Tag Archives: insurance

Amazon Protect

Amazon is in the insurance business. The retail giant is offering Amazon Protect across Europe. The policy covers accidental damage, breakdowns and theft of objects. Coverage is for two to four years from the delivery of the product. All these incidents are thus covered.

This major retailer is considering offering home insurance as well. Rivals in the industry are worried. At the S & P Global Ratings insurance conference, analysts assured competitors that there was no reason to panic. Joshua Shanker, a Deutsche Bank AG analyst stated that initially Amazon would offer a “bare-bones” policy.

Last year insurers in the US and Canada generated $92 billion of premium from homeowners. Another point made was that it is time consuming to set up the legal entities needed to underwrite risk.

Amazon has made moves into other big regulated industries. Pharmacy companies were nervous when Amazon acquired licences in more than a dozen states to sell healthcare products as a wholesaler. The retailer has an edge over competitors in that its vast store of data on consumers could be a tool for pricing insurance.

Furthermore, Jeff Bezos, Warren Buffett and Jamie Dimon want to fix healthcare. A partnership has been developed between Amazon, Berkshire Hathaway and JP Morgan Chase. The latter is the nation’s largest bank. Together they believe that one of the country’s biggest problems is soaring healthcare costs.

The new company is still unnamed. However, a spokesperson said that the new company will be “free from profit-making incentives and constraints”. There are 840,000 global employees between these three companies. Initially they will concentrate on providing health cover for these employees. They will not offer a product to other companies.

The three companies mentioned have extraordinary resources. Berkshire Hathaway which owns the auto-insurer Geico is a big player in the insurance and re-insurance business.

AI in insurance

Insurance is a complex profession. Could AI replace insurance brokers?  Could a robot do a job better than you? Actuarial models are used for an in-depth analysis of the potential client.

Lapetus, a US-based start-up believes that a selfie can replace that assessment. A potential client sends a good portrait of themselves to Lapetus. Computers then do the rest. The face is analysed in different aspects.  The life expectancy is determined by the computer. Factors such as gender, body mass index and the rate at which the person is ageing are calculated. This process only takes a few minutes.

Warren Buffett of Berkshire Hathaway has warned about the risk of disruption to insurance from AI.

UK insurer Aviva is using AI to do repetitive tasks which were performed by humans. They say that Algorithms are 15 times more productive than humans. Furthermore, insurers say that AI can improve claims processes as well as detect fraud.

Crop insurance is also changing.  Drone technology enables insurers to map terrain in 3D and check plant health from the air.

Zurich Insurance is using robots to decide personal injury claims. The processing time has been cut from an hour to seconds. Accuracy has improved. Because of its machine learning, every new claim leads to further development and improvements.

Siber is a bald, blue-eyed principal of the Buyonic Insurance Agency in Austin, Texas. This insurance android can rate, bind and issue policies on the spot while answering the phone and making robocalls. He speaks every language known to humans and machines. He is able to work 24/7.

Angie Smith, owners of the agency says that Siber never makes a mistake, does not call in sick, does not take a long lunch. She can also take him home after work to do the laundry.

Gun ownership

There have been several mass shootings in the country over the past 12 months. As a result, every aspect of gun ownership is being given closer scrutiny. Furthermore, this includes the responsibility and potential liability of owning a gun.

Insurance companies don’t typically take guns into consideration in home insurance premiums. Some companies do not need you to disclose gun ownership in an application for home cover.

Companies are not permitted to victimize gun owners when issuing homeowner’s policies. However, insurance companies will not cover every claim associated with gun ownership. You will be held liable for injury to another party if you own the gun. Claim payment is dependent upon the incident itself.

However, an accidental shooting in your home could result in the injured party filing a claim against the homeowner. Shootings outside the home also apply here. As long as the shooting is not classified as a crime, a claim will be considered by the insurance company.

The definition of a crime varies state by state. The storing of a gun where minors have access to it is considered a crime in some states. Accidents, where drugs and/or alcohol is involved, may also be regarded as a crime.

The above also depends upon the wording of the policy document. It is important to know the policy limits. If the limit is $150, 000, this may not be sufficient to cover legal and medical fees in the case of a lawsuit as a result of an accident.

Gun owners could obtain an umbrella policy could cover a higher limit than $150, 000. If you or a family member is shot, the cover is provided by your life assurance policy or medical cover.

Chubb, the insurance company, has stated that it will stop underwriting an insurance policy for gun owners called NRA Carry Guard. The NRA began selling this line of Carry Guard insurance last year. These policies help individuals who use firearms for self-defence cover their legal expenses.

Cyber exposure

The fastest growing peril faced by businesses today is cyber exposure. Firms are driven by data and are dependent upon technology.

