ISO Emerging Trends in ISO Emerging Trends in Coverage Issues Coverage Issues

STRIMASTRIMA

September 19, 2005September 19, 2005

AgendaAgenda

• Class Action FairnessClass Action Fairness• TRIATRIA• Food LitigationFood Litigation• Electromagnetic FieldsElectromagnetic Fields• Business EthicsBusiness Ethics• Climate ChangesClimate Changes• Cyber-slanderCyber-slander• Identity TheftIdentity Theft• PrivacyPrivacy• Other IssuesOther Issues

Studying Emerging IssuesStudying Emerging Issues

• Where we go to get information: Where we go to get information: trial bar, scientific studies, futurists, trial bar, scientific studies, futurists, newspapers, claims units, newspapers, claims units, management team, panels, your management team, panels, your inputinput

• What we do with it: identify trends What we do with it: identify trends and possible issues and then and possible issues and then consider insurance implications consider insurance implications

• Then we make these ideas Then we make these ideas actionable in your stateactionable in your state

Class Action FairnessClass Action Fairness

The Class Action Fairness Act of The Class Action Fairness Act of 20052005

• Expands federal diversity jurisdiction for Expands federal diversity jurisdiction for certain multi-state class actions where certain multi-state class actions where the class members are seeking more the class members are seeking more than $5,000,000 in the aggregatethan $5,000,000 in the aggregate

• Should lessen the incentive for filing Should lessen the incentive for filing nationwide class actions in state courts nationwide class actions in state courts thought to be favorable to plaintiffsthought to be favorable to plaintiffs

Fear of DiseaseFear of Disease

• Beyond the plaintiffs who have actually Beyond the plaintiffs who have actually developed symptoms of disease, there is a developed symptoms of disease, there is a whole body of claims being made out of fear whole body of claims being made out of fear of a diseaseof a disease

• Some states, such as NY, consider mental Some states, such as NY, consider mental anguish to be covered by the GL policy anguish to be covered by the GL policy because of the policy wordingbecause of the policy wording

• These “fear claims” need not be limited to These “fear claims” need not be limited to diseases, but include medical devices, as well, diseases, but include medical devices, as well, such as breast implants and heart valves such as breast implants and heart valves

• Insurance issuesInsurance issues

Holding Plaintiffs' Lawyers Holding Plaintiffs' Lawyers Accountable for Legal System AbuseAccountable for Legal System Abuse

• Criminal investigation of Milberg Criminal investigation of Milberg WeissWeiss– Seymour Lazar of Palm Springs Seymour Lazar of Palm Springs

charged with accepting millions of charged with accepting millions of dollars in exchange for serving as dollars in exchange for serving as the lead plaintiff in dozens of fraud the lead plaintiff in dozens of fraud lawsuitslawsuits

– Considering criminal charges Considering criminal charges against William Lerach, an against William Lerach, an attorney who is no longer with the attorney who is no longer with the firmfirm

Holding Accountable Holding Accountable (Cont’d)(Cont’d)

• U.S. District Court Judge Janis Jack U.S. District Court Judge Janis Jack issued a decision in June that issued a decision in June that criticized nearly all of the 10,000 criticized nearly all of the 10,000 silicosis claims that had come to her silicosis claims that had come to her courtcourt

• Most of the cases were sent back to Most of the cases were sent back to state courtsstate courts

Fed Up With Legal SystemFed Up With Legal System

• Without objection from the defense, Without objection from the defense, Madison County, Ill., Circuit Court Judge Madison County, Ill., Circuit Court Judge Nicholas G. Bryon granted a plaintiffs’ Nicholas G. Bryon granted a plaintiffs’ motion for mistrial after a couple of hours motion for mistrial after a couple of hours of questioning revealed that many of the of questioning revealed that many of the potential jurors potential jurors – would not follow court instructions would not follow court instructions

during deliberations and during deliberations and – are prejudiced by news coverage and are prejudiced by news coverage and

political pressures political pressures

Terrorism Risk Insurance Terrorism Risk Insurance ActAct

TRIATRIA• TRIA expires at the end of this year TRIA expires at the end of this year • ISO Conditional Endorsements in placeISO Conditional Endorsements in place• Bills have been introduced in both the Senate and the Bills have been introduced in both the Senate and the

HouseHouse• The industry has been intensely lobbying for legislation The industry has been intensely lobbying for legislation

renewing the act, expanding the reinsurance coverage renewing the act, expanding the reinsurance coverage guaranteed by the government and making the program guaranteed by the government and making the program permanentpermanent

