Risk & Business

Well, the experts who have been saying that 2011 will see the turn in the commercial insurance market are backing off on their prediction. Capacity is extremely high in the industry and demand for insurance is at an all time low. In addition claim fequency is down. This is a recipi for more and more competition in the marketplace. Now, as the economy starts a rebound, and claims go up and demand go up , the capacity the industry is sitting on will start to erode quickly because rates are so suppressed. The industry will have a hard time increasing rates at the pace their capacity will be dwindling thus causing a crisis. This is what I see happening. Heaven forbid if the crisis is severe enough to get the headlines. The Feds are looking for an insurance crisis to get thier hands on regulation. Oh what an interesting time it is in the commerical insurance industry. Until next time know your risks and be careful out there.   K

A recent Conning study showed that small business owners have enjoyed the soft market but have gone the extra measure by cutting back coverages to cut costs. The recession has made the small business owner look deep into cutting back to survive and insurance is on the top of the list of expenses. However the risk of business increases when coverage is cut or when claims become self insured. Finding the right balance between risk and coverage is tougher than ever. Insurance agents and brokers can help business owners find that balance. Until next time be careful out there and know your risks.  K

Here is the scenario.  You are a business owner in Michigan and you drug test your employees as part of your safety and risk protocol. One of your employees comes up positive for marijuana, and tell you that it is prescribed and is for medical uses. However now you are in a dilemma. Your handbook says that the employee must be fired for positive drug tests. The employee signed off on the handbook. His job requires utmost safety as it is considered high hazard. So you as the employer fire the employee. Now Michigan law is "mum" on whether you did the right thing or the wrong thing as a business owner. The only thing left to do is sue and fight it out in court. This is a risk managers night mare. The Michigan law silence, on private workplace issues regarding medical marijuana, only opens up potential litigation that will be hard to quantify. In my opinion as a risk manager it may be a risk that cannot be managed with standard risk mitigation techniques. I also expect similiar

The fans that lost thier seats due to a screw up in ticketing have filed a class action lawsuit for 5 million dollars. Apparently the fans were promised the best sight views in the stadium and were charged $1500 per seat. Then the day of the game they were told they did not have their seats and would have to stand in certain areas of the stadium which really angered the fans. The problem here is that the fans said that no one from the stadium, or the NFL had really spoken with them or did  any risk managment to make the situation better. From all indications risk management did not do the job pre or post incident. It will be interesting to see how this plays out. Until next time be careful out there and know your risks. K

Many insurance pundits are calling for an end to the soft market. The falling of rates and the increased competition over the last 4 or 5 years has been great for business owners but is starting to become scary for insurance companies. Insurance actuaries do not like unpredictability because they cannot charge the appropriate rates. well, mother nature has been keeping these guys up at night along with insurance company CEO's. Based on recent events, wild weather is happening in places it has never really hppened before, or at frequencies never seen before. Insurance company results are starting to deteriorate. While constantly waiting for the next "big one" to change the market, the soft cycle may come to an end because of a mulititude of unepxected, irregular, weather storms that no one saw coming. Time will tell but this blogger sees some surprises about to happen to the industry because of frequent weather events that were not on the radar screen. Until next time know

The risk managers for the NFL have a tough problem to tackle in the off season. The problem is how to stop the trend of increasing concussions in the league. Using risk science the analysis will show a multi-faceted issue that does not have one solution. Players are bigger and faster than they ever have been, and helmet design has not caught up with the game. Think back to the early part of the 19th century when players wore leather helmets, concussions were common place. The introduction of plastic helmets helped carry the game into the current time period. However, now is time for innovation in helmet design. Science has to step up and re-think the traditional model. NFL risk managers need to demand this innovation to make progress. Until helmet design comes up to speed, the next risk mitigation step has to be in training and educating players on tackling. When I played the saying was, "see what you hit". When I watch the games I rarely see this approach by players. Most wi

We are in the result stages of how predictive modeling use by insurance companies, is panning out. The results are looking pretty good for insurance companies. Many who use it are reporting underwriting results that are 40% better than prior to its use. This is a significant number. What this translates into is more profit. However on the street level it is a hard thing to explain to customers. Many times we get premiums that are surcharged because the predictive model picks up a negative criteria based on the insureds financial history. Many times this is not "predictive" in the eyes of us agents who know the clients. For example, I had a client who was going through a nasty divorce which his credit score was negatively impacted. His business was running like a clock and his loss history was fantastic. However his "predictive model" developed rates that were surcharged because the computer picked up his poor credit score and modeled his business as a higher risk. T

John Hopkins developed a safety checklist program for hospitals. This checklist is proving out to virtually eliminate hospital blood infections in patients. In addition it is helping to reduce hospital deaths. This illustrates how safety science and risk managment are effective in any application. Hospitals and medical facitlities are already more advanced than most businesses because of constant regulation and scrutiny. However, using more advanced techniques in safety and risk science, even hospitals are improving results. In addition risk is an ever changing, dynamic monster that has to be continually tamed. As soon as you think you have it whipped , it reels it's ugly head. Risk science is the only answer to keep risk managed and controlled. Even the best we have , hospitals, are finding this out. until next time be careful out there and know your risks. K