ISO regularly monitors technological, social, and business issues — as well as legislative, regulatory, and legal developments — that may affect our insurance programs. We modify our programs to reflect changes in all those areas.
ISO’s staff also actively pursues emerging issues and long-term trends that may affect the insurance industry. We discuss those issues with our insurer panels, and we have a special Emerging Issues Panel that helps us identify important future concerns. You may review the agenda of our last Emerging Issues Panel meeting in Circular AM-AL-2012-004.
We also consider the effects of emerging issues on enterprise risk management (ERM). ISO’s enterprise risk management web portal — Enterprise Risk Management for Insurers on ISOnet® — contains articles and presentations designed to keep you informed about recent trends and developments in the field.
Here’s a selective list of some of the issues we’re watching now:
Follow the links or scroll down for details.
ISO Activity: Recent General Liability Classification Table changes, which became effective September 1, 2011, introduced several new classes addressing solar energy, wind energy, and biofuels. A commercial property general multistate revision, filed in late 2011 for a planned effective date of April 1, 2013, includes new classes that uniquely identify wind towers, solar panel arrays, and electric-vehicle charging stations.
ISO Activity: We’ve been tracking several lawsuits regarding climate change and global warming. The cases include Comer v. Murphy Oil USA, Inc., Native Village of Kivalina v. ExxonMobil Corp., and Steadfast Insurance Company v. The AES Corporation.
On September 16, 2011, in Steadfast Insurance Company v. The AES Corporation, the Supreme Court of Virginia ruled generally that, under the commercial general liability (CGL) policies at issue, Steadfast does not have a duty to defend AES for global-warming-related claims asserted against the utility. The court subsequently granted a rehearing of Steadfast Insurance Company v. The AES Corporation. On April 20, 2012, the Supreme Court of Virgina affirmed the decision of the lower court and found that there was no allegation that the property damage was the result of a fortuitous event or accident. As a result, the court found that such loss is not covered under the relevant CGL policies.
We’re also tracking information focusing on how directors and officers liability (D&O) policies could potentially become involved in associated claims and lawsuits.
ISO Activity: ISO’s sister company Atmospheric and Environmental Research (AER) is involved in a research initiative regarding Solar Cycle 24 and space weather. The goals of the initiative are to establish baseline probability of space weather events capable of producing severe disruption to the power grid and to quantify the consequences of power grid interruptions caused by space weather.
ISO is following such issues as food-related illnesses (including the severe E. coli outbreak reported in Europe), childhood obesity, and the use of bisphenol A (BPA) and other chemicals in food packaging. Many substances reportedly leach out of the packaging and into food.
We’re tracking reported concerns about potential increased products liability risk associated with green building materials. A lack of qualified and experienced contractors installing such products — many of which are new and untested — could lead to increased risk.
ISO Activity: ISO filed a commercial property coverage option — and related rating information — for green upgrades. The filing became effective March 1, 2010, in most jurisdictions. For personal property, ISO is planning to file a green buildings coverage option for residential properties in the third quarter of 2012.
Employers have raised concerns about their employees’ use of social networking websites during the workday. The National Labor Relations Board (NLRB) issued a report discussing the decision making involved in 14 complaints reportedly stemming from employer social media policies that, according to the NLRB’s acting general counsel, present emerging issues in the context of social media. The NLRB indicates the report is intended to provide guidance as this area of the law develops.
ISO Activity: In a homeowners multistate revision effective May 1, 2011, ISO filed an optional endorsement that provides personal injury coverage within an aggregate limit. The slander, libel, and invasion of privacy exposures typical under personal injury coverage may potentially include some Internet and electronic publications. The endorsement addresses concerns that, because of the widespread use of personal blogs and social networking, some insurers may not wish to provide coverage for such exposures under the “per offense” limit of liability in the existing program.
ISO’s commercial lines staff is studying the potential effect of increased blogging, cyber bullying, and electronic social networking on certain coverages under our commercial policies, specifically with respect to personal and advertising injury coverage and employment-related practices liability coverage.
ISO Activity: ISO filed changes to the General Liability Classification Table to introduce several new classes addressing nanotechnology. The classes include nanotechnology distributors and manufacturers. The changes became effective September 1, 2011.
We’re tracking the following topics for future developments: coal combustion residues, atrazine, phthalates, bisphenol A (BPA), cadmium, and perchlorate.
ISO Activity: ISO is considering the merits of introducing a liability exclusion for injury or damage from genetically modified farm personal property.
Most businesses — manufacturers, retailers, and service providers alike — rely to some extent on other entities to supply materials, products, or services needed to ensure the continuity of their own operations. The interdependence of the many sectors of the business community has become an issue of global concern, especially following recent extreme-weather, earthquake, and tsunami events. Such events have turned the spotlight on the importance of planning to mitigate the risk of supply chain disruption. A World Economic Forum report highlights the need to review risk management practices to keep pace with rapidly changing contingencies facing the supply chain and the related transport, aviation, and travel sectors. The report is available online at http://www.weforum.org/reports/new-models-addressing-supply-chain-and-transport-risk.
ISO Activity: As part of a general multistate revision, ISO has filed revised dependent property endorsements that will enable commercial enterprises to address supply chain loss exposures more fully. The proposed effective date is April 2013. The endorsements appear in Circular LI-CF-2012-001.
For more information . . .