• Congressional opposition to the program based on the Congressional opposition to the program based on the principal that the government should not play a continuing principal that the government should not play a continuing role in a private market, particularly one that is growingrole in a private market, particularly one that is growing

• The Consumer Federation of America also opposes an The Consumer Federation of America also opposes an extension of the program, arguing that the profitable extension of the program, arguing that the profitable insurance industry does not need to be subsidizedinsurance industry does not need to be subsidized

• The proponents contend that insurers cannot fully accept The proponents contend that insurers cannot fully accept the risks and that the program should be extended for at the risks and that the program should be extended for at least two years while the issue is given continued least two years while the issue is given continued considerationconsideration

Treasury Department’s Treasury Department’s ReviewReview

Treasury was required to assess:Treasury was required to assess:• The effectiveness of TRIAThe effectiveness of TRIA• The likely capacity of the P&C The likely capacity of the P&C

insurance industry to offer insurance insurance industry to offer insurance for terrorism after termination of TRIAfor terrorism after termination of TRIA

• The availability and affordability of The availability and affordability of such insurance for various such insurance for various policyholderspolicyholders

EffectivenessEffectiveness

2002 2003 2004

Insurers writing coverage 73% 91% 91%

Policyholder take-up 27% 39.5% 54%

Insurers not charging 75% 46% 40%

Policyholders getting free 70% 42% 37%

Average cost of coverage 1.2% 1.6% 1.8%

Share of premium for insurers writing 3.7% 2.4% 3.1%

Cost among policyholders paying for terrorism coverage

4.0% 2.8% 2.7%

High-risk cities 6.1% 5.1% 2.6%

Transitional PeriodTransitional Period

• Industry surplus has returned to pre-Industry surplus has returned to pre-September 11th levelsSeptember 11th levels

• Insurers are more able to bear unexpected Insurers are more able to bear unexpected losses than they were prior to the enactment losses than they were prior to the enactment of TRIAof TRIA

• Insurers might have begun charging for Insurers might have begun charging for terrorism risk insurance whether or not TRIA terrorism risk insurance whether or not TRIA was enactedwas enacted

• Insurers purchasing terrorism reinsurance: Insurers purchasing terrorism reinsurance: 70% in 2003, 65% in 2004, 75% in 200570% in 2003, 65% in 2004, 75% in 2005

• Smaller and medium-sized insurers made Smaller and medium-sized insurers made greater use of terrorism reinsurance greater use of terrorism reinsurance

AssessmentAssessment

• TRIA was effective TRIA was effective • TRIA provided a transitional period during TRIA provided a transitional period during

which insurers had enhanced financial which insurers had enhanced financial capacity to write terrorism coveragecapacity to write terrorism coverage

• TRIA provided an adjustment period for TRIA provided an adjustment period for insurers and policyholders insurers and policyholders

• TRIA's effectiveness does not imply TRIA's effectiveness does not imply continuation of the programcontinuation of the program

• The sunset of TRIA should encourage the The sunset of TRIA should encourage the development of the private reinsurance development of the private reinsurance market and other risk transfer mechanismsmarket and other risk transfer mechanisms

Terrorism Insurance after Terrorism Insurance after Termination of TRIATermination of TRIA

• The removal of the subsidy will result in a The removal of the subsidy will result in a short-lived adjustment in coverage and pricingshort-lived adjustment in coverage and pricing

• The financial health of insurers, especially The financial health of insurers, especially surplus, improved in the past three yearssurplus, improved in the past three years

• Private market capacity. Take-up of terrorism Private market capacity. Take-up of terrorism risk insurance, for example, continued to risk insurance, for example, continued to increase, while the ratio of policies written by increase, while the ratio of policies written by insurers including terrorism coverage has been insurers including terrorism coverage has been flat to rising, even as the TRIA deductible rose flat to rising, even as the TRIA deductible rose over timeover time

Terrorism Insurance after Terrorism Insurance after Termination of TRIA (Cont’d)Termination of TRIA (Cont’d)

