Business Briefs

• A new California law has pushed the state's Department of Insurance into the 21st century. Gov. Arnold Schwarzenegger recently signed a bill that will put the insurance regulator on a path to a paperless future. The old law required that much of the department's business be done on paper and even required that some forms be filed "in triplicate." Some of the laws hadn't been updated since the 1930s, long before the invention of the computer and the Internet. Besides being more modern and efficient, the law promises to help the state be more environmentally friendly and more open to the public. Insurance Commissioner Steve Poizner said the law will make information more readily available on the Internet.
• Apparently, being a brunette is so bad that it can cause anxiety and require anti-depression medication. But it isn't enough to win a lawsuit. According to a report in the Connecticut Post, a blond woman sued a cosmetics company claiming that the hair dye she bought was mislabeled and changed her beautiful blond locks to a depressing brown. “I was mentally and physically in shock,” the Post reported that the woman stated in court documents. “I was sick to my stomach, I had headaches, I don't like myself, I stay home more than ever in my life, I wear hats most of the time.” Luckily for the cosmetics company, the Superior Court judge dismissed the lawsuit, saying the woman had presented no proof of her allegations.

Jump in litigation predicted

If a credit crisis that was putting the health of the U.S. economy in great jeopardy wasn’t bad enough, now there are indications that the economic slump is likely to produce an uptick in the number of lawsuits that companies will be forced to defend.

The Fulbright & Jaworski law firm recently released its annual survey on litigation trends among 251 selected companies in the United States and a little more than 100 in Europe. The good news is that 2007-2008 saw a drop in litigation, with more companies reporting no lawsuits in the previous year and a notable decline in the number of companies reporting lawsuits for more than $20 million. But that is where the good news ends.

The survey also found that more than a third of companies expected to see more litigation in the following year, a significant change from last year when less than a fourth predicted an increase.

“This year’s survey appears to mark an inflection point for American business, between the end of a prolonged period of prosperity and the start of a period of economic challenge that is likely to fuel litigation over who is to blame and who should pay for the consequences,” said Stephen C. Dillard, who chairs Fulbright's global litigation practice. “Given that we were polling in-house counsel on the cusp of that transition, it’s no wonder that this year’s findings highlight both the evident calm before the storm, as well as the sense that disputes are on the rise.”

And the bad news isn’t confined to the financial industry. There also were worries about types of cases that can affect nearly all business. Nearly a third of companies reported a jump in multi-plaintiff suits stemming from wage-and-hour claims by employees in the past year, with 29 percent noting an increase in discrimination cases. Companies also cited a noticeable rise in privacy lawsuits. This year’s survey found that the three most common types of lawsuits that companies have to deal with are employment, contracts, and to a lesser degree, personal injury.

The survey serves as a reminder that companies should occasionally re-evaluate their risk of liability and their level of liability coverage. The amount of coverage your business needs will vary greatly by size and industry. Small businesses run the risk of having one potentially expensive lawsuit wipe them out. Talk to your insurance representative if you have any questions about your coverage.

A deer danger

They might seem cute and harmless, but doe-eyed deer kill scores of people every year and cause hundreds of millions of dollars in damage.

According to the Insurance Institute for Highway Safety, there are about 1.5 million deer-vehicle collisions every year in the United States. Those accidents kill more than 150 people and cause $1.1 billion in damage.

State Farm, which does an annual survey on deer-vehicle accidents, says the number of these collisions has increased 14.9 percent in the last 5 years.

Where you live has a lot to do with the danger of hitting a deer. State Farm’s latest survey shows that for the second year in a row West Virginia led the nation in deer-vehicle accidents. Using its data from the last half of 2007 and the first half of 2008 and motor vehicle registration counts by state from the Federal Highway Administration, State Farm estimated the chances of a West Virginia vehicle colliding with a deer over the next 12 months at 1 in 45. State Farm pointed out in a press release that West Virginia drivers are more likely to hit a deer than to be audited by the Internal Revenue Service.

After West Virginia, Michigan was the second-worst state for deer collisions. The likelihood of a specific vehicle striking a deer there next year is 1 in 78. Pennsylvania (1 in 97), Iowa (1 in 105) and Arkansas (1 in 108) were third, fourth and fifth respectively. Not surprisingly, Hawaii had the lowest deer-vehicle accident rate.

The average property damage in these incidents was just over $2,950, up 2.5 percent from a year ago, according to State Farm.

This is the worst time of the year for deer-vehicle accidents. Late fall is the deer migration season and the most likely time for them to wander into traffic, according to the Insurance Information Institute.

“As our wildlife habitat continues to shrink, accidents with deer and other animals are likely to increase. We need to be more vigilant in our driving,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I.

Deer aren't just confined to rural areas. The I.I.I. says that many deer-vehicle accidents happen on busy highways near large cities.

