At the Verisk Insurance Solutions 2013 Risk Symposium next month, Jason Trigg, CEO of the Cardinal Group, and I will discuss cargo and retail theft, the implications for insurers, and how best to prevent those losses. In 2012, transportation and logistics companies reported nearly 1,200 cargo thefts to CargoNet^®. And for retailers, shrink remains a significant challenge. Whether a company absorbs those losses or passes them along to the insurer, the incentive to minimize them is significant.

What can you do to help your clients in every link of the supply chain to lower their theft losses? Here are a few ideas:

1. Turn from pressure to incentive: Pressure to reduce theft losses comes in the form of higher insurance premiums and deductibles. That may help offset claim payments, but it’s hardly a long-term strategy for customer retention and profitable growth. In fact, it could ultimately lead your client to find a new insurer (or cause you to drop coverage, with the only benefit being a loss reduction). Instead of relying solely on claim history, provide some incentive as well. Many insurers in the United States, for example, offer deductible waivers (usually of up to $10,000) for customers who agree to participate in the loss mitigation programs of CargoNet and National Equipment Register^®. The increased odds of recovery offset the risk of the deductible waiver.

2. Stay current with theft trends: Last year, warehouses and distribution centers became the prime spots for cargo theft, accounting for 27 percent of all incidents reported to CargoNet. In 2011, truck stops were the prime spots at 20 percent. That declined to 19 percent in 2012. Learn more in CargoNet’s 2012 annual theft report. Gathering that sort of intelligence will help you anticipate shifts in claim patterns and support predictive modeling efforts.

3. Always offer ideas: Help your insureds understand how they can address theft risk proactively. CargoNet has developed a transportation carrier vetting checklist that our member insurers and brokers can share with their clients (for example, retailers and manufacturers). The tool shows red flags quickly, allowing the rapid detection of identity theft and other new schemes.

To learn more about theft prevention best practices for cargo and retail, please join us at the Verisk Insurance Solutions 2013 Risk Symposium in London on June 24. Be sure to attend session 103: Combating Cargo and Retail Crime.

Verisk Underwriting just announced the availability of vehicle-specific annual mileage and prior coverage information in a single point-of-sale service.

Verisk’s Coverage Verifier^℠ database has provided auto carriers with detailed information about an applicant’s prior coverage dates and lapses, limits of coverage, deductibles, and lienholder information. Now, carriers can add to that list accurate annual mileage estimates for each covered vehicle, providing faster and more accurate quotes while improving the customer and agent experience. Check out our press release issued May 16, 2013.

Faster and more accurate quotes are a competitive advantage in a data prefill or point-of-sale underwriting environment.

Do your claims adjusters rely on manuals too much? While the guidelines can help an adjuster understand your company’s policies, they can still lead to inconsistent application and result in the ineffective use of the adjuster’s judgment and experience. Watch this video to learn how ISO Claims Outcome Advisor® can improve claims adjusters’ efficiency and consistency while making the most of their knowledge and expertise.

Learn more about ISO Claims Outcome Advisor. >>

In a major development on the Medicare front, President Obama has signed the Strengthening Medicare and Repaying Taxpayers (SMART) Act into law. The SMART Act makes major revisions to Section 111 reporting, conditional payments, and other important Medicare Secondary Payer (MSP) compliance areas. 

I hope you can join me at the Verisk Insurance Solutions 2013 Risk Symposium  (on June 24 in London) and attend Session 301: SMART Act Becomes Law — How the SMART Act Will Change MSP Compliance. As part of the presentation, I’ll break down the SMART Act’s provisions and discuss how they will change everyday claims and settlement practices in the following areas:

• Section 111’s “$1,000 a day, per claim” penalty
• obtaining Medicare conditional payment information
• appealing Medicare lien claims
• safe harbor protections
• low-dollar compliance thresholds
• Medicare statute of limitations
• preparing for the changes — practical claims approaches

Register now for the Verisk Insurance Solutions 2013 Risk Symposium. >>

Forecasts indicate that claims executives will likely hire plenty of adjusters this year. That hiring will require a considerable investment in formal and on-the-job training. The longer it takes, of course, the more it costs. Inexperienced adjusters — or even seasoned adjusters who don’t have experience with a new employer’s claim-handling policies — can miss important questions that can translate into lost opportunities. Watch this video to learn how ISO Claims Outcome Advisor^® can help your department make new adjusters productive faster — and keep them consistent.

Learn more about ISO Claims Outcome Advisor. »

The second quarter is off to a great start, with more than $3 billion in catastrophe bonds announced or completed so far. And as the insurance and reinsurance industry prepares for hurricane season, the momentum should continue. Yet issuance volume is only part of what has made the catastrophe bond market interesting this year. A number of new developments show that the sector is ready for continued growth.

1. Big Bosphorus: Bosphorus 1 Re, exposed to earthquake risk in Turkey, started as a $100 million transaction and upsized to $400 million in only a few weeks. Bringing a rare opportunity for geographic diversification (in a market still largely exposed to U.S. natural catastrophe risk), the size and upsizing speed show just how substantial investor appetite is — and how willing investors are to explore new opportunities.

2. Mixed Indemnity: While indemnity-triggered deals have become more common, concern about moral hazard persists. Tar Heel Re, a large transaction at $500 million, is using PCS® for catastrophe designation, bringing in an independent third party to reduce moral hazard. With that approach, the sponsor includes only claims from a catastrophe event that has a PCS catastrophe serial number, preventing the use of other claims from driving up losses and triggering the bond.

3. Publicly Managed Entities: Both Citizens Property Insurance Corporation and Louisiana Citizens have returned to the capital markets after debuting in 2012. The former sponsored its second Everglades Re transaction at $250 million, following its initial $750 million catastrophe bond last year (the second largest in the history of the market). The second Louisiana Citizens Pelican Re transaction (after last year’s $125 million deal) started at $100 million and has since upsized to $140 million.

4. Frictional Costs: Long a problem for the ILS sector, frictional costs are declining. That should make the capital markets more accessible to both existing players (note the return of Allstate with Sanders Re and its unique use of PCS data) and new entrants, particularly the midmarket. PCS remains committed to increasing the accessibility of the ILS sector and continues to work with sponsors and their advisors to help manage frictional costs.

5. Continued Growth: This year is on track to reach $4 billion in catastrophe bond issuance by the end of the first half. To put that in perspective, the first two quarters would be among the most active in the market’s history. In fact, 2013 could ultimately surpass 2007 as the busiest issuance year on record. With increasing sponsor and risk diversity, continued trigger innovation, and declining frictional costs, the base for future growth is still expanding.

Download the latest PCS catastrophe bond market update now >>