By JARED SHELLY, web editor of Risk & Insurance®
Whether it was terrorism risk in the wake of the Boston Marathon bombing, property/casualty risk after Hurricane Sandy, or drones and the new world of aviation, attendees at the Risk & Insurance Management Society's 2013 Annual Conference & Exposition had plenty to talk about.
Drones Cause New Aviation Risk
Aviation risk is sure to go through some changes in the near future, now that unmanned aerial vehicles (more commonly known as drones) are becoming more prevalent. Pilots operating planes and helicopters via remote control reduces the risk of bodily harm from a plane crash. The technology could also be helpful in finding missing persons, or serve as lookouts for police departments.
But drones could increase the chances of an in-air collision with a manned aircraft since drones are often unknown to air traffic control. It could also lead to privacy issues if the public thinks they're being spied-on by the machines, and people should certainly be wary of drones getting into the hands of terrorists.
"It sure would be interesting to talk to a pilot to find out how different it is when you're flying on the ground vs. the situational awareness of being in the cockpit," said Chris Moss, consultant at Charles Taylor Risk Consulting, during a learning session on the aviation industry.
But since it's such an emerging risk, it's anybody's guess as to how regulations will shape up and what insurance coverage will look like.
"The question will be whether regulators will allow it and whether the public will adjust to it," said Moss. "If the public is not going to stand for it, then regulators will not stand for it either."
So far, laws have been mixed -- some permit drones while others outright ban them.
"We may end up with a patchwork quilt of ordinances by state, town and municipality," said Moss. "That will make it hard to fly between the lines."
Meanwhile the federal government is close to permitting drones for public and private use, he said. So expect police departments and private businesses to have their own fleets. The Federal Aviation Administration estimates that there will be 30,000 drones in flight nationwide by 2020.
Assessing Real-Time Climate Risk
The damage done to the property market over the past few years by hurricanes and other perils has certainly weighed on the minds of risk managers. To combat that, AIR Worldwide released Real-Time Climate Risk Analytics, a service that helps companies with large facilities or multiple locations assess the risk of hurricanes.
Imagine running a large amusement park. With so many different types of business (shops, rides, food and beverage stands etc.) the risks are quite varied. The risk of a roller coaster being damaged is much different from the risk of a warehouse being damaged. So AIR and their engineers can identify damage possibilities beforehand, then help assess damage from a storm in real time.
"We're able to help a company make decisions in a 'war gaming' type of atmosphere," said Peter Dailey, vice president and director of atmospheric science at AIR Worldwide in an interview.
Product Liability a Growing Concern
While the push to eat organic foods has made great strides in people's health, it could be leading to higher than normal food recalls, said Clark Schweers, a managing director in the Washington, D.C. office of BDO Consulting in an interview. When you remove pesticides and other chemicals, food can spoil easier which could be a possible cause of increased exposure for food manufacturers.
"The number of recalls and contamination matters are growing quite substantially," said Schweers. "Companies involved in food, beverage and consumer products are looking hard at it."
While the number of recalls are up, the severity is down. Companies have become much more robust in terms of health-and-safety programs so they're catching a lot of these contaminations in their own testing. They are also becoming good at isolating contaminated batches of product.
"There may be might lot more recalls but the amount of product is much smaller," he said.
On the insurance side, however, limits are increasing, premiums are on the decline because so many companies are purchasing it, and coverages are broadening.
"It's a win, win, win for companies right now."
Around the Expo Hall
Walking through the expo hall, visitors to RIMS had plenty to catch their attention. If they were in a sporting mood, they could've hit a golf ball into a virtual reality golf course at two different booths. Liberty Mutual clocked the speed of conference goers' volleyball serves (winners were around 55-60 mph each day). They also had Olympic beach volleyball gold medalist Misty May-Treanor on hand for photos and autographs.
The state of Vermont treated its visitors to an array of decadent ice cream flavors while plenty of booths like Reed Smith and Lloyd's of London offered gourmet coffee, espresso and cappuccino.
For the builder in you, Starr Companies had an expert building a large, intricate structure out of nothing but business cards. Meanwhile Belfor Property Restoration offered a large, detailed sandcastle. If you're into celebrity sightings -- it is Los Angeles after all -- you could have visited Riskonnect which had particularly striking Joan Rivers and Oprah Winfrey impersonators.
Lloyd's of London won Best in Show in the large category; Progressive Medical won the medium category; and Modern Medical took top honors in the small category.
May 1, 2013
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