• The expiration of TRIA will likely change The expiration of TRIA will likely change industry behaviorindustry behavior– increasing the use of private reinsuranceincreasing the use of private reinsurance– building surplus by tapping into capital building surplus by tapping into capital

marketsmarkets– raising premiums or placing exclusions on raising premiums or placing exclusions on

some policiessome policies• 50% of insurers are not writing coverage for 50% of insurers are not writing coverage for

terrorism risks after the expiration of TRIA terrorism risks after the expiration of TRIA • 25% of policyholders with terrorism 25% of policyholders with terrorism

coverage indicated that their coverage will coverage indicated that their coverage will exclude terrorism after the expiration of exclude terrorism after the expiration of TRIATRIA

Food LitigationFood Litigation

The Medicaid AngleThe Medicaid Angle

• Tobacco ($246B for Medicaid)Tobacco ($246B for Medicaid)• DrugsDrugs

– On June 30, 2005 Texas filed a On June 30, 2005 Texas filed a lawsuit seeking at least $168 lawsuit seeking at least $168 million in damages from Merck million in damages from Merck for the health risks associated for the health risks associated with its Vioxx painkillerwith its Vioxx painkiller

• Alcohol – Currently deceptive Alcohol – Currently deceptive advertising is the main thrustadvertising is the main thrust

ObesityObesity

• Original Claims:Original Claims:– A factor in 300,000 deaths annuallyA factor in 300,000 deaths annually– 90,000 cancer deaths directly caused by obesity90,000 cancer deaths directly caused by obesity– Heath-care costs about $117 billionHeath-care costs about $117 billion

• The Actual Facts?The Actual Facts?– As yet unpublished research by the CDCAs yet unpublished research by the CDC– While obesity is a leading cause of preventable While obesity is a leading cause of preventable

death, it probably ranks closer to alcohol death, it probably ranks closer to alcohol consumption (about 85,000 deaths in 2000), consumption (about 85,000 deaths in 2000), rather than being near tobacco use (about rather than being near tobacco use (about 435,000 deaths in 2000)435,000 deaths in 2000)

Obesity Costs Obesity Costs

• Between 1987 and 2002, private Between 1987 and 2002, private spending on obesity-linked medical spending on obesity-linked medical problems mushroomed from $3.6 problems mushroomed from $3.6 billion, or 2 percent of all health billion, or 2 percent of all health spending, to $36.5 billion or 11.6 spending, to $36.5 billion or 11.6 percent of spending, the study (Health percent of spending, the study (Health Affairs)Affairs)

• In 2002, obese individuals dominated In 2002, obese individuals dominated the category of adults treated for the the category of adults treated for the top 10 medical conditions contributing top 10 medical conditions contributing to medical spending, including arthritis, to medical spending, including arthritis, asthma, back problems, diabetes and asthma, back problems, diabetes and heart diseaseheart disease

State Laws Eating Away at State Laws Eating Away at Obesity LawsuitsObesity Lawsuits

• At last count, 20 states have enacted a At last count, 20 states have enacted a "common-sense consumption" law that "common-sense consumption" law that prevents lawsuits attempting to prevents lawsuits attempting to attribute obesity to the restaurant attribute obesity to the restaurant industryindustry

• An additional 11 states have similar An additional 11 states have similar legislation pendinglegislation pending

• These laws, however, leave the door These laws, however, leave the door open for suits based upon the state's open for suits based upon the state's consumer protection laws involving consumer protection laws involving deception in the marketplacedeception in the marketplace

Senate Bill 908Senate Bill 908

• Commonsense Consumption Act of 2005 would Commonsense Consumption Act of 2005 would bar tort lawsuits against food manufacturers bar tort lawsuits against food manufacturers and sellers that seek recovery based upon and sellers that seek recovery based upon obesity or obesity related "injuries" resulting obesity or obesity related "injuries" resulting from the lawful sale of food, ingredients or from the lawful sale of food, ingredients or beveragesbeverages

• It would shield fast food restaurants and their It would shield fast food restaurants and their suppliers from potential liability based upon suppliers from potential liability based upon their patron's eating habitstheir patron's eating habits

• The bill would not preclude lawsuits premised The bill would not preclude lawsuits premised on false advertising or injuries from food on false advertising or injuries from food consumptionconsumption

Electromagnetic FieldsElectromagnetic Fields

EMFsEMFs

• Human cells emit their own very weak Human cells emit their own very weak magnetic fieldmagnetic field

• Strong or high frequency external Strong or high frequency external electromagnetic fields may affect electromagnetic fields may affect cellular magnetic fieldscellular magnetic fields– Heat resulting from higher and higher Heat resulting from higher and higher

network frequenciesnetwork frequencies– Resonance of the structures in cells that Resonance of the structures in cells that

could literally shake them apart, which could literally shake them apart, which could then replicate in damaged formcould then replicate in damaged form

