Aon, Insurance Information Institute and Swiss Re join Advisen on Webinar

We're going to hold a webinar tomorrow (Wed May 13th) at 3pm EDT (sorry to our friends overseas, scheduling all panelists mandated this time). Early registration means attendance will likely exceed the most popular webinar of the year which was Madoff. We might hit our max of 1,000 on the conference call, who knows.

The discussion will revolve Advisen’s latest briefing "The Insurance Market in 2009: A Market Poised for a Change" that examines the forces at work on commercial insurance premiums, claims and investment income in 2009. Download this new Briefing, free of charge, at http://corner.advisen.com/reports_topical_hard_market_2009.html.

Register for free here.

While the briefing groups together findings of several recent Advisen reports, there are several points that are new - see the breakout of trends by coverage on page 4, a discussion of broker consolidation to come - on page 5 (we are going to publish a full piece on this soon), and the implications of the new Obama administration on page 7.

Jim Blinn of Advisen will moderate a panel including:

• Eric Andersen, CEO-Aon US Retail
• Dave Bradford, co-founder and EVP of Advisen
• Bob Petrilli, Head of Swiss Re’s IRI Americas
• Steven Weisbart, Chief Economist for Insurance Information Institute

Buyers, brokers and underwriters of all major lines will learn from the report and the webinar discussion. If Property, D&O, GL or Workers Compensation insurance are important to you, we urge you to register for the free webinar here.

We'd love to see you on the call and answer your questions. The best way to get your question answered is to submit them to jblinn@advisen.com in advance.

Climate Change, a D&O Loss Event?

Firms on the wrong side of the environmental movement have seen an enormous amount of suits filed against them, and plaintiffs have sought compensation from many forms of insurance policies, including directors & officers insurance.

Advisen Front Page News (here) carried an interesting article this week from the Chief Counsel to ACE Professional Risks, Carol Zacharias, who recapped the state of play in climate change litigation and how it increases the exposure to companies and their directors and officers.

Excerpting from the article:

The new cases address the adequacy of a company’s assessment of the financial
consequences of climate changes and the adequacy of disclosures to shareholders
of that financial impact. Since questions regarding disclosures to shareholders
raise the prospect of management liability exposure, these developments present
liability risks to directors and officers that should be considered.

Click here for the full article.

So I searched Advisen's large loss database for "climate change disclosure" and found a match on a case where Xcel Energy settled with the Attorney General of New York. Excerpting from our case profile:

Attorney General Andrew M. Cuomo today announced the first-ever binding and
enforceable agreement requiring a major national energy company to disclose the
financial risks that climate change poses to its investors. Cuomo's agreement
with Xcel Energy (NYSE: XEL) ("Xcel") comes as many power companies, including
Xcel, are investing in new coal-burning power generation that will significantly
contribute to global warming emissions.

Certainly climate change disclosure is not going to decrease under the Obama administration.

To get your hands on this case or other cases you want to follow, click here and indicate you want everything we have on climate change or whatever search criteria fits your needs.

And You Thought the Plaintiffs Bar Couldn't Get More Busy

Insurance executives ask their heads of claims the same thing: "How many Securities Class Action Cases (SCAS) were filed?" There's no industry standard definition and Advisen, our friend Kevin LaCroix at the D&O Diary (blog here), and other service providers like NERA or Cornerstone have varying counts.

NERA and Cornerstone make their money by serving as expert witnesses during trial and pre-trial stages. NERA and Cornerstone collect data as a byproduct of this business.

Advisen makes its money collecting data and licencing access to this data on a one-time or continuous basis. Data and predictive models are our core business and we are dedicated to the commercial insurance industry so our output is tailored to their specific needs.

So the answer to the executive's question is "Depends on what you define as a SCAS" but, more importantly, SCAS is only one part of the exposure to liability insurers. In fact, in Q1 2009, SCAS dropped to less than 40% of all securities filings. Advisen tracks shareholder and other derivative suits and cases involving breach of fiduciary duty and securities fraud.

Advisen tracks filings in US federal and state courts and collective actions and other cases filed in overseas courts against US and non-US companies.

In summary, there is no standard definition of "securities class action suit." But for management liability professionals, the more important question is"How many and what types of lawsuits are likely to result in claims under D&O, E&O or fiduciary liability policies?" Advisen tracks and reports on all manner of suits, filed in state, federal and foreign courts, that are likely to result in losses to companies and their management liability insurers. The Advisen database is the most complete, accurate and timely of its kind.

Today Advisen released the findings of its quarterly securities litigation review and the report is available free of charge here. The headline is that filing activity was up significantly from 2008 rates, but the pace can't be sustained and will likely level off over the year.

The executive's follow up questions are "how many of these companies do we write policies for" and "what do we need to reserve". Reserving capital erodes profit so frequency is not popular, but frequency of filings is only part of the picture.

The elephant in the D&O room is whether these cases will yield insured loss. Advisen has already written (see here) about how defense costs are going to eat significantly into the policy limits but that for many reasons, this increased frequency is unlikely to result in an increase in claims paid.

D&O and E&O professionals would benefit from reading the report (here) and seeing if their clients are on the list (here).

Not For Use on Moving Vehicles

I love the Friday funny news story.

Quoting a UPI article:

A warning submitted by a man in Hampton, Ga., regarding the use of a portable toilet has topped this year's Wacky Warning Label Contest, an event sponsor says.

The Foundation for Fair Civil Justice said in a release that Hampton resident Steve Shiflett won the 2009 Wacky Warning competition by sending in a warning label attached to "The Off-Road Commode."

"Not for use on moving vehicles," the label on the portable toilet, which can be attached to a vehicle's trailer hitch, reads.

Other winning entries this year include a cereal bowl warning that urges adult supervision for use and a livestock castration ring product that insists the product only be used on animals.

Bob Dorigo Jones, who created the annual contest, said such seemingly unnecessary labels are an indication of an ongoing economic trend.

"Once a year, millions of people around the world get a collective laugh from our winners," Jones said. "The truth is, this is no laughing matter. Outrageous warning labels confirm that the American civil justice system is out of whack! In today's economy, Wacky Warning Labels demonstrate the tax we all pay for lawsuit abuse."