The Insurance Corporation of British Columbia, a Canadian auto insurer, released last week a list of top excuses from local motorists when they were caught using handheld cellphones while driving.

The insurer compiled the information with help from the local police department, which went on a month-long crackdown in September on distracted driving. Police estimate they issued more than 3,500 tickets.

Motorists getting distracted by holding a cellphone in one hand and making or receiving calls while driving is also a common problem in the United States.

Since the first law was passed in New York in 2001 banning handheld cellphone use while driving, there has been debate as to the degree of hazard, according to the New York-based Insurance Information Institute.

A survey conducted by State Farm in November 2010 found that 74 percent reported making or receiving calls at least once a week while driving.

Here are the top 10 excuses the Insurance Corporation of British Columbia compiled of local drivers who were caught using handheld phone devices while driving:

1. This is a bogus law.

2. It was my boss on the phone – I had to answer it.

3. I wasn’t using it – I just like to hold it.

4. Sorry officer, I didn’t see you trying to pull me over because I was on my phone.

5. But it was an emergency call to my wedding planner.

6. My Bluetooth died.

7. Driver: I’m using my speakerphone. Police officer: No, you’re holding your phone in one hand and steering with the other.

8. I’m not driving; I was stopped at a red light.

9. I wasn’t talking, I was checking my messages.

10. I was just checking the time.

Auto insurance claimants who incur a total vehicle loss are notably less satisfied with the claims experience than claimants who incur a repairable vehicle claim, a new study reports.

Satisfaction averages 811 on a 1,000-point scale among claimants with a total loss — 42 points lower than among those whose vehicle is repaired, according to the J.D. Power and Associates 2011 U.S. Auto Claims Satisfaction StudySM released today.

This gap is largely due to a lack of satisfaction with the settlement among total loss claimants, with approximately one-half of these claimants citing the settlement they received wasn’t enough to replace their totaled vehicle with a similar make/model vehicle.

“Auto claims resulting in a total loss tend to be more complex, compared with vehicle repair claims, because in addition to filing a claim, claimants also have to purchase a replacement vehicle,” said Jeremy Bowler, senior director of the insurance practice at J.D. Power and Associates. “Ongoing communication and managing expectations are key throughout the entire claims process, as total loss claims take 18.2 days, on average, for claimants to receive payment, compared with just 12.5 days for the return of a repaired vehicle.”

Making the claimant aware of how quickly they’ll receive the settlement and providing a thorough explanation of how the settlement amount was calculated are crucial to improving the overall experience in those instances of total loss, Bowler said.

The study says that insurers can deliver a satisfying experience by addressing three primary needs throughout the claims process:

• Communication—Insurers must not only be available when claimants have questions, but must also make the effort to clearly explain the claims process, follow up in a timely manner and keep claimants informed throughout the claims process.
• Speed—Insurers must quickly move the claim along from first notice of loss, to the appraisal, to communicating settlement amounts and ultimately paying claimants. Currently, total loss claimants report having to wait an average of four days to receive a settlement offer following damage appraisal.
• Fairness—Claimants want to be treated fairly regarding the settlement and avoid surprises during the process, whether caused by unexpected out-of-pocket expenses or not fully understanding what their policy covers in a claims situation.

The study measures claimant satisfaction with the claims experience for auto physical damage loss. Depending on the complexity of a claim, the claimant may experience some or all of the following factors measured in the study: first notice of loss; service interaction; appraisal; repair process; rental experience; and settlement. Settlement is the most important factor in overall satisfaction among both total loss and repair claimants.

“It’s important for customers to examine the settlement offer and, in particular, verify the vehicle content and condition,” said Bowler. “The majority of customers who disputed their vehicle’s valuation most often cited differences concerning comparable vehicles (56 percent), vehicle condition (53 percent) and aftermarket accessories (18 percent).”

Auto-Owners Insurance ranks highest in overall satisfaction with the claims experience for a fourth consecutive year, achieving a score of 890. Auto-Owners Insurance performs particularly well in all six factors.

State Farm follows in the rankings with a score of 878, improving considerably from 2010.

Amica Mutual ranks third with 865.

New Jersey Manufacturers Insurance Co. and USAA also achieve high levels of customer satisfaction, although they are not included in the rankings due to the closed nature of their respective memberships.