Occurrences in 2017 highlighted cybersecurity issues. Furthermore, we were shown how vulnerable we are to the hacking of our personal information. Hospitals, voting records and school districts were targeted. Not only were US consumers the focus of the hackers but also another 150 countries.

Three hundred thousand computer systems across the globe were affected by the malevolent Wannacry, NotPetya and Equifax malware. They caused extensive business interruption losses.

Brad Gow, global cyber product leader at Sompo International has warned that a threat could come from a dozen different directions. Cyber experts view the industry as unprepared for cyber exposure due to a lack of experience and data. This is troubling in a continually evolving cyber risk environment.

The NotPetya malware was composed to attack corporate networks. It used a hacked version of a well-known accounting program in Ukraine. It destroyed data and filesystems within each computer.

Most of the attacks happened in Ukraine and Russia. Losses amounted to hundreds of millions of dollars within a few weeks. However, business interruptions continued for months.

Brad Gow said that fortunately, it had not been a true zero-day event. If it had been, this would have turned the cyber insurance market on its head. A zero-day attack happens when developers have not had time to fix a recently discovered software vulnerability. Therefore, there is time for hackers to take advantage of the security gap.

Equifax Inc. expects the 2017 data breach costs to top $275 million this year. Reuters has stated that this could be the costliest hack in corporate history.

In May 2017 WannaCry targeted computers running Microsoft Windows operating system. Data was encrypted and then Bitcoin ransom payments were demanded.

It appears that companies are taking cyber insurance more seriously since the above attacks.

Maersk, a transport and logistics company, lost more than $200 million due to the NotPetya attack. As a result, the company has said that they are taking cyber insurance coverage very seriously.

Electric Vehicles

There are many working parts in an internal combustion engine.  The owners of electric vehicles, however,  do not have to worry about these parts.

Most insurance companies regard electric vehicle drivers as more responsible.  They are therefore less likely to be involved in a car accident. A Chevy Volt costs an average of $1,452 per year to insure. Its non-electric counterpart, namely the Cadillac CTS is approximately $2,024 per annum. The most popular electric vehicle in 2016 was the Toyota Prius C and its annual insurance premium average $1,513 in comparison to $1,801 for a Nissan Altima.

Every electric vehicle is not, however, cheaper to insure.

Many well-known insurers have a problem reacting to new technology, such as electric vehicles, however, there are others who are highly flexible.

Zurich put into motion a worldwide drive which thus put emphasis on the advancement of products and services which would help consumers deal with climate-related risks. The conversion to electric vehicles is part of the solution. The ultimate goal is low carbon emissions. Zurich’s electric car insurance cover includes:

  • 20% discount on an electric car’s insurance premium;
  • 24-hour roadside assistance;
  • In the event of your car running out of charge, you will get free towing to the nearest public charge point or to your home charge point, whichever is the nearest;
  • Your car will be repaired if you have a mechanical failure. You will be towed to the nearest specialist electric car repairer at no charge.

Also. enquire about cable liability.

Does your insurance policy cover the possibility of somebody claiming liability should they trip over the cable and hurt themselves? The cables are short.

Nissan is part of the Renault-Nissan Alliance. Nissan delivers a range of more than 60 models under Nissan, Infiniti and Datsun brands. In 2010, Nissan introduced the Nissan LEAF and continues to lead in zero-emission mobility.

The Renault-Nissan alliance have sold 200,000 electric vehicles worldwide to date. They say that they control 58 percent of the segment. The CEO of the alliance, Carlos Ghosn claims that there are, in his opinion, four reasons why car buyers are making the switch to electric vehicles.

  Owners can make a “recharge” without making a trip. These recharge points include the drivers’ homes and workplaces.

Mr. Ghosn is to have said that the “cul-de-sac” effect is, therefore, helping the market share grow.
Ghosn claims furthermore that the Nissan and Renault EVs have the highest customer satisfaction rates of any vehicle that either company has ever produced to date.

Hydraulic Fracking

The term “hydraulic fracking” is used to describe a drilling method. Quantities of water, chemicals and sand are injected into gas-producing shale rock beds.

The natural gas is trapped inside the shale rock. Pressure produced by this technique creates small cracks in the surrounding rock. Thus the natural occurring gas is released and captured. After the capture, waste water is released.

Environmental concerns

Hydraulic fracking has gained positive and negative attention over the past few years. This drilling method is highly contentious.  This is due mainly to environmental concerns. Methane gas is released.  It is dangerous because poses possible air and water pollution risks.

The amount of water used places strain on water supplies, especially in drought-stricken areas. Potential hazards include induced earthquakes as well as operational failures and traffic congestion.

Drilling operators should have the proper insurance coverage. Most drilling companies carry commercial general liability. This is protection against third-party bodily injury as well as property damage claims. Also carried by operators is extra expense liability coverage. This insures against well failures and closures.

