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FROM THE EDITOR
2018: Year of the
Compiled by staff from news and wire services.
Concerns that commercial
insurance underwriters are about
to be replaced by machines are
No one celebrates the scale
of property and human loss that
characterized the third quarter of
2017. But commercial insurance
underwriters can take heart that
their work, always valued, will
achieve a fuller meaning in 2018
Years of faltering prices
combined with a devastating series
of earthquakes, hurricanes and
wildfires mean corporate insurance
carriers are doing a lot of soul
searching. Carriers will need to reevaluate numerous business lines.
Auto and D&O were already
showing signs of firming before the
disasters of Maria, Irma and Harvey
took place. Now we can look for
price increases in those lines and in
others where we haven’t seen them
for at least five years.
This point in time is when
underwriters are going to earn their
bread for a number of reasons — not
just the third quarter of 2017.
How can we know that the rate of
climate change, the ongoing threat
of cyber and the seeming inability
of adults to drive without looking at
their cell phones might not result in
quarterly losses in the near future
that could exceed the losses of 3Q
For now, carriers can collectively
absorb the loss of more than $100
billion in market surplus. But can
they do that again, and again, and
again? The answer is probably no.
Realistic pricing for coastal flood
risk is just one area that is yet to
be addressed. That day is coming,
and underwriters, real, human
underwriters, will be there to usher
INSURER SUES OVER COMPOUND
PAIN CREAM FRAUD
Liberty Mutual Insurance filed a
lawsuit against 18 Pennsylvanian pain
management doctors and pharmacists
for prescribing $4.7 million worth
of allegedly fraudulent pain creams
intended for injured workers.
In the suit, Liberty Mutual said the
doctors, pharmacists and related parties
formed “illegal, collusive relationships”
between workers’ compensation
patients and pharmacies where doctors
have a financial interest. The insurer
also claimed the creams’ prices were
inflated because of this relationship —
one tube could cost up to $8,000.
Additionally, the compounded
creams, said Liberty Mutual, were
not custom made for each individual’s
case but rather manufactured in
batches, a violation of Food and Drug
Named as a defendant, 700
Pharmacy was the top prescribing
pharmacy, accounting for nearly one-third of the money Liberty Mutual
seeks to recover.
INTACT FINANCIAL ACQUIRES
Intact Financial Corporation, the
largest provider of property and
casualty insurance in Canada, acquired
OneBeacon Insurance Group Ltd.
in a $1.7 billion deal. Through this
acquisition, the company intends to
grow its U.S. specialty lines businesses.
OneBeacon will continue to operate
out of the U.S. under the brand
OneBeacon as an indirect, wholly-owned subsidiary of Intact Financial,
offering products through independent
agencies, brokers, wholesalers and
Insurers that write employer-based
health plans are stepping up to combat
the U.S. opioid epidemic.
managing general agencies.
Intact Financial intends to offer new
coverages for technology risks, third-party cyber, and professional liability
for manufacturers of electronics.
CIGNA ENDS COVERAGE FOR
In an effort to curb the opioid
epidemic, Cigna announced it will no
longer cover OxyContin prescriptions
for customers on employer-based
OxyContin is among the most
common opiate prescriptions that lead
to overdose and death. CDC data shows
almost 2 million Americans abused
or were dependent on prescription
opioids in 2014. That number has
only increased, with more than 47,000
overdose deaths in 2016 alone.
Cigna’s decision came after greater
pressure was placed on insurers to take
action in the opioid crisis.
In addition to no longer covering
OxyContin, Cigna pledged to reduce
opioid use by 25 percent among its
consumers by 2019.
Critics were quick to say that one
insurer’s refusal to pay won’t deter
opioid misuse, but CEO Bryn Wesch
of Novus Medical Detox believes
insurers need to be held accountable
for their impact on creating barriers
and supporting less addictive
alternatives to opiates.
CYBER ATTACKERS TARGET U.S.
A recent survey revealed that more
than half of all U.S. businesses
experienced some form of a cyber
attack in the past year.
The Hartford Steam Boiler
Inspection and Insurance Company
surveyed 403 business executives across
the U.S., representing institutions
with revenues ranging from under $5
million to more than $200 million.
Of the businesses affected by
hacking, 38 percent spent $50,000 to
respond, 10 percent spent between
$100,000 and $250,000 and seven
percent spent more than $250,000. The
vast majority, 72 percent of affected
businesses, spent at least $5,000 to
investigate their breach. Data loss and
business interruption were among the
The respondents to the survey cited
negligent and disgruntled employees
as the biggest risk to cyber security.
Hackers finished at a close second.
CHANGES AT AIG
American International Group, Inc.,
announced an organizational shift.
The company will no longer have
commercial and consumer segments,
and instead will transition to general
insurance, life and retirement and
a stand-alone, technology-enabled
General insurance encompasses
commercial, personal insurance and
field operations. It is hoped that the
general insurance and the life and
retirement units will better reflect how
business is marketed and underwritten.
Brian Duperreault, president
and CEO, AIG, said changes to the
company’s structure will best position
AIG for the future, particularly its
Rob Schimek, CEO of commercial,
AIG, left the company at the end of
October as part of the change.