The 2011 U.S. Auto Claims Satisfaction Study is based on more than 11,500 responses from auto insurance customers who filed a claim within the past 12 months. The study excludes claimants whose vehicle only incurred glass/windshield damage or was stolen, or who only filed roadside assistance claims. The study was fielded March through July 2011.

Source: J.D. Power and Associates

Consumers in the United States and Canada have sued Research in Motion for a days-long service outage on BlackBerry devices that rippled across the world earlier this month.

The system-wide failure of the service had left tens of millions of frustrated BlackBerry users on five continents without email, instant messaging and browsing.

Research In Motion’s co-CEOs had apologized to millions of BlackBerry customers for the four-day outage that tarnished the company’s image and set back its drive to catch up with Apple and other smartphone rivals.

The U.S. lawsuit, filed on Wednesday in federal court in Santa Ana, California, was brought on behalf of all U.S. BlackBerry owners with an active service agreement at the time of the email, internet and messaging interruptions.

It accuses Research in Motion of breach of contract, negligence and unjust enrichment.

The Canadian lawsuit, filed on Wednesday in Quebec Superior Court, was brought on behalf of all Canadian BlackBerry owners with an active service agreement.

Research in Motion failed to compensate BlackBerry users with refunds for loss of service and must “take full responsibility for these damages,” it said.

Messages left with Research in Motion seeking comment were not immediately returned.

The U.S. lawsuit was brought by Sherman Oaks, California resident Eric Mitchell. While Mitchell did not sign a service contract directly with Research in Motion, he paid the company fees for BlackBerry device through a mobile carrier Sprint, the complaint said.

He therefore had an “implied contract” with Research in Motion, it said.

Because of the global service outage that began on Oct. 11 and continued until Oct. 14, Mitchell was unable to use emails and other communications “in real-time, without delay, reducing and interfering with his productivity and causing him damage and loss of money,” the lawsuit said.

Mitchell “paid for a service he did not receive,” it said.

U.S. plaintiffs are seeking damages including cash compensation for service fees along with attorneys’ fees and legal expenses.

The U.S. complaint estimates that Research in Motion earns at least $3.4 million per day in service revenue, collected from customers through carrier networks including Sprint and Verizon. “Plaintiff and the Class ultimately paid these fees,” it said.

The size of the potential class of U.S. consumers would include 2.4 million California residents alone, the lawsuit said.

The case is Eric Mitchell, individually and on behalf of all others similarly situated vs. Research In Motion LTD, U.S. District Court, Central District of California, case no. CV11-8872

According to the Insurance Information Institute (III), 9/11 was the largest claims payout in global insurance history. The terror attack produced insured losses of about $32.5 billion; the cost exceeded only by Hurricane Katrina.

9/11-related losses were paid out across several lines of insurance, including property, business interruption, aviation, workers compensation, life and liability.

III ranks 9/11 as the second most costly catastrophe in the United States, the only terror-related incident making the list.

THE TEN MOST COSTLY CATASTROPHES, UNITED STATES (1)

($ millions)

(1) Property coverage only. Does not include flood damage covered by the federally administered National Flood Insurance Program.
(2) Adjusted for inflation through 2010 by ISO using the GDP implicit price deflator.

Source: ISO’s Property Claim Services (PCS) unit.

“The 9/11 attack was the largest payout in the history of insurance until Hurricane Katrina in 2005,” Dr. Hartwig said. “Insurers became the nation’s economic ‘first responders’ and as construction progresses on the site of the former World Trade Center, insurance claims dollars continue to play an essential and highly visible role in rebuilding lower Manhattan while also mitigating the overall economic impact of the 9/11 attack.”

Source: http://www.claimsjournal.com/news/national/2011/09/09/190969.htm

Parts of the southeastern United States were already experiencing dangerous swells and rip tides Thursday as Hurricane Irene exited the Bahamas. On Friday afternoon, ahead of Hurricane Irene’s forecasted arrival in North Carolina tomorrow, high waves and storm surge were beginning to impact the state’s Outer Banks, according to catastrophe modeling firm AIR Worldwide, which is tracking the storm and reported on its possible route and effects late Friday afternoon.

Dr. Tim Doggett, principal scientist at AIR Worldwide, said that the current forecast indicates Irene will likely hit North Carolina’s Outer Banks rather than bypassing them, and go on to make a second landfall on or near Long Island, New York. Virginia, Maryland, Delaware, New Jersey, Connecticut, Massachusetts, Rhode Island and Vermont are all in the vicinity of Irene’s projected path, meaning the major cities of New York, Philadelphia, Washington D.C. and Boston are projected to be affected by tropical storm conditions.