Causes for ConcernCauses for Concern

• High voltage transmission power linesHigh voltage transmission power lines• Electric blanketsElectric blankets• Low-frequency 60hz household currentLow-frequency 60hz household current• Higher frequency / lower power Higher frequency / lower power

microwave broadcasting uplink dish microwave broadcasting uplink dish farmsfarms

• Cell phone towers and cell phonesCell phone towers and cell phones

Business EthicsBusiness Ethics

Business EthicsBusiness Ethics

• It's not just businesses we can't trust It's not just businesses we can't trust anymore, but the newspapers and anymore, but the newspapers and broadcasters as well. broadcasters as well.

• If you're unscrupulous in your business, is If you're unscrupulous in your business, is there any reason to think you wouldn't be there any reason to think you wouldn't be when filing insurance claims? when filing insurance claims?

• Trends: Trends: – Crime down, but cheating upCrime down, but cheating up– More underwriting and claims checks; More underwriting and claims checks;

scoring; policing by advisorsscoring; policing by advisors

SOX 404SOX 404

• The NAIC is proposing adding The NAIC is proposing adding elements of the Sarbanes-Oxley elements of the Sarbanes-Oxley Act of 2002 to its audit rules used Act of 2002 to its audit rules used with privately held insurers and with privately held insurers and mutual insurersmutual insurers

• The proposal is in the discussion The proposal is in the discussion stage with the AICPAs stage with the AICPAs

• The plan covers corporate The plan covers corporate governance, auditor independence governance, auditor independence and a company's internal controlsand a company's internal controls

Climate ChangesClimate Changes

Global WarmingGlobal Warming

• National Center for Atmospheric Research National Center for Atmospheric Research has a model to analyze climate changes; has a model to analyze climate changes; runs will be completed in 2005runs will be completed in 2005

• After WWII there is an obvious greenhouse After WWII there is an obvious greenhouse effecteffect

• Methane and carbon dioxide cause global Methane and carbon dioxide cause global effects while sulfur is more regionaleffects while sulfur is more regional

• One measure of proof of the greenhouse One measure of proof of the greenhouse effect is that the number of days of intense effect is that the number of days of intense rainfall per year has been increasing steadilyrainfall per year has been increasing steadily

• Could have an affect hurricanes; probably Could have an affect hurricanes; probably more extreme hurricanes than moremore extreme hurricanes than more

Global Warming Lawsuits

• Object is to recover damages from carbon dioxide emissions

• Plaintiffs could attempt to file cases before the United Nation's International Court of justice or before the World Trade Organization

• Liability of power companies to keep up with a changing environment

• D&O suits against directors who did not D&O suits against directors who did not order their companies to reduce emissionsorder their companies to reduce emissions

Climate Changes Model?Climate Changes Model?

• The world's weather will become more violent and The world's weather will become more violent and a major business riska major business risk

• Allianz and the World Wide Fund for Nature (WWF) Allianz and the World Wide Fund for Nature (WWF) co-sponsored a report on the risks posed by co-sponsored a report on the risks posed by climate change and the investment opportunities climate change and the investment opportunities that may be spawned by a drive for lower carbon that may be spawned by a drive for lower carbon emissionsemissions

• Concern over the Greenhouse Effect has already Concern over the Greenhouse Effect has already helped drive new markets for weather derivatives helped drive new markets for weather derivatives

• Insurers have been hit by a run of climate-related Insurers have been hit by a run of climate-related disasters such as the four hurricanes that disasters such as the four hurricanes that devastated homes and businesses in Florida last devastated homes and businesses in Florida last yearyear

Severe WeatherSevere Weather

• The average number of powerful The average number of powerful Atlantic hurricanes each year since Atlantic hurricanes each year since 1995 has been twice as high as in the 1995 has been twice as high as in the previous 25 yearsprevious 25 years

• Atmospheric conditions generally Atmospheric conditions generally favored the U.S., keeping most of these favored the U.S., keeping most of these storms away from its coast, until last storms away from its coast, until last yearyear

• The average number of storms making The average number of storms making landfall returned to the levels typical of landfall returned to the levels typical of the 30’s, 40’s and 50’sthe 30’s, 40’s and 50’s

Are Hurricanes Getting Are Hurricanes Getting Stronger? Stronger?

