Author Archives: Jared Wade

About Jared Wade

Jared Wade is a freelance writer and former editor of the Risk Management Monitor and senior editor of Risk Management magazine. You can find more of his writing at JaredWade.com.

America’s Most Trustworthy Companies

Posted on by

trust

For the fourth straight year, Forbes has unveiled its list of America’s 100 Most Trustworthy Companies and, as Reactions pointed out, three property/casualty insurers not only made the cut, but received perfect scores: Montpelier Re, Greenlight Capital and National Interstate.

The other insurance firms in the top 100 were: Chubb, Arch, Renaissance Re, Transatlantic, FPIC, Safety Insurance Group, EMC and Navigators. Here is the full list, which includes Bed, Bath & Beyond, Hess and Lowe’s in the “large cap” division.

For the rankings, Forbes partners with Audit Integrity, and in the write up, they were quick to kick another insurance giant while it is down in an attempt to show how their past predictions have proven true.

Audit Integrity looks beyond the raw data on companies’ income statements and balance sheets to assess the true quality of corporate accounting and management practices. As early as August 2005, Audit Integrity’s proprietary rating system signaled potential problems at Lehman Brothers. In December of 2005 it gave American International Group a significant downgrade.

Awww. Poor AIG. Always getting made fun of for helping tank the economy.

They also note some of the rationale behind the list, which is directly in line with a core tenant of risk mitigation: avoid negative events.

Audit Integrity’s evaluation penalizes companies for unusual or excessive executive compensation, high levels of management turnover, substantial insider trading relative to their corporate peers or high levels of short-term executive compensation, which encourages management to focus on short-term results. Good housekeeping practices leave companies better prepared to handle an economic downturn, especially one as severe as right now. The absence of negative events counts, as much as the existence of positive events, in getting businesses on the list. “These companies have made it through our screening process and shown consistent high quality,” Zwingli says. “Healthy individuals are often that way because they don’t engage in unhealthy behavior. These companies are the same way.”

What’s the saying?

“All news is good news.”

Yeah, I don’t think that is true for companies. And apparently, neither do Audit Integrity and Forbes.

In related news, Greenwich Associates recently released its “Excellence Awards for Middle Market Insurance Brokerage.”

After Record Fine, Toyota Extends Car Discounts. But Will It Continue to Drive Sales?

Posted on by

toyota recalls

For risk managers and others looking at the Toyota recalls as an ongoing lesson in corporate crisis response, seeing the daily headlines about the automaker’s woes is — both figuratively and literally — like watching a car crash.

Sure, in some ways, Toyota has handled the situation adequately, and its rebounding stock price and recent sales suggest that the immediate damage could have been worse. Then again, the company dragged its feet in addressing safety concerns publicly, and all the fines, recalls, class-action lawsuits, Congressional hearings and public scorn suggest that the long-term reputational damage could very well be lasting. This isn’t something that consumers will ever forget.

Especially not now.

Because on Monday, the National Highway Traffic Safety Administration hit Toyota with a record $16.4 million fine, which is more than an order of magnitude larger than the watchdog’s previous highest penalty, a $1 million slap on the wrist to GM for faulty windshield wipers. The $16.4 million figure is also the largest allowed under civil law, according to NHTSA.

Said Transportation Secretary Ray LaHood:

“We now have proof that Toyota failed to live up to its legal obligations,” said Secretary LaHood. “Worse yet, they knowingly hid a dangerous defect for months from U.S. officials and did not take action to protect millions of drivers and their families. For those reasons, we are seeking the maximum penalty possible under current laws.”

On Forbes.com, Ned Douthat advises Toyota to just pay the fine rather than try to fight the regulator’s decision.

Now, Toyota is faced with the choice of contesting the fine in court or simply paying the fine in order to get the episode behind in.  In comparison to the potentially lengthy and expensive legal battle, the nominal $16.4 million fine may be an attractive option.  However, in paying the fine the prestige of the Toyota brand may be forever damaged, as they would be admitting fault in hiding a very serious safety issue in their vehicles and thus endangering millions of drivers.  The number of incidences of stuck accelerators is still relatively small, but the recalls have affected some 8.5 million vehicles.  Furthermore, if Toyota admits fault and accepts this fine, it may open the litigation flood gates to hundreds of class action and personal injury lawsuits related to the stuck accelerator issue.

Amanda Bronstod of Law.com delves deeper into the idea that accepting the fine as handed down will be troublesome for Toyota, as it factually “validates the legitimacy of our allegations that Toyota has been misleading the federal government and consumers.”

With that damned-if-you-do, damned-if-you-don’t decision looming, Toyota also announced on Tuesday that it would extend its sales discount program. The program was successful in March and finally gave the company some positive headlines, but at least one industry expert seems skeptical that even this price-cutting measure will continue to push vehicles under the once-impeccable-but-now-tainted Toyota banner.

Last month’s incentive program helped Toyota “scoop up bargain hunters and loyalists” to achieve a 41% gain in sales over March 2009, said James Bell, an analyst with auto information company Kelley Blue Book.

But the increase was not as robust as it might seem, as results were tempered by the low sales in the same month a year earlier, he said.

“The question now is how many of those bargain hunters and loyalists are left. You have a finite number of people in the auto market at any one time,” Bell said.

