Tag Archives: product liability

How will current legacy losses affect P&C insurers?

Property and casualty (P&C) insurance headlines these days generally focus on issues relevant to current policies. Although not receiving as much attention, historical accident years have also been experiencing deteriorating trends, both for mature exposures such as asbestos, environmental pollution, and construction defect claims as well as for emerging exposures related to talc, sexual abuse, and opioid litigation.

Understanding the impact of these potential legacy losses is important, not only in the context of establishing an appropriate reserve, but also to form a view of the load for mass torts needed for pricing current policy years. Very often insurance companies segregate these mass tort claims, housing them in discontinued operations, ceding such exposures as part of adverse development covers or simply removing them from actuarial analyses to prevent them from “distorting” the analyses of the “normal” claims.

In this article, Milliman’s Raji Bhagavatula, Mark Goldburd, and Jason Russ discuss a number of these “legacy” topics that affect the general liability books of commercial insurance companies.

Who’s liable for electronic scooter accidents?

Dockless electronic scooter (e-scooter) sharing programs are the new era in micromobility. However, scooter-sharing companies are drawing fire from injured pedestrians and a concerned medical community. A recent Consumer Reports investigation documents at least 1,500 injuries and eight deaths related to rented e-scooters in the United States since late 2017. Hundreds of riders have landed in emergency rooms with injuries ranging from cuts, sprains, and bruises to bone fractures and head injuries.

E-scooter sharing also introduces new insurance implications. Traditional policies have not kept up with the micromobility revolution, although most e-scooter riders assume they’re covered for liabilities and personal injuries. With e-scooter accidents on the rise, insurance gaps need immediate attention and innovative solutions for on-demand, usage-based transportation. In this article, Milliman actuaries Abby Sternberg and Anthony Pinello delve into the new world of e-scooters. They examine injuries associated with e-scooters and potential litigation. The authors also compare e-scooters with bicycles and bike shares and talk about what e-scooter companies can do to mitigate risk.

The insurance risks of handheld devices

Carbone-WilliamAs handheld devices continue their march toward world domination, they have brought along a new set of insurance risks to threaten the bottom lines of insurers. While some of these risks are simply altering the landscape of traditional coverages, others are creating a need for innovative products that can address the arrival of new kinds of claims that may emerge. Let’s take a look at some of the dangers handheld devices have introduced to us and, in turn, the insurance world.

Distracted driving
No list of insurance risks related to handheld devices, specifically cell phones in this instance, would be complete without discussing the impact of distracted driving on the auto liability industry. The details and statistics are abundant and vary by source, but according to the latest annual report from the National Highway Traffic and Safety Institute over 3,100 people were killed and 420,000 people were injured in motor vehicle accidents involving a distracted driver during 2013. While talking on a cell phone is still the leading cause of distracted driving accidents, texting receives a great deal of attention because of the nearly universal understanding that it is a serious detriment to driving ability. Combine this with texting being the preferred mode of communication of most teenagers and young adults—the cohort with the least driving experience—and we have a dangerous combination on the roads and a rise in the auto liability frequency statistics.

Text (or iPhone) neck
Despite what you may believe about the egomaniac down the hall, most human heads weigh about 10 pounds, balanced atop a cord of bones and cartilage called a spine. For each inch we tilt our spine out of its proper alignment, checking e-mail on our tablet or instagramming our cheeseburgers, we double the pressure on it. This can lead to symptoms ranging from soreness and inflammation to pinched nerves to an overall decrease in our metabolism. These all seem like issues that the health industry will likely face as handheld device use—and chiropractor salaries—continue to trend upward.

Distracted walking
Despite an overall decrease in pedestrian injuries since 2005, the number of pedestrian fatalities that are due to distracted walking has doubled. Distracted walkers tend to walk at a slower pace with little to no arm swing, typically with their heads down, as cognitive abilities are focused on the task at hand rather than at foot. As those in heavily used pedestrian areas will tell you, distracted walkers also tend to change direction or stop seemingly at random and often struggle with obstacles such as curbs and other pedestrians. The potential for injuries is significant, whether it is due to stepping in front of moving vehicles or to rolling an ankle on an uneven sidewalk. Despite public service announcements to raise awareness of the issue, it does not appear to be going away.

Cyber liability
One of the hottest topics at any actuarial convention is intimately linked with your handheld device. While cyber security headlines focus on the large-scale theft of personally identifiable information, there is also an omnipresent threat of losing individual information through a stolen or hacked cell phone or tablet. A hacked cell phone (or one not password-protected) can be used to gain access to personal records, data, and information saved on apps as well as sensitive material, which can be held ransom. Those using these devices for professional purposes may also have corporate secrets or other nonpublic information on their phones or tablets. It is not a stretch to imagine that a lost handheld device could be as damaging as a lost laptop.

Product liability?
The pilot episode of “CSI: Cyber” was centered on a hacked baby monitor, a terrifying thought for any parent. Unfortunately, this was not a work of science fiction, but one based in fact. As the Internet of Things (IoT) grows to include more and more items, it opens up our daily lives to cyber vulnerability. Despite the basic preventive measures we take, allowing wireless access to nanny cams, security systems, and home heating systems will also open the virtual door for the motivated hacker as well. If damages occur and the manufacturer of these products, or the apps that service them, are deemed to have been negligent in protecting customers’ security or in warning them about security vulnerabilities, product liability claims may be brought against them. While the standard of care does not appear to be high to date, it would only take one landmark case to change the shape of the products liability landscape in the IoT universe.

Long-term assessment of product liability is vital

Businesses need to evaluate their exposure to product liability years in advance of any potential suits to ensure adequate reserves. In the video below, Milliman consultants discuss how companies can avoid being blindsided by product liability claims.

Elizabeth Cohen also provides perspective on the unique risk that product liability poses to product manufactures here.