine Department to use as a reference. Read more…

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Facebook privacy breach reveals important risk management and insurance issues

October 18, 2010 Leave a comment

The lead story in the Wall Street Journal today reports Facebook in Privacy Breach. The article describes how several of the applications available on Facebook transmit identifying information to Internet tracking and advertising companies. The breach affects millions of users. An especially resonant sentence in the article notes that “The practice breaks Facebook’s rules, and renews questions about its ability to keep identifiable information about its users’ activities secure.”

A casual reader of the article might understandably think that the Facebook breach has little relevance to the risks that most companies confront in the collection and handling of confidential information. While it is true that most don’t have 500 million customers or embed third-party applications in their websites, several important aspects of Facebook seemingly sui generis situation can have analogues for almost all companies.

Some important questions raised by the Facebook matter could also arise for any other company that collects confidential personal information. Read more…

Wind project tax credits also fuels renewable energy insurance options

October 18, 2010 Leave a comment

A recent report by the American Wind Energy Association outlined the impact of renewable energy tax credits from the Federal Government (the 1603 program). They reported that “the 1603 tax credit program restarted stalled projects and saved all 40,000 jobs at risk. This year, a study by Lawrence Berkley National Laboratory found that the 1603 tax credit supported shovel-ready projects and over 50,000 American jobs. The 1603 program actually led to a record-breaking year of 10,000 megawatts (MW) of new wind in 2009, compared to the 4,000 MW feared prior to the Recovery Act.”

This growth in the Renewable Energy sector, including wind, has increased the availability of insurance competition and product development. New products have been introduced by various insurers for wind farms, solar panel farms, green roof construction, geothermal plant and systems integrators. Expanded insurance products are now available from Chubb, ACE, Zurich and Chartis.

Liability insurance for law firms who find themselves in the cross hairs of the foreclosure scandal

October 14, 2010 Leave a comment

There is often a trickle down effect when it comes to massive economic dislocation. The latest evidence for that statement is to be found in Florida as a major law firm there was virtually shut down from its formerly lucrative business of processing foreclosures according to reports in the Wall Street Journal. The accusations include the now familiar litany of charges against banks servicing home loans including the forging of signatures and undue pressure to process loan repayments in haste.

So, the economic dislocation caused by the failure of the market for mortgage-backed securities in the last few years first led to problems in investment banks, then commercial banks and now to those businesses that support such businesses.

Liability Insurance for law firms has been “soft” for the past few years but as with banks, insurance costs may rise if there is a great increase in litigation arising out of the mortgage crisis.

Even politicians need good risk management

In the battle for the governorship of Massachusetts, politics entered a new phase yesterday when independent candidate and State Treasurer Tim Cahill brought a law suit against his former aides who had defected to the Republican Governors Association (RGA). Cahill’s Lt. Governor partner Paul Loscosso defected from Cahill’s campaign earlier this week and email messages seem to portray a set-up for the defection by consultants in Cahill’s camp who defected to the RGA. In fact, one of the key consultants that left Cahill had a job with the RGA the next day.

The lawsuit demonstrates the potential for large-scale litigation in politics. The consultants involved will hopefully have Professional Liability Insurance in order to defend themselves against charges that they were not carrying out their efforts on behalf of candidate Cahill on who’s payroll they were on. Read more…