Our weekly column of items of interest from in and around the insurance industry.
PRAC Lawsuit Heading to the Massachusetts Supreme Judicial Court
In April of this year, Agency Checklists reported on the Massachusetts Appeals Court decision, Johanna Lief-Socolow et al. v. Annette Liquori et al., in which the Mass. Appeal Court overturned a Superior Court judgment awarding $500,000.00 in punitive damages, $203,775.00 in attorney fees, and $30,473.25 in costs against the Plymouth Rock Assurance Company (Plymouth Rock). For those interested in an in-depth analysis of the facts of the case as well as the outcome, please refer to our April 2018 article entitled, “Mass. Appeals Court Rules Plymouth Rock Not Liable For $700,000 Bad Faith Judgment.“ Agency Checklists noted at the end of that article the plaintiffs had twenty days in which to apply for a Further Appellate Review with the Supreme Judicial Court and that based on the reversal of the plaintiffs’ judgment, the filing of an application was guaranteed. In fact, the plaintiffs did file for further appellate review, and on July 30, 2018, the Supreme Judicial Court allowed the plaintiffs’ application. Agency Checklists will follow this continued appeal and report on the Supreme Judicial Court’s decision when rendered.
AM Best Reaffirms MAPFRE USA
A.M. Best has maintained its positive rating for the MAPFRE USA Group. The rating agency, which released its decision at the end of July, affirmed the insurer’s Financial Strength Rating of A (Excellent) as well as the Long-Term Issuer Credit Ratings of “a” of the main property/casualty members of the U.S.A. based part out the Group. The outlook of these Credit Ratings (ratings) also remains stable.
The ratings reflect MAPFRE U.S.A.’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect the implicit and explicit support provided by its parent company, MAPFRE… While MAPFRE U.S.A. has generated net income in most years in the recent five-year period, its five-year average total return on revenue and total return on equity measures lag the averages for the industry composite by a significant margin. Operating results have been impacted negatively by underwriting losses driven by adverse prior-year loss reserve development and weather-related losses. The business profile is considered neutral due to the group’s local market expertise, MAPFRE U.S.A./Commerce brand-name recognition in several states, broad distribution networks and marketing activities throughout the various subsidiaries. This is offset partially by MAPFRE U.S.A.’s concentration of business in Massachusetts and to the automobile lines of business. ERM is considered appropriate for the group’s size and complexity of its underwriting, investment and other risks based on its ERM framework and controls.
IBHS Offers Science-Based Guidance for Massachusetts Agents to Help Their Insureds Mitigate Risks from Tropical Cyclones
With the 2018 Hurricane season officially underway, the Insurance Institute for Business & Home Safety (IBHS) has prepared some “science-based”guidance for Massachusetts insurance agents to share with both their personal and commercial lines insureds with respect to preparing for a summer storm.
“Before the next storm strikes, homeowners and business owners should take a walk around their property,” said Roy Wright, CEO and president of IBHS. “They should look for and arrange repairs to loose shingles, siding or fencing. Trim trees away their home or business facility and clear gutters and drains of debris so rain water can move away. These and other simple steps will help Massachusetts residents prepare their homes and businesses and save insureds time, energy, aggravation and money after the storm passes.”
The National Oceanic and Atmospheric Administration (NOAA) forecast calls for 10 to 16 named storms, with five to nine hurricanes. NOAA’s outlook indicated one to four hurricanes could become major (Category 3 or higher) with sustained winds in excess of 110 MPH. This follow’s 2017 extremely active season, which resulted in more than $200 billion in property losses across the U.S.
IBHS offers numerous resources to help Massachusetts insureds prepare their properties for hurricanes, tropical storms and other severe summer storms.
For homeowners, IBHS resources include a hurricane preparedness checklist, reducing hurricane risk brochure (English and Spanish versions), reducing hurricane damages to your home guide and protecting your financial assets.
IBHS also provides numerous resources for Massachusetts business owners to prepare their facilities and operations for tropical cyclones and severe summer storms. This includes a reduce hurricane damages to businesses guide, business protection resources, business protection lessons learned, business continuity planning and tips for protecting financial assets.
“Preparedness is the key to mitigating risks for everyone in hurricane-prone areas,” Wright added. “Homeowners and business owners can protect their property through maintenance and monitoring, and with flood insurance if they live in an area prone to flooding. If you live or own property along any waterway, flood insurance is something you should strongly consider.”
Travelers Institute Outlines Framework for Autonomous Vehicle Insurance
We thought it worth a mention that the Travelers Institute, the public policy division of Travelers, has published a white paper outlining the framework for Autonomous Vehicle Insurance. Dubbed, “Insuring Autonomy: How auto insurance can adapt to changing risks,” the white paper assesses the current state of auto insurance for both personal and commercial lines before making recommendations as to what should survive from this existing framework when the industry eventually begins to deal with auto insurance for autonomous vehicles.
With the increasing adoption of semi-autonomous vehicles and the potential for fully autonomous vehicles, several policy-related questions and challenges are beginning to emerge,” said Michael Klein, Executive Vice President and President, Personal Insurance at Travelers. “It’s important that the insurance industry play a central role in policymaking discussions to develop a uniform legal and regulatory framework for autonomous vehicles. Ensuring that a clear risk transfer mechanism is in place will help facilitate the development of autonomous vehicles and the improved safety we expect they will bring to our roads.”
According to The Institute, while research suggests the adoption of autonomous driving technology will lead to fewer accidents, collisions that do occur will likely result in costlier repairs and raise difficult questions relating to driver and manufacturer liability, victim compensation and data collection. The general risks that come with vehicle ownership, autonomous or not, will remain, including risks related to weather and theft. Among other things, the white paper offers the following recommendations to facilitate an effective auto insurance system:
- Develop a model state law relating to autonomous vehicle insurance that builds on the current state-based regulatory and oversight structure.
- Require vehicle owners — including personal, ride-sharing and company-owned vehicles — to purchase and maintain adequate insurance.
- Provide for sufficient coverage to account for the more expensive technology used in autonomous vehicles.
- Establish strong cybersecurity requirements for autonomous vehicles, including appropriate data-sharing protocols.
- Utilize insurers’ extensive consumer communication programs to help educate customers and the public on autonomous vehicle safety.
- Ensure representation of the insurance industry in policymaking and stakeholder forums.
Klein concluded, “Travelers has been a longtime leader and innovator in both personal and commercial auto insurance and would support the creation of a coalition of non-government stakeholders to make recommendations on insurance-related autonomous vehicle issues.” Copies of the white paper, are available via the Travelers Institute website.