Homeowners

Homeowners exposed to risks from fracking should be aware of coverage limitations. There are also exclusions in their homeowners insurance policy. Such policies exclude settling, cracking and shrinking. Pollution exclusions are also common in homeowners policies. These policies do not cover damage incurred by seismic activity. As a result,  individuals exposed to this risk should purchase earthquake specific cover.

Complicating matters, regulations over hydraulic fracking operators differ widely among the states.

Some U.S. Insurers have started excluding fracking activities from their policies because of pricing difficulties.

The rapid expansion of hydraulic fracking operations in the U. S. brings the need for insurance solutions.

Major global reinsurers, which traditionally pick up substantial parts of insurance exposure, remain unwilling to take on hydraulic fracking. The insurers and reinsurers are reluctant to participate if they can’t understand the risk. If they can’t understand the risk, they can’t price it. If an insurer can’t measure and quantify that, the choice would be to stay out of the business altogether.

Insuring Carinata

The United States federal government has finalised procedures insuring carinata, a new crop that is being grown to produce jet fuel.

Last year farmers in North Dakota planted 6000 acres of the mustard seed variety known as carinata. However, insurance agents were unclear about how to go about insuring carinata.

As the new crop being grown for jet fuel becomes more popular, the U. S. Department of Agriculture officials have finalised procedures to insure it.

For 2016 and succeeding crop years, carinata is only insurable under the federal crop insurance program by written agreement under canola and rapeseed crop provisions.

Approved insurance providers (AIPs) and producers have raised questions regarding the insurability of Brassica carinata. Carinata is an inedible oilseed. These oil seeds mimic the attributes of its petroleum – derived counterpart. Carinata yields oil that can be refined into fuels. These fuels meet the specifications of petroleum-based fuels.  They work in ground and air transportation engines without blending. Engine modifications are also not required.

A common name for the crop is Ethiopian Mustard. Processor contracts are being promoted in both fall and spring-seeded canola counties for the 2016 crop year. The Risk Management Agency (RMA) became aware that carinata contracts were being offered earlier this year in Georgia, North Dakota and Montana.

One requirement for insuring carinata under the Mustard Crop Division is that the crop be in the family Cruciferae.   Carinata meets this requirement and was insurable under the Mustard Crop Provisions in the 2015 crop year.

Furthermore, a requirement for the insured crop is for the crop to contain at least 30 per cent of an industrial type of oil of high erucic acid in this case. Carinata’s oil profile contains more than 30 per cent high euricic acid, so meets this requirement. It can thus be insured under the Canola and Rapeseed Crop Provisions as a Rapeseed type.

The International Air Transport Association (IATA) wants to decrease net carbon dioxide emissions by 50%, compared to 2005 levels, by 2050.

Nationwide’s Strange Insurance Ad

Last year Nationwide, the insurance company, sparked a nationwide backlash with their insurance ad during the 2015 Super Bowl.

This insurance company normally sticks to reminders that they are “on your side” and use Julia Roberts’ voice in their marketing messages. The risky expensive insurance ad forced Nationwide however, to release a statement regarding the advertisement.

The commercial debuted during the New England Patriots’ ultimately winning game against the Seattle Seahawks. The ad was called “Make Safe Happen”. It opened with a shot of a little child riding a tricycle, playing with a dog and participating in regular childhood activities.

The little boy said “I’ll never learn to ride a bike. I’ll never learn to fly. I won’t ever get married.”

The Insurance ad takes a surprising and dark turn when the child says: “I could n’t grow up because I died from an accident.” Then the ad reads, “The number one cause of childhood deaths is preventable accidents. At Nationwide, we believe in protecting what matters most – your kids. Together, we can make safe happen.”

A twitter storm followed in reaction to the advertisement.

After the less-than-positive reaction, Nationwide Insurance was forced to release a statement about the company’s intention with the “Make Safe Happen” ad.  They claimed that the marketing opportunity, which set them back about $7 million, was not for the purpose of selling insurance but to start a conversation.

Furthermore, the company said that they have been working with experts for more than 60 years to make homes safer.

“Preventable injuries around the home are the leading cause of childhood deaths in America,” they said in a statement to NBC News. Nationwide said that the sole purpose of this message was to start a conversation, not sell insurance.

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The Risks of Movie-making

 

The risks of movie-making make it a high risk industry and insurance has to be considered in order to protect the movie-making company and investors.

Bruce Lee’s son, Brandon, was fatally shot by a prop revolver while shooting a scene for The Crow that called for the firing of a blank towards the 28 year old actor.  A bullet had inadvertently been lodged into the barrel due to careless procedures by those working on the set and this resulted in a gunshot that took Lee’s life despite emergency surgery in a hospital in North Carolina.  Brandon Lee’s mother filed a suit against the Edward R. Pressman Film Corp.