The National Hurricane Center (NHC) projection as of Friday afternoon indicated Irene will make its first landfall along the Outer Banks at around 2 p.m. Saturday, and another landfall somewhere between New Jersey and Cape Cod—with Long Island the most likely landfall location—around 2 p.m. Sunday afternoon. This timing could be good news for the New York / Long Island region as it corresponds with low tide, thus potentially mitigating storm surge levels, according to AIR.

Up to 50 million people from the Carolinas to New England could be affected by Irene.

Airlines began to cancel flights on Thursday, and hundreds of flights are likely to be cancelled through this weekend. Amtrak is cancelling train travel south of Washington, D.C. Operations at some oil refineries situated along the east coast in Virginia, Delaware, Pennsylvania and New Jersey—accounting for seven percent of the nation’s refining capability, according to the Energy Information Administration—are also expected to be shut down.

In North Carolina, roughly 200,000 tourists and local residents in three coastal counties have been ordered to evacuate. Both the governor, Beverly Perdue, and President Barack Obama, have declared states of emergency in North Carolina. States of emergency have also been declared in Maryland, Virginia, Delaware, New Jersey and New York. In parts of Delaware, Maryland and New Jersey, mandatory evacuations have been ordered. The mayor of New York said he could decide as early as Friday night whether to evacuate New Yorkers in low-lying areas, like Coney Island in Brooklyn.

Because Irene may strike the nation’s capital, federal officials postponed the dedication of the Martin Luther King Jr. memorial on the National Mall; it had been scheduled for Sunday. In New York City—which will likely be hit with tropical storm conditions, which include heavy rain and winds of 39 to 73 mph—the mass-transit system could shut down if Hurricane Irene arrives as is currently predicted (on Sunday). According to the Metropolitan Transportation Authority chairman, the safety of riders cannot be guaranteed if sustained winds reach above 39 miles per hour, and thus residents should prepare for interruptions in transit service.

To the north, in New England, the exact impact of the hurricane remains uncertain, though forecasters say to expect a “very significant and potentially damaging event” across the southern part of the region. Some areas are expected to get 5 to 10 inches of rain. Wind gusts could bring down trees, causing widespread extended power outages.

Irene has been downgraded from a major hurricane to Category 2 strength (with 105 mph winds). While some intensification is possible, Irene is not expected to achieve Category 3 status again. However, there is considerable uncertainty in both track and intensity forecasts.

“Irene is expected to weaken after passing North Carolina due to increased wind shear and cooler waters in the higher latitudes,” said. Doggett. “While it may maintain Category 2 strength as it tracks north to New Jersey, it is likely to be a rapidly weakening Category 1 hurricane at its second landfall, on Sunday. Scenarios that keep most of the storm’s footprint over water between North Carolina and New York show a longer period of sustained intensity, as the hurricane feeds off the Atlantic’s heat and moisture.”

Doggett said that in New England, the extent of Irene’s damage footprint is highly dependent on the storm’s track as it approaches this region. “If Irene cuts through Connecticut or Rhode Island, its stronger winds—on the right-hand side of the storm—will impact eastern Massachusetts. Forecast models which take Irene left of the NHC central track are considerably weaker than those to the right, owing to the interaction of the hurricane with land,” he said.

After exiting New England, Irene is expected to accelerate considerably, as is common for storms at this latitude; the storm may reach the Canadian border slightly after midnight Sunday.

Storm surge from Irene will raise water levels by as much as 11 feet along parts of the North Carolina coast and as by much as 8 feet in parts of the Chesapeake Bay. Locations well away from the coasts of North Carolina to New England could receive tropical storm-force winds (39-73 miles per hour) and 5 to 10 inches of rain; because much of this area is already saturated from downpours earlier this year, residents were warned to expect heavy flooding.

As high coastal winds and severe flooding are possible all the way from North Carolina north to New England, the current forecast track for Irene is not good news. A similar and notable hurricane was 1985’s Hurricane Gloria, which affected the New York, New Jersey and the New England states. Gloria struck Cape Hatteras with 105 mph winds, Long Island, New York, with winds of about 90 mph, and the coast of Connecticut with roughly 80 mph winds. AIR estimates that Gloria would produce about $2.5 billion in insured losses if it were to recur today. When Gloria was impacting Long Island, it was a bit smaller than Irene is today. Often, hurricane wind fields will expand as they track through the middle latitudes, so Irene’s footprint could be considerably wider than Gloria’s.