The I.I.I. offers some tips to avoid hitting a deer:

• Remember that deer often move in groups. If you see one, there's a good chance there are others that you don't see.
• Drive with caution when moving through deer-crossing zones, in areas known to have a large deer population and in areas where roads divide agricultural fields from forestland.
• When driving at night, use high beam headlights when there is no oncoming traffic. The high beams will better illuminate the eyes of deer on or near the roadway.
• Be especially attentive from sunset to midnight and during the hours shortly before or after sunrise. These are the highest risk times for deer-vehicle collisions.
• Brake firmly when you notice a deer in or near your path, but stay in your lane. Many crashes occur when drivers swerve to avoid a deer and hit another vehicle or lose control of their cars.

Commercial vehicle mandates possible

Fatigue is a big problem on America's roads. A 2002 report from the National Highway Traffic and Safety Administration estimated that 1.35 million drivers were involved in a drowsy driving related crash in the previous five years. That danger and a crash in 2005 that killed five people has led the National Transportation Safety Board to recommend to the Federal Motor Carrier Safety Administration that it determine whether commercial vehicles should be required to have equipment that would help prevent crashes when drivers are too tired to be on the road.

Some of the technology pushed by the NTSB are collision warning systems with active braking, electronic stability control systems, adaptive cruise control and additional tools to help drivers remain in control of their vehicles.

The tipping point on this issue came from an accident in October 2005. A truck-tractor semitrailer on a highway near Osseo, Wisconsin, overturned at about 2 a.m. after the driver apparently dozed off. The truck blocked both lanes. About a minute later a chartered bus carrying members of a high school band slammed into the overturned truck, killing the bus driver and four passengers. The board determined that the driver of the truck didn’t use his down time to get enough rest and fell asleep at the wheel.

“In this tragic accident, we can clearly see how the advanced vehicle safety technologies, some of which are already fully developed and in use, could have made a big difference here,” said NTSB Acting Chairman Mark V. Rosenker.

The plan to equip vehicles with this technology is in the early stages. The NTSB has asked the Federal Motor Carrier Safety Administration to study the problem and only mandate the use of these systems after developing performance standards for them. But with gas prices rising, any new mandates could be a burden on some trucking companies.

“Human fatigue has been a persistent factor in far too many transportation accidents. And if anything, the problem is growing not shrinking,” Rosenker said. “More needs to be done to reverse the trend so fewer of these tragic accidents come before the safety board.”

Flood reform on hold

Reform of the National Flood Insurance Program will have to wait until next year. With more pressing economic issues, Congress passed a short-term extension of the federal insurance program but didn’t address the calls for reform that have been percolating for several years.

The extension will provide funding for the program and keep millions of Americans from being left without insurance. But it puts off decisions on several controversial issues. Those include the idea of covering wind damage, something that is now excluded, and fixing financial problems that have put the program $18 billion in debt.

The idea of adding wind coverage is controversial and was easily rejected by the Senate but passed in the House. Critics worry that adding wind coverage would expose the government to billions in losses in the event of major hurricane. Other reforms are less controversial. They include bringing premiums and claims up to a level that would make the program self sufficient. Another idea is to create a panel of experts to advise the program on technical areas like risk mitigation and climate change.

Florida reform paying off

The move to reform Florida's workers' compensation system continues to pay dividends for employers in that state.

Florida Insurance Commissioner Kevin McCarty recently announced that the state would lower workers' compensation rates by 18.6 percent, 4.5 percentage points more than was recommended by the National Council on Compensation Insurance. The Florida Office of Insurance Regulation said it was the largest one-year drop ever.

“The 2003 reforms in Florida’s workers’ compensation laws are continuing to play a significant role in these rate reductions,” McCarty said. “In addition, positive trends in utilization and costs have helped make reductions possible.”

Before the reforms were first put in place, Florida was consistently among the states with the highest workers' compensation rates. But since 2003, it has dropped out of the top 10 in the state rankings, the Office of Insurance Regulation said.

The reforms included better fraud compliance and revised definitions of disability. It also changed the way lawyers and doctors were compensated. The Florida reforms are similar to those instituted in California, which also has seen a drop in workers' compensation rates.

Totaling Ike's damage

If there was any doubt that Hurricane Ike was a storm of historic proportions, the initial estimates of losses coming out of the Gulf Coast put those doubts to rest. So far the damage from the storm that devastated Galveston, Texas, and much of the surrounding area has been pegged at anything from $8 billion to more than $11 billion.

Mark Hanna, a spokesman for the Insurance Council of Texas, told The Associated Press that insured losses would be at least $10 billion, making Ike the most costly hurricane in Texas history. The Insurance Information Institute’s estimate was similar. The I.I.I. says the category 2 storm could easily be the fourth most expensive in United States history. The only storms more expensive were Wilma in 2005, Andrew in 1992 and Katrina in 2005. But with all this damage it’s important to remember the human toll. At least 37 people also were killed by Ike.