The post-apocalyptic film – Water World, that imagined a world without land after the polar ice caps melted was reportedly the most expensive movie ever made upon its release ($175 million).   A large cause of the cost overruns came when a hurricane destroyed a multi-million dollar set off the coast of Hawaii. The Kevin Reynolds-directed and Kevin Costner- starring “Mad Max on water” adventure picture was tagged as a flop before it even opened.  The film had bad press concerning cost overruns due to the difficulties of filming on water as well as behind the scenes squabbling between Reynolds and Costner.

George Camilieri, a bodybuilder and extra, broke his leg during the filming of Troy.  He was operated on the following day but died two weeks later of a heart attack related to a blood clot. Ironically, Brad Pitt, who played Achilles in the blockbuster version of the Homer’s Illiad, also tore his left Achilles tendon during production. About three-quarters of the way through the film, Pitt’s Achilles faces Hector, played by Eric Bana and kills him.  While performing a difficult jumping strike against Bana, Pitt landed awkwardly and injured his Achilles tendon.

Insurance coverage is already in place when a film production is launched.  There are a number of speciality insurance brokers within the industry whose sole purpose is to protect a film or TV show’s production costs while shooting.  This insurance also covers risks associated with cast insurance (i. e. injury, death and abandonment).  Case in point:  Halle Berry broke her foot while on location in Spain filming Cloud Atlas, which pushed back shooting two-and-a- half weeks to allow the actresses foot to heal. Production did however continue by filming around her injury – either in closely cropped shorts or using stunt doubles.

Along with the injuries to the cast, the insurance also covers delays caused by fire, theft, damaged film and other setbacks, and it typically totals between 0.8% – 1.5% of the film’s entire budget.  This number can fluctuate, however, based on such factors as where the film is being shot or an actor’s health.  “Traditional insurance can cover almost anything that impairs the ability to make a film” said Konrad Dowling, managing director of Arthur J. Gallagher Entertainment Services in Glendale California.  The Gallagher Entertainment consultants have brokered the insurance for 90% of the American Film Institute’s Top 100 films.  They have been involved in many high-profile claims including Hurricane Katrina and September 11, 2001 production claims as well as serious cast losses.

Production Coverage Protection

Props, sets and wardrobes

Extra expense

Third party property damage liability

Miscellaneous equipment

Negative film

Faulty stock, camera and processing

Cast

Office contents

Money and currency

Animal mortality

Civil authority

Difference in conditions

General and automobile liability

Foreign general and automobile liability

Excess liability

Errors and omissions

Aircraft liability

Dowling’s firm insured, in one capacity or another, two-thirds of the films that were nominated at this year’s Academy Awards.  As successful as Gallagher and the handful of other insurance brokers that operate in this arena are, there are some risks that cannot be underwritten by traditional carriers.  There are specialised underwriters that are able to take an added risk.

An actor wanting to pilot his own aircraft during production of a film would qualify as something left to speciality insurance, and the cost of coverage can vary depending on how many times the star intended to fly the aircraft during filming and where he is flying.

There is no shortage of actors whose penchant for party life has the potential to put a film in jeopardy.  Drugs and alcohol are not the only personal risks that require extra coverage.  Sometimes factors beyond anyone’s control arise.  People get sick.  Lori Shaw, an entertainment insurance advisor with Aon remembers, “We were involved with a TV production that was about to be launched when their anchor star was diagnosed with a life-threatening medical condition”.  The insurance carrier covering the cast was not willing to take on the medical risk, which would have shut down the series before the first episode was filmed.  Fortunately Aon was able to help solve the problem.

Everyone complains about the weather, but no one does anything about it.  In Hollywood, the insurance industry tries, but there is only so much that one can do.  You can avoid the Philippines during monsoon season.  In Florida, a time other than the hurricane season can be chosen.  However, even with forethought, circumstances do not always work out favourably.

Last Fall, Hurricane Sandy wreaked havoc during the filming of Noah, as floodwaters threatened the sets.  The exterior sets for Noah, including the 450 foot long ark were constructed directly in the storm’s path in Oyster Bay on Long Island Sound;  the damage to the area made it impossible to fully assess the costs.  The $115 million film was fortunately covered by insurance.    High profile film events, including the gala premiere in Lincoln Square of the Keira Knightley film

Anna Karenina were cancelled.  TV shows affected included:  Law & Order:  Special Victims Unit, 30 Rock, 666 Park and Gossip Girl.  Taping of live shows, such as Late Night with David Letterman had to go ahead without an audience.

No matter the perils, traditional insurance brokers do an exceptional job protecting film and television productions.  It would be impossible to list just how many times that coverage has prevented studios from hemorrhaging fortunes after disaster strikes.  Occasionally something arises that is outside the purview of the traditional brokers, and the speciality carriers fill the gap.  If not for them, many films would never have seen the light of day.