Historically, Toyota has been among the stingiest automakers when offering incentives, helped by its historically high resale values and a reputation for building reliable cars, he said.

Last week at the International Auto Show, a Toyota rep spoke on the situation, specifically noting his thoughts that “people don’t buy a car they don’t trust just because you give them a good price.”

We’ll see, I guess.

For more on the risk management angle of the Toyota troubles, check out our past coverage. Morgan also covered “Toyota’s Total Recall” in the April issue of Risk Management.

How to Be a Better Insurance Consumer

Posted on by

Over at the Clear Risk Blog (which you should be reading regularly), Craig Rowe posted some great stuff yesterday on how risk managers can be better insurance consumers. Some of this should be basic to many of you oh-so-savvy industry veterans, but even if it’s just a refresher, Rowe puts an insightful, quick-to-read spin on some of the fundamentals.

Take this piece of advice, for instance:

First and foremost, budget for the market cycle. The insurance market is cyclical with wide swings between the peaks and valleys. Budget at the high end of the cycle and keep your budget consistent.

online pharmacy avodart with best prices today in the USA

When prices start easing, remember that an upswing is on the horizon.

It’s a simple concept and something that all risk professionals need to do. But more importantly, they need to be able to convince those above them with final budgetary authority that, even though the department is saving money on policy costs this year, they can’t count on that being a permanent savings. It most certainly will not last.

As they say, you may be getting coverage on the cheap today, but, soon enough, you’ll be overpaying for it again. For those at the top, this shouldn’t really be a problem. Ultimately, the organization is paying for the long-term peace of mind that the policy provides, so it’s important that leadership understands the cyclical nature of the upfront costs and doesn’t get used to today’s comfy prices.

online pharmacy antabuse with best prices today in the USA

Here’s another recommendation:

Sell your company to the insurance market. Insurance companies compare you with all the other companies in the same industry. Make sure that your insurer is aware of all the things you do that make you a better risk. The things you do in your organization to reduce down time, improve quality and to prevent losses make you a better risk than companies that don’t do these things. Insurance companies want to know that you care more about risk than they do.

I know what you’re thinking: Easier said than done, buddy.

Risk managers have been advocating for the market to recognize differentiation for longer than I’ve been in the industry. They want companies to stop treating them as numerical calculations within some pre-defined risk cluster and start seeing them as an individual company with individual risks. Unfortunately, even the most forward-thinking companies in regards to risk mitigation still rarely see significant premium savings — at least not as much they deserve for taking progressive steps to limit their exposures. There has been plenty of progress, sure. But in this regard, the road ahead is still longer than the path already traveled.

But that doesn’t mean you should stop pushing your loss control programs ahead.

It just means you get to keep complaining about policy costs.

online pharmacy addyi with best prices today in the USA

And, honestly, isn’t that really risk managers’ favorite pastime anyway?

Be sure to head over to The Clear Risk Blog to find five other interesting insights on how to be a better insurance buyer.

video game kid

Buying insurance aint easy, but you’ll be in good shape if you remember the basics. We’re not talking about a truly difficult purchasing decision like choosing which video game you want.

Easter Quake Damage “Will Not Exceed $1B”

Posted on by

As you all know by now, a 7.2 magnitude earthquake struck along the Mexican/California border yesterday, severely damaging some structures in Mexico but causing only minor disruptions — and a big scare — for those in Southern California, despite being the biggest shock to hit the area in two decades. According to risk modeling company EQECAT, most of the economic damage occurred in Mexico (Mexicali, specifically) and overall losses will not exceed $1 billion, with insured losses totaling $300 million.

Reports EQECAT:

Although damage will have occurred in both Mexico and the US, the community of Mexicali is the largest urban area affected by this event, and damage there is expected to be widespread. The largest US city affected by the earthquake is El Centro, California, although significantly less damage is expected there than in Mexicali, due both to lower-intensity ground shaking and less-vulnerable structures.

buy lipitor online rebalancenyc.com/wp-content/uploads/2023/10/jpg/lipitor.html no prescription pharmacy

Structures with greater earthquake resistance may have experienced slight to moderate damage. The intensity of shaking that occurred in El Centro and other US locations is below the threshold typically associated with structural damage.

This earthquake ruptured on the Laguna Salada fault, whose last major earthquake occurred in 1892, to the northwest of yesterday’s rupture.

buy abilify online rebalancenyc.com/wp-content/uploads/2023/10/jpg/abilify.html no prescription pharmacy

Another historic earthquake that affected the region was the 1940 Imperial Valley (US) earthquake (M6.9), which caused strong shaking in the US cities of El Centro and Brawley. Buildings damaged in 1940 will have been repaired or replaced, and highly-vulnerable buildings were not reconstructed in the El Centro region.

However, border cities such as Mexicali had not experienced shaking as severe as from yesterday’s quake for nearly 100 years. Consequently, many buildings in Mexicali will have been at risk to major damage, particularly older commercial and residential structures, and particularly those built of unreinforced masonry.

buy finasteride online rebalancenyc.com/wp-content/uploads/2023/10/jpg/finasteride.html no prescription pharmacy

Unreinforced masonry buildings have consistently demonstrated vulnerability to damage from earthquakes.

Let’s hope any after shocks do minimal harm.

ABC also offers the following video report.