“Again, it should be noted that the long term forecast along northeastern U.S. states is subject to potentially large errors in both track and intensity,” said Doggett. “Furthermore, due to Irene’s proximity to the U.S. coastline, any deviation in its forecast path could change its landfall point and intensity, with significant implications for damage and loss.”

According to AIR, the majority of single-family residential structures along the U.S. east coast are of wood-frame construction. At Category 2 wind speeds, these structures can experience significant damage to the roof, roof covering and wall cladding. Failure of roof structures often occurs because of improper fastening between the roof sheathing and building frame. At Category 2 wind speeds there may also be numerous cases of damage due to downed trees—a possibility exacerbated by soils already saturated from recent heavy rainfall.

Mobile or manufactured homes and light metal structures are much more vulnerable than other construction types; these buildings could experience structural damage, AIR said. Engineered structures such as reinforced concrete and steel buildings should experience less damage compared to wood-frame and masonry structures; they may exhibit isolated instances of nonstructural damage, such as that to windows and roof coverings.

Recent damage data analyses have indicated that building vulnerability can change significantly over time due to changes in building code and code enforcement, changes in material and construction practices, and structural aging. North Carolina has a long history of evolving building codes. AIR said it expects newer structures in the region will perform better than older structures.

Source: http://www.insurancejournal.com/news/national/2011/08/26/212568.htm

Facebook won a round in court Wednesday against a man suing for half ownership of the social network, gaining the company access to the man’s personal email accounts and forcing him to explain why he can’t produce documents the company believes are evidence.

Proof that Paul Ceglia’s case is a fraud has been sitting on a Chicago law firm’s email server since 2004, Facebook attorney Orin Snyder told a federal judge.

An email that Ceglia sent to a former business associate at the firm includes a scanned version of the two-page contract he and Facebook founder Mark Zuckerberg signed, Snyder said. Unlike the one Ceglia filed, it doesn’t mention Facebook, only a street-mapping database Ceglia had hired Zuckerberg to work on, he said.

“The noose is tightening around the neck of this plaintiff and he knows it,” Snyder said during a four-hour motions hearing that had each side accusing the other of dirty tricks.

Snyder said Ceglia had artificially aged his “phony” contract with light and chemicals, backdated computer files and transferred others to portable storage devices, which he’d likely tossed into Lake Erie.

Ceglia’s attorney, Jeffrey Lake, countered that Facebook had tried to “poison the jury pool” by releasing what should have been confidential documents and implied Facebook had planted damning evidence on Ceglia’s computers, a statement he backed away from after the hearing.

In the end, Facebook gained access to Ceglia’s personal email accounts and additional ink sampling from the contract. U.S. Magistrate Judge Leslie Foschio also denied Ceglia’s request for a set of relevant Zuckerberg emails and ordered Ceglia to explain why he cannot produce five portable storage drives that Facebook’s experts believe contain the scanned version of the contract.

Ceglia says he lost them, his attorney said.

“Asking me to produce them will be like asking me to produce a unicorn or a leprechaun,” Lake said.

Ceglia has been waiting out the case in Ireland and wasn’t at the hearing.

The man’s lawsuit claims that when he hired Zuckerberg as a Harvard University freshman to work on the Streetfax business in 2003, he gave him $1,000 in start-up money for his fledgling Facebook idea with the condition he’d own half if it expanded.

Facebook believes that for his lawsuit, Ceglia altered the Streetfax contract to insert references to Facebook.

Experts first found what they believe to be the authentic contract in an email outbox on one of Ceglia’s computers, Snyder said. They’ve since verified it still exists on the Sidley Austin law firm’s server.

“It says, `This is my contract with Mark,”’ Snyder said, calling it “proof positive” the case is a fraud. He signaled he would eventually seek to have the lawsuit thrown out.

Before the hearing, emails bearing Ceglia’s name and sent to several media outlets accused the Palo Alto, California-based Facebook of planting the damning contract on his computer, and Lake raised the possibility at the hearing. After the hearing, Lake said he couldn’t confirm the emails had come from Ceglia. When asked whether he thought Facebook had planted evidence, he said he’d rely on experts before drawing any conclusions.

After Lake’s request to try to settle the case through mediation was shot down by Facebook, Lake said a resolution will likely come down to a battle of experts testifying about which version of the contract is authentic.

