December, 2011  

 

INSURANCE

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ADVISOR

A Publication of Parsons & Associates, Inc.

 

INDEX

 

  

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  Anti-texting law backfires

 

Text messaging while driving isn't safe. That seems clear enough. But efforts to stop drivers from texting while driving are proving to be surprisingly ineffective. It is now illegal to text while driving in most states. But a report released by the Highway Loss Data Institute shows that not only are these laws not preventing accidents, they seem to be causing them.

 

“Texting bans haven't reduced crashes at all. In a perverse twist, crashes increased in three of the four states we studied after bans were enacted. It's an indication that texting bans might even increase the risk of texting for drivers who continue to do so despite the laws,” said Adrian Lund, president of the institute.

 

The institute compared insurance claims filed after collisions before and after texting bans were put in place in California, Louisiana, Minnesota and Washington. The study found increased collisions in all four states, but the rise in Washington wasn't statistically significant. The institute was able to attribute these rises to the text-messaging bans by comparing the rise in claims in the states with new bans to nearby states that had not implemented texting bans. This controlled for any rise in claims that could be attributable to other causes.

 

The question remains: why? It would seem that an ineffective ban would simply not reduce the number of accidents, not cause an increase.

 

“If drivers were disregarding the bans, then the crash patterns should have remained steady. So clearly drivers did respond to the bans somehow, and what they might have been doing was moving their phones down and out of sight when they texted, in recognition that what they were doing was illegal,” Lund said. “This could exacerbate the risk of texting by taking drivers' eyes further from the road and for a longer time.”

 

Using a driving simulator, researchers at the University of Glasgow found a sharp decrease in crash likelihood when participants switched from head-down to head-up displays, the institute reported. This suggests that it might be more hazardous for a driver to text from a device that's hidden from view on the lap or vehicle seat.

 

The problem of texting while driving is likely to get worse. The institute reports that texting went up by about 60 percent in one year alone, from 1 trillion messages in 2008 to 1.6 trillion in 2009.

 

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 Data theft surpasses physical theft

 

Losses from business fraud have skyrocketed in the past year with 87 percent of North American companies reporting some level of fraud in the last year, up from 78 percent last year. This increase in fraud is being driven mostly by a drastic increase in the amount of information theft, according to a global survey of businesses by Kroll, Inc.

 

The survey shows that information theft has overtaken physical theft for the first time. In 2009, just 19 percent of North American companies reported losses from information theft. This year that number rose to 32 percent. Meanwhile, reports of theft of physical property rose from 22 percent in 2009 to 27 percent in 2010. The increased reports of information theft in North America mirrored those coming from around the world. Globally, 19 percent of companies reported information theft in 2009, but in 2010 that percentage had increased to 27 percent.

 

“Theft of confidential information is on the rise because data is increasingly portable and perpetrators – often departing or disgruntled employees – can remove it with ease absent sufficient controls,” said Robert Brenner, vice president of Kroll’s Americas region. “At the same time, there is a growing awareness among thieves of the increasing intrinsic value of an organization’s intellectual property.”

 

Despite these numbers, the survey suggests that many companies are not taking the threat seriously. Only a third of North American businesses thought they were moderately or highly vulnerable to information theft, and investment in computer security measures actually declined among these companies in the last 12 months.

 

“Companies need to regularly evaluate how they are controlling access to information within their organization to ensure they are keeping pace with technological advancement and the imperative for collaboration in the workplace,” Brenner said.

 

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 EEOC claims on the rise

 

The Equal Employment Opportunity Commission has received 47,000 job bias claims in the six months that ended in April, according to a report in the Wall Street Journal. This is an 8 percent increase compared to the same six months one year before, according to the Journal.

 

Filing a claim with the EEOC is required before a worker can file a lawsuit. Once a claim is filed the EEOC will launch an investigation. If the EEOC determines that the employee was discriminated against, it will seek to settle the claim. If not, it will allow the employee to file a lawsuit. However, it is important to note that not all of these claims will turn into lawsuits.

 

One recent high-profile lawsuit filed in New York accuses Citigroup of using the recent recession as an excuse to fire thousands of women in a discriminatory manner. Citigroup denies any wrongdoing. In addition, the second-largest Coca-Cola bottler in the United States recently paid almost half a million dollars to settle claims of racially discriminatory hiring from the U.S. Department of Labor. The bottler admitted no wrongdoing and it is unclear whether the suit against Citigroup has any merit. But what is clear is that these kinds of claims are becoming increasingly common.

 

During times of high unemployment, employment-related lawsuits tend to go up, and this period of high unemployment is no different. However, there are things an employer can do to decrease the chance that they will be sued and to lessen the damage should they be sued.