• MIT has concluded that the average force MIT has concluded that the average force of hurricanes has increased significantly of hurricanes has increased significantly since the mid-1970’ssince the mid-1970’s

• The power of storms in the North Atlantic The power of storms in the North Atlantic has tripled while the power of storms in the has tripled while the power of storms in the western North Pacific has more than western North Pacific has more than doubleddoubled

• The study links the increasing power of the The study links the increasing power of the storms to global warming and predicts that storms to global warming and predicts that future storms will continue to be more future storms will continue to be more destructive destructive

Climate PactsClimate Pacts

• On July 26 the Bush Administration On July 26 the Bush Administration released details on a six-nation released details on a six-nation climate agreement intended as an climate agreement intended as an alternative to the Kyoto accord on alternative to the Kyoto accord on global warmingglobal warming

• Asia-Pacific Partnership for Clean Asia-Pacific Partnership for Clean Development and ClimateDevelopment and Climate

Cyber-slanderCyber-slander

Exposures

• Gripe SitesGripe Sites– Created to criticize a product, service or companyCreated to criticize a product, service or company– Domain names add pejorative words to Domain names add pejorative words to

trademarked company namestrademarked company names• BlogsBlogs

– Weblog or online journalWeblog or online journal– Created to post personal thoughts and experiencesCreated to post personal thoughts and experiences

• Chat Rooms/Message BoardsChat Rooms/Message Boards

– Typically dedicated to a particular topicTypically dedicated to a particular topic

– May be sponsored by company or ISPMay be sponsored by company or ISP

Taking Action

• Software trackingSoftware tracking

• Suits have been filed for:Suits have been filed for:– Trademark infringement or dilutionTrademark infringement or dilution

– DisparagementDisparagement

– Libel and defamationLibel and defamation

– Publication of trade secretsPublication of trade secrets

– Violation of the Right of Privacy (personal Violation of the Right of Privacy (personal exploits, students disparaging teachers)exploits, students disparaging teachers)

Insurance Coverage

• Personal Injury can be endorsed onto Personal Injury can be endorsed onto Homeowner’s policyHomeowner’s policy

• Covered under personal umbrella (drop Covered under personal umbrella (drop down over deductible)down over deductible)

• Includes: libel, product disparagement and Includes: libel, product disparagement and written publication of material that violates written publication of material that violates a person’s right of privacya person’s right of privacy

• Triggered “per offense” (Triggered “per offense” (not defined)not defined)

Identity TheftIdentity Theft

Latest SurveysLatest Surveys• Privacy & American Business and Deloitte & TouchePrivacy & American Business and Deloitte & Touche

– 44 million people, have been victims of identity theft, up from 44 million people, have been victims of identity theft, up from 35 million in 200335 million in 2003

– 78% agreed that consumers had "lost all control" over the 78% agreed that consumers had "lost all control" over the collection and use of their personal informationcollection and use of their personal information

– 67% of respondents had not registered at a Web site because 67% of respondents had not registered at a Web site because the site's privacy policy was too complicated and/or unclearthe site's privacy policy was too complicated and/or unclear

• ChubbChubb– 27% of respondents said a credit card number for their family 27% of respondents said a credit card number for their family

or a friend had been used fraudulently, up from 19% in 2000or a friend had been used fraudulently, up from 19% in 2000– 87% of respondents said companies that fail to safeguard 87% of respondents said companies that fail to safeguard

consumer data should be required to restore victims' credit consumer data should be required to restore victims' credit ratingsratings

– 66% say such companies should be fined; nearly as many want 66% say such companies should be fined; nearly as many want to see them charged with a crimeto see them charged with a crime

Data Security & Security Data Security & Security Breach Notification – Draft ActBreach Notification – Draft Act

• Requires entities that hold sensitive information Requires entities that hold sensitive information establish and maintain appropriate security policies to establish and maintain appropriate security policies to prevent unauthorized acquisition of that dataprevent unauthorized acquisition of that data

• Requires in the event of a material breach of security, Requires in the event of a material breach of security, those whose information has been inappropriately those whose information has been inappropriately revealed be notified of the breachrevealed be notified of the breach

• Special requirements are imposed on information Special requirements are imposed on information brokers, those that compile and sell consumer data to brokers, those that compile and sell consumer data to third partiesthird parties

• Would preempt similar state laws to create a uniform Would preempt similar state laws to create a uniform national standard national standard