He said he intends to seek access to Zuckerberg’s computers, email accounts and the Facebook code as the case proceeds, in part to see whether Zuckerberg used code he wrote for Ceglia’s now-defunct Streetfax business in the creation of Facebook.

Source: http://www.claimsjournal.com/news/east/2011/08/19/189781.htm

The number of workers covered by workers’ compensation dropped by 4.4 percent in 2009, the biggest decrease in two decades.

Also, according to a report by the nonprofit National Academy of Social Insurance, employer costs for benefits fell by 7.6 percent to $73.9 billion in 2009, reflecting the overall decline in employment.

“As one might expect, when the Great Recession hit, employers paid less in workers’ compensation costs because there were fewer workers to cover,” said John F. Burton, Jr., chair of the panel that oversees the report.

Burton said that although the drop in employer costs represents the biggest decrease in the last two decades, benefits increased slightly by 0.4 percent to $58.3 billion, reflecting in part benefits provided in 2009 to workers injured in prior years.

Workers’ Compensation Benefits, Coverage, and Costs 2009

Source: NASI, Workers’ Compensation: Benefits, Coverage and Costs, 2009.

The total benefits paid to injured workers in 2009 increased in 23 states and the District of Columbia while declining in the remaining 27 states, compared to the previous year.

Payments for medical care declined for the first time in a decade by 1.1 percent to $28.9 billion, although they continue to make up roughly half of total workers’ compensation benefits.

Employers paid a total of $73.9 billion nationwide for workers’ compensation with a cost of $1.30 per $100 of payroll, the lowest in the last 30 years.

A total of 4,551 fatal work injuries occurred in 2009, which is a 12.7 percent decrease from the number reported in 2008, and the lowest since 1992.

The report, Workers’ Compensation: Benefits, Coverage and Costs, 2009, provides data on workers’ compensation benefits for the nation, the states, the District of Columbia, and federal programs. The report has been produced annually by the National Academy of Social Insurance since 1998. NASI is based in Washington, D.C.

Key Trends

Key trends identified by the report include:

National Trends

• Workers’ compensation programs in the 50 states, the District of Columbia, and federal programs paid $58.3 billion in benefits in 2009, an increase of 0.4 percent from $58.1 billion in 2008.
• Medical payments decreased by 1.1 percent, to $28.9 billion, in 2009 but cash benefits to injured workers increased by 1.9 percent to $29.4 billion.
• Costs to employers fell by 7.6 percent in 2009 to $73.9 billion. This is the largest percentage decline in employer costs since 1987.
• Workers’ compensation covered an estimated 124.9 million workers in 2009, a decrease of 4.4 percent from the previous year due to the recession, which began in 2007. Aggregate wages of covered workers fell by 4.7 percent in 2009.
• Measured as a percentage of the wages of covered workers, benefits paid to workers increased whereas employer costs fell in 2009. As a share of covered wages, employers’ costs in 2009 were lower than in any year since 1980.

State Trends

• Between 2008 and 2009, the total amount of benefits paid to injured workers declined in 27 jurisdictions while the remaining 24 jurisdictions experienced an increase in benefit payments.
• Among the 51 jurisdictions (including the District of Columbia), on average from 2008 to 2009, medical benefits declined in 27 states and cash benefits increased in 28 states.

Source: http://www.claimsjournal.com/news/national/2011/08/16/189628.htm#

Officials with the California Earthquake Authority said yesterday that their recent $150-million bond issue is just a first step in diversifying their risk so that they can expand earthquake coverage in the state.

“It is just a step and we need to keep at it,” said Glenn Pomeroy, the chief executive officer, of the CEA.

Pomeroy said his major goal with the CEA is to expand the number of homes it covers. Currently, the CEA accounts for 70 percent of residential earthquake policies sold in California, but only 12 percent of households have earthquake insurance.

He would like the CEA to “develop more affordable insurance while remaining sustainable in the event of a big earthquake,” he said.

The CEA recently announced that it will institute a 12 percent rate reduction, starting Jan. 1, 2012.

The bond issue, the sale of which was completed this week, was not large in the scheme of the CEA plan, but it was an important first effort, Pomeroy said.

The issue was the first time the CEA has accessed the capital markets. Prior to this, the CEA went to the traditional, reinsurance markets when it needed to transfer some of its risk. But the CEA knew there was demand. The Japanese issue earthquake bonds, and, in this country, insurers sell bonds to back hurricane insurance.