The first – and cheapest – step is proper training. The Insurance Information Institute recommends that employers take the following measures:

 

  • Create effective hiring and screening programs to avoid discrimination in hiring.
  • Post corporate policies throughout the workplace and place them in employee handbooks so policies are clear to everyone.
  • Show employees what steps to take if they are the object of sexual harassment or discrimination by a supervisor. Make sure supervisors know where the company stands on what behaviors are not permissible.
  • Document everything that occurs and the steps your company is taking to prevent and solve employee disputes.

 

But in any company an allegation of bias is sometimes unavoidable. Employment practices liability insurance can help protect employers from the financial losses that can come with these lawsuits. EPLI typically covers various types of suits including sexual harassment, wrongful termination, and discrimination. You should check with your insurance representative if you have any questions about your coverage.

 

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  Deer danger continues to grow

 

Deer-vehicle collisions are a growing problem on U.S. roads, according to a new report from State Farm Insurance. The company estimates that there have been 2.3 million collisions between deer and cars in the last two years, a 21 percent increase from five years ago.

 

The problem is expensive – and deadly. The average collision results in more than $3,000 in property damage, according to State Farm. More troubling, the Insurance Institute for Highway Safety reports that about 200 people die every year in these collisions.

 

The increase in collisions over the last few years cannot be wholly attributed to an increase in the number of vehicles on the road. The number of motorists has gone up only 2 percent over the last few years, while the number of deer-vehicle collisions has gone up more than 10 times that amount. State Farm attributes the increase largely to an increasing deer population and the destruction of deer habitat.

 

The chance that you will strike a deer during the next year depends a lot on what state you live in. West Virginia has the highest rate of deer-vehicle collisions. In West Virginia there is a one in 42 chance of hitting a deer in any given year. That compares to one in 13,000 in Hawaii.

 

The next few months are mating season for deer – the time of year when deer-vehicle collisions are most common. State Farm provides the following tips to avoid hitting a deer:

·      Be aware of posted deer crossing signs. These are placed in active deer crossing areas.

·      Remember that deer are most active between 6 p.m. and 9 p.m. Be especially cautious during those times.

·      Use your high beams as much as possible at night.

·      Keep in mind that deer generally travel in herds – if you see one, there is a strong possibility others are nearby.

·      Do not rely on car-mounted deer whistles.

·      If a deer collision seems inevitable, attempting to swerve out of the way could cause you to lose control of your vehicle or place you in the path of an oncoming vehicle.

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  Regulation has businesses worried

 

Any recession comes with fears of increased litigation, and this recession was no different. But as the recession officially comes to a close, it's not the economy that has businesses worried about more litigation – at least not directly. Instead it is increased government regulation and a changing legal landscape that have businesses worried.

 

More than 90 percent of in-house lawyers at corporations around the United States expect litigation to increase or stay the same in the coming year, according to an annual survey by Fulbright & Jaworski LLP. In the past year, 87 percent of those surveyed in the United States reported new litigation, up from 83 percent last year.

 

“With reform in two major industries—financial services and health care—and the possibility of greater regulation of offshore petroleum production, regulatory concerns are front-and-center in the minds of in-house legal counsel,” said Stephen C. Dillard, the head of Fulbright’s global disputes practice. “Even at small-cap companies, regulatory investigations have nearly doubled.”

 

The fear of litigation isn't new; corporations have reported increased litigation in recent years. The survey reported drops in lawsuits in 2006 and 2007, but since then there has been a steady upward trend in litigation. The only difference in 2010 is that, in addition to the lawsuits that naturally arise during a downturn, there are new laws and changing regulations to worry about.

 

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 Business briefs: Obesity cost estimates up

 

The obesity problem in America might be costing businesses more money than previously thought. New data released by the National Bureau of Economic Research show that 17 percent of U.S. medical costs can be attributed to obesity. This is almost double previous estimates. The new study reports that obesity can add more than $2,800 to a person's annual medical bills. That's up from a previous estimate of around $1,400. Part of the reason for the increased estimate is that previous studies have relied on self-reported weight, something people have a tendency to lie about. Researchers this time were able to correct for that. The number of overweight and obese Americans has risen dramatically over the last decade.

 

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  Business briefs: Virtual farm insurance

 

Proving that just about anything can be covered by insurance, one insurer is stepping in to cover virtual farming. Farmers Insurance Group is offering the 60 million users of Facebook's wildly popular FarmVille insurance for their electronic corn and cotton. FarmVille is an online game where players maintain farms of increasing complexity using Facebook, an online social networking site. “This is the first time an insurance company will be featured within internet Social Gaming,” said Kevin Kelso, Chief Marketing Officer of Farmers Insurance Group Inc. The company is offering the service for free during a promotional period.

 

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