• Banks, credit unions, thrifts, and common carriers Banks, credit unions, thrifts, and common carriers would be exemptwould be exempt

General Liability ExposureGeneral Liability Exposure

• The CGL pays for P&AI including "oral or written publication, The CGL pays for P&AI including "oral or written publication, in any manner, of material that violates a person's right of in any manner, of material that violates a person's right of privacy"privacy"

• From an insurance coverage perspective a claim for injury From an insurance coverage perspective a claim for injury resulting from the theft of identity likely could turn on resulting from the theft of identity likely could turn on whether there has been a "publication" whether there has been a "publication"

• Businesses that handle Personal Identity information need to:Businesses that handle Personal Identity information need to:– develop a security policydevelop a security policy– appoint an information security officerappoint an information security officer– develop a process for taking corrective and preventative actiondevelop a process for taking corrective and preventative action

• In the event of an unauthorized access of information, the In the event of an unauthorized access of information, the business may be required to send notices to potentially business may be required to send notices to potentially affected persons, arrange for a free credit report and provide affected persons, arrange for a free credit report and provide a one year subscription to a credit monitoring service. Can a one year subscription to a credit monitoring service. Can these obligations be considered "damages?"these obligations be considered "damages?"

PrivacyPrivacy

PrivacyPrivacy

• The federal intelligence overall that became The federal intelligence overall that became law this year establishes standards for law this year establishes standards for driver’s licensesdriver’s licenses– Documents required to obtain licenseDocuments required to obtain license– Verification proceduresVerification procedures– Information includedInformation included– Security against forgerySecurity against forgery– Machine readableMachine readable

• Effective mid-2006, once details worked outEffective mid-2006, once details worked out• States can opt out, but their licenses wouldStates can opt out, but their licenses would

be useless for federal purposesbe useless for federal purposes

Event Data RecordersEvent Data Recorders• Originally developed to record airbag deployment, Originally developed to record airbag deployment,

EDRs now record auto speed, engine revolutions EDRs now record auto speed, engine revolutions per minute, and the status of seat belts and per minute, and the status of seat belts and braking for five seconds before and for one second braking for five seconds before and for one second after an accidentafter an accident

• Linked with an OnStar system, an EDR reports the Linked with an OnStar system, an EDR reports the site of an accident and driver behavior over a site of an accident and driver behavior over a period before an accidentperiod before an accident

• More than 40 million vehicles now have EDRsMore than 40 million vehicles now have EDRs• Proposed regulation from NHTSA would standardize Proposed regulation from NHTSA would standardize

EDR data and make it easier to access by 2008 EDR data and make it easier to access by 2008 • Would also require that manufacturers put in the Would also require that manufacturers put in the

owners manual that the vehicle has an EDRowners manual that the vehicle has an EDR

Concerns about Personal Concerns about Personal Privacy Privacy

• Five states have laws regulating the ownership and Five states have laws regulating the ownership and use of EDR datause of EDR data

• Eleven states have such legislation pendingEleven states have such legislation pending• Some states (CA, AR, ND) have laws that insurers Some states (CA, AR, ND) have laws that insurers

cannot put wording in the cooperation clause cannot put wording in the cooperation clause requiring insureds to provide EDR info; legislation requiring insureds to provide EDR info; legislation is pending in New Hampshire, New York, and Texas is pending in New Hampshire, New York, and Texas

• Some of the car rental contracts make insurance Some of the car rental contracts make insurance coverage invalid if the renter is breaking the lawcoverage invalid if the renter is breaking the law

• Insurance contracts don't have similar provisions. Insurance contracts don't have similar provisions. Could this increase carriers’ exposure even when Could this increase carriers’ exposure even when renter takes out additional damage waivers?renter takes out additional damage waivers?

Other IssuesOther Issues

Lead PaintLead Paint• In 1999, Rhode Island filed a suit to hold lead paind In 1999, Rhode Island filed a suit to hold lead paind

manufacturers liable for removal and treatment of manufacturers liable for removal and treatment of children with health problemschildren with health problems– In 2002, the lawsuit ended in a mistrial; a new trial is In 2002, the lawsuit ended in a mistrial; a new trial is

scheduled to begin in Septemberscheduled to begin in September– DuPont has reached a settlement with Rhode Island; the DuPont has reached a settlement with Rhode Island; the

remaining 6 defendants argue that the property owners remaining 6 defendants argue that the property owners should be held accountable for failure to maintain their should be held accountable for failure to maintain their propertiesproperties

