Theoretically, wealthier people should buy less insurance, and should self-insure through saving instead, as insurance entails monitoring costs. Here, we use administrative data for 63,000 individuals and, contrary to theory, find that the wealthier have better life and property insurance coverage. Wealth-related differences in background risk, legal risk, liquidity constraints, financial literacy, and pricing explain only a small fraction of the positive wealth-insurance correlation. This puzzling correlation persists in individual fixed-effects models estimated using 2,500,000 person-month observations. The fact that the less wealthy have less coverage, though intuitively they benefit more from insurance, might increase financial health disparities among households.
Insurance is a peculiar business because customers don’t really want it, hence the adage, “insurance is sold, not bought.” As much as she’s a customer, she’s also a counterparty: what’s good for her (a claim) is not good for the company. There’s a zero-sum dynamic to the relationship, which means that the classic Amazon flywheel around customer experience and lower pricing doesn’t work.
This concept got Lemonade tied up in knots this week. In a series of tweets, the company told of how its platform is getting better at “delighting customers”. One way it does this is, “when a user files a claim, they record a video on their phone and explain what happened. Our AI carefully analyses these videos for signs of fraud. It can pick up non-verbal cues that traditional insurers can’t, since they don’t use a digital claims process.”
It seems a strange way to “delight” customers by allowing AI to auto-reject their claims based on how their face looks or their accent sounds. The company realized its (PR) error, deleted the tweets and issued a denial. But this is what happens when your customers and your shareholders start mixing in an industry that doesn’t lend itself very well to that.
Younger, populist, anti-corporate juries are more prone to make larger awards than baby boomer jury pools. Plaintiff attorneys making good use of the “reptile theory” to provoke jurors to punish defendants painted as dangerous to society have led to staggeringly large verdicts. The combined impact of these trends has led to more and larger lawsuits, as well as year-over-year increases in “nuclear verdicts” — verdicts in excess of $10 million.
Some elements of the COVID-19 litigation torrent fit squarely in Buffet’s meaning of social inflation: expansion of what insurance policies cover. To be sure, the plurality of the 10,000 coronavirus suits filed involve insurance coverage litigation, with plaintiffs seeking coverage for business losses in policies where insurers maintain coverage does not exist.
On Jan. 27, 1986, Allan McDonald stood on the cusp of history.
McDonald directed the booster rocket project at NASA contractor Morton Thiokol. He was responsible for the two massive rockets, filled with explosive fuel, that lifted space shuttles skyward. He was at the Kennedy Space Center in Florida for the launch of the Challenger “to approve or disapprove a launch if something came up,” he told me in 2016, 30 years after Challenger exploded.
His job was to sign and submit an official form. Sign the form, he believed, and he’d risk the lives of the seven astronautsset to board the spacecraft the next morning. Refuse to sign, and he’d risk his job, his career and the good life he’d built for his wife and four children.
“And I made the smartest decision I ever made in my lifetime,” McDonald told me. “I refused to sign it. I just thought we were taking risks we shouldn’t be taking.”
The unwinding has rippled to holders of the Credit Suisse funds, German municipalities that deposited money with Greensill’s bank, and a high-profile duo of venture-capital investors.
Greensill specialized in supply-chain finance, a type of short-term cash advance to companies to stretch out the time they have to pay their bills. The firm was once worth $4 billion based on investments from SoftBank Group Corp.’s Vision Fund. The collapse marks a high-profile blow for the mammoth Japanese investor.
The National Safety Council (NSC) estimate of total motor-vehicle deaths for 2020 is 42,060, up 8% from 39,107 in 2019. The estimated annual population death rate is 12.8 deaths per 100,000 population, up from 11.9 in 2019. The estimated mileage death rate is 1.49 deaths per 100 million vehicle miles traveled, up 24% from 1.20 in 2019. Estimated vehicle miles traveled for 2020 indicate over a 13% decrease compared to 2019, from 3,260 billion to 2,830 billion.
A medically consulted injury is an injury serious enough that a medical professional was consulted. Based on the current medically consulted injury-to-death ratio of 114:1, and rounded to the nearest thousand, the estimated number of nonfatal medically consulted injuries resulting from crashes during in 2020 was 4,795,000.
The estimated cost of motor-vehicle deaths, injuries, and property damage in 2020 was $474.4 billion.
Protection from COVID-19 related lawsuits may be on the way for Illinois businesses through House Bill 3003.
Known as the COVID-19 Liability Act, the legislation was filed in the House of Representatives on Feb. 18. If passed, the bill would offer protection to businesses from people claiming they were infected at a business and therefore the business is liable for medical costs, pain and suffering or more.
Clark Kaericher, vice president of Government Affairs at the Illinois Chamber of Commerce, says so far, there have been two crises proceeding from the coronavirus: a public health crisis and an economic crisis.
Winter storms paralyzing the United States have left millions without power and sent health officials scrambling to protect freezers full of COVID-19 vaccines, which have to be kept at extremely low temperatures or risk going bad.
Rolling blackouts through Texas took out at least one set of freezers full of the Moderna vaccine; 5,000 doses were sent to a university, a jail, and a handful of hospitals before they expired. The Oregon Health Authority is moving vaccines to places with power, although the agency isn’t disclosing which storage sites have their systems down. As part of its storm preparations, Kentucky made sure places holding COVID-19 vaccines had contingency plans.
To a large extent, the risky traffic safety behaviors observed in Q2 continued in Q3. Frequency of triptaking continued to be lower, and a greater percentage of people stayed home in Q3 2020 compared to Q\3 2019. Ejection rates remained elevated compared to the same period a year earlier. New data on seat belt use among seriously injured drivers and passengers suggests that the belt use rate among those in serious crashes decreased in the early phases of the public health emergency at the study sites, but that rate may now be rebounding. The data also suggested that alcohol- and other drug-positive drivers and passengers who were seriously or fatally injured were much less likely to wear a seat belt than their counterparts who tested negative for all the drugs included in the study.
Speed data from the NPMRDS shows higher speeds in urban roadways across roadway types in Q3 2020 compared to the same period in 2019. Further, the greater speed dispersion in rural areas observed in Q2 continued in Q3 2020 compared to the same period in 2019.
Regarding alcohol and other drug prevalence among seriously and fatally injured drivers at the five trauma center study sites, more than 29% in the most recent period (July 19 to September 30) had measurable alcohol in their systems, with over 26% testing positive for the presence of cannabinoids and over 13% positive for opioids. In the same period, the percentage of drivers testing positive for at least one category of drugs remained above 60%, with nearly 25% testing positive for multiple categories of drugs. These observed increases in alcohol and other drug prevalence relative to before the public health emergency are consistent with the reported data that showed increases in marijuana and alcohol sales and consumption during the public health emergency. Overall, these data sets continue to have great potential to improve our understanding of the prevalence of drugs and alcohol among different types of seriously and fatally injured road users, as well as how prevalence may be changing over time during the public health emergency.
NHTSA just released some specs. When you look at the second quarter of 2020, the first full quarter of the pandemic, total traffic deaths have decreased by three percent compared to the second quarter of 2019. That translates into 302 fewer fatalities than the same period last year. I’m not discounting that drop, since Each man’s death diminishes me, For I am involved in mankind. However, the traffic volume didn’t drop just three percent, it dropped more than 16 percent. There should have been a lot fewer deaths than there were. The difference is idiots like the one I encountered.
NHTSA said that because traffic volumes decreased more significantly than the number of fatal crashes, the traffic fatality rate per 100 million vehicle miles travelled is projected to increase to 1.25 in the first half of 2020, up from 1.06 in the same period in 2019.