When it comes to emerging risks, nowhere are they more apparent than in the insurance industry. From cyber liability to product recalls to Ebola, the list of risks insurers must anticipate for their clients is long and varied, and continues to grow.
A new issue insurers will be grappling with encompasses losses involving illegal or medical marijuana. Possessing, using or growing marijuana is illegal under federal law, but many states are passing laws that conflict with that statute. And while the generally accepted rationale for denying claims is whether or not the loss is illegal under federal law, state statutes are challenging that premise.
As a growing number of marijuana initiatives appear on state ballots, this provides a complex coverage dilemma for insurers. More drivers under the influence of drugs are getting behind the wheel of a car, increasing the risk of accidents for all. A recent survey by the National Highway Traffic Safety Administration found that the number of weekend nighttime drivers under the influence of drugs has increased to 20 percent since 2007. The survey also found that drivers under the influence of marijuana are more like to be involved in accidents.
Then there is the question of coverage for losses involving legal and illegal grow operations. Is an insurer liable if a homeowner is allowed to grow marijuana for medicinal purposes and suffers a fire as a result? What if there is a robbery and several plants are stolen? How will the insurers determine the value of the plants and their potential crop yield? Is there coverage since the federal government says growing marijuana is illegal, but the state says it is allowed under specific circumstances? (Hint: While the Constitution says that federal law trumps state law, the federal government seems to be turning a blind eye to the conflict.) Our cover story examines these issues and more.
Another issue that has required creative risk management strategies involves cybercrime. As hackers become even more sophisticated, it is not a matter of if an insurer or its clients will be breached, but when. Having proper insurance coverage, assembling an incident response team, providing employee training and creating proper procedures are just some of the risk management strategies companies should be employing. We tackle this topic from several perspectives.
You can find out more about the emerging risks insurers face and how to manage them at the America's Claims Event (ACE) this June 17-19 at the Hilton Austin in Austin, Texas. More information is available at americasclaimsevent.com. I hope you'll make it a priority to attend because you really can't afford to miss it.
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