• The Supreme Court of Wisconsin recently held that The Supreme Court of Wisconsin recently held that the lead pigment industry cannot avoid liability for the lead pigment industry cannot avoid liability for want of specific product identificationwant of specific product identification– Remanded a case to lower court for trial under a "risk Remanded a case to lower court for trial under a "risk

contribution" approach (similar to market share liability)contribution" approach (similar to market share liability)– The majority opinion relaxed the traditional rules of The majority opinion relaxed the traditional rules of

causation and could be seen as imposing absolute liability causation and could be seen as imposing absolute liability on manufacturers of raw materials that are later on manufacturers of raw materials that are later incorporated into a finished productincorporated into a finished product

Prosecution for Workers’ Prosecution for Workers’ Injuries and DeathsInjuries and Deaths

• Trend among state and federal prosecutors to Trend among state and federal prosecutors to look into the possibility of filing criminal look into the possibility of filing criminal charges against companies and managers charges against companies and managers when workers are injured or killed on the jobwhen workers are injured or killed on the job

• Traditionally, workers compensation programs Traditionally, workers compensation programs and civil tort cases have determined the and civil tort cases have determined the liability for workers' injuries and deaths, with liability for workers' injuries and deaths, with the risk of high insurance premiums and large the risk of high insurance premiums and large awards providing managers with incentives to awards providing managers with incentives to keep their workplaces safekeep their workplaces safe

• With 5,575 workplace deaths and 1,315,900 With 5,575 workplace deaths and 1,315,900 nonfatal injuries in 2003, the potential nonfatal injuries in 2003, the potential exposure to criminal prosecution is significantexposure to criminal prosecution is significant

Chemicals and Health ConcernsChemicals and Health Concerns

• The results of an increasing number of studies are The results of an increasing number of studies are leading some scientists to speculate that the prevalence leading some scientists to speculate that the prevalence of certain industrial chemicals at extremely low levels of certain industrial chemicals at extremely low levels results in a greater incidence of some cancers and brain results in a greater incidence of some cancers and brain disorders in childrendisorders in children

• Although minute traces of some chemicals have long Although minute traces of some chemicals have long been considered insignificant, some scientists suggest been considered insignificant, some scientists suggest that traces in the environment are causing the increased that traces in the environment are causing the increased incidence of such illnesses as breast and prostate cancer incidence of such illnesses as breast and prostate cancer as well as autism and learning disabilitiesas well as autism and learning disabilities

• Pollution regulations are intended to limit the exposure Pollution regulations are intended to limit the exposure to chemicals to levels that studies have shown to be safeto chemicals to levels that studies have shown to be safe

• Some authorities now question whether some toxic Some authorities now question whether some toxic chemicals can have any safe exposure levelchemicals can have any safe exposure level

• After studying the effects of lead on children for After studying the effects of lead on children for decades, the EPA has effectively decided that there is no decades, the EPA has effectively decided that there is no acceptable level of exposureacceptable level of exposure

Insurance IssuesInsurance Issues

• Wrap-up programs may contain Wrap-up programs may contain gaps in coverage which are being gaps in coverage which are being picked up by subcontractorspicked up by subcontractors

• Could run out of limitsCould run out of limits• The general or the sub’s insurer is The general or the sub’s insurer is

not collecting a premium for these not collecting a premium for these exposuresexposures

Car SharingCar Sharing

• Drivers rent a vehicle just for the time they need Drivers rent a vehicle just for the time they need itit

• insurance costs are included in the hourly insurance costs are included in the hourly chargecharge

• If inadequate, creates an excess exposure for If inadequate, creates an excess exposure for insurers of insureds who own carsinsurers of insureds who own cars

• Growing market for non-ownership liability Growing market for non-ownership liability coveragecoverage

• Physical Damage deductible could be payable Physical Damage deductible could be payable via ownership of an owned auto or “platinum” via ownership of an owned auto or “platinum” credit cardcredit card

• Maintenance of vehicles could be an issueMaintenance of vehicles could be an issue

ISO Emerging Trends in ISO Emerging Trends in Coverage Issues Coverage Issues

STRIMASTRIMA

September 19, 2005September 19, 2005

No part of this presentation may be copied or redistributed without the prior written consent of ISO.  This material was used exclusively as an exhibit to an oral presentation.  It may not be, nor should it be relied upon as reflecting, a complete record of the discussion.