Actually, the demand in the bond sale outstripped the supply, according to a CEA statement.

“We knew there was appetite out there for earthquake risk in the capital market,” Pomeroy said.

The bonds came from an arrangement CEA entered into with Embarcadero Reinsurance, Ltd, a special purpose, reinsurance vehicle established in Bermuda for this bond sale, and for others with the CEA. The sale of the bonds — three-year catastrophe bonds, paying a floating rate of 6.6 points above one-year U.S. Treasury money-market funds — was led by Deutsche Bank Securities.

The CEA intends to have more, similar bond issues in the future, perhaps every four to six months, said Tim Richinson, chief financial officer of the CEA.

What could really make a difference for the earthquake insurer, however, is a bill currently being considered in the U.S. Congress, the Earthquake Insurance Affordability Act, sponsored by Sen. Diane Feinstein (D-Calif.), Pomeroy said.

The bill would give CEA access to post-event federal loan guarantees it could use following an earthquake. That would allow CEA to issue bonds in the aftermath of an earthquake, which, in turn, would mean CEA would not have to use the reinsurance market so much, saving it money. CEA could pass that savings on to its customers, Pomeroy said.

Presently, CEA has about $9 billion in claims-paying capability, of which about $3 billion comes from reinsurance. But, that reinsurance is expensive. In the 14 years it has been in existence, the CEA has paid about $2.8 billion to reinsurers.

The proposed federal legislation would allow CEA to keep about half of the current $3 billion out of the reinsurance market, Pomeroy said.

That would make a much bigger difference to CEA’s plans to expand than the $150-million bond issues, he added.

“A diverse set of risk-transfer tools, which includes not only reinsurance and catastrophe bonds but also post-earthquake federal loan guarantees, will help us make earthquake insurance more affordable and more widely used,” CEA said in a statement.

Adjusting claims involving damage to fine art and collectibles caused by destructive weather, like floods and wildfires, may seem like a daunting task. Not so, says Heather Becker, CEO of The Conservation Center located in Chicago, Ill. Adjusters can use a decision methodology to make the best possible, most cost-effective decisions when it comes to repairing or replacing art and collectibles.

It’s relatively easy to determine pre-versus post loss issues, according to Becker.

Tools such as a microscope, UV light, infrared, X ray, and forensic analysis can be used to detect condition history and determine a timeline for when the damage occurred.

Much can be detected by microscopic analysis before other, CSI-like, tools come into play.

Becker cites an example of a painting that came in after a hurricane. “It had several tears and holes in the surface, as well as streaking down the front of the painting from the water damage. It was determined by looking at the holes under a microscope, that the fibers of the tear areas were actually old tears, meaning they were dirty, they were covered with a little bit of grime, they were dusty, which means the tears had been there for quite some time,” says Becker.

Though the tears were found to exist pre-loss, the water damage was determined to be related to the hurricane.

Another example involves a light soot claim with a piece that had been in the home of a smoker for several years. “There’s a very noticeable level of nicotine on the surface. And then the soot layer from the fire claim might be sitting lightly on top of that,” says Becker. “And it’s quite easy to detect under a microscope, the difference between the two. Obviously, that nicotine layer is pre loss and the light soot layer is related to the claim.”

In addition to art mediums, high value items can range from vintage cars and wine to emerging collectibles.

According to AXA Art Insurance’s director of claims, Colin Quinn, the process for adjusting a wine loss is similar to adjusting any other type of collectible claim. “The insured is contacted by our adjuster immediately after we have been notified of the claim and all relevant documentation is secured including photographs, purchase receipts and appraisals. We would also conduct an inspection of the climate control system for claims involving wine spoilage,” says Quinn.

The handling procedure for emerging collectibles requires research unless the agreed value of an item is determined at the onset of coverage.

“To avoid discrepancies in valuation the insured may wish to have the collection insured on an agreed value basis. Under this scenario the insured and insurer are in sync with the values at the policy’s inception. If the insured chooses a current market policy there are numerous online auctions and trade publication appraisal services… that can establish values on items as diverse as vintage dolls, model trains, military and sports memorabilia,” Quinn says.

Value in Hiring a Conservator

There are several ways a conservator can assist claim adjusters in evaluating fine art and collectible losses. Becker points out that conservators can do the following:

• Identify pre versus post loss damages;

• Identify condition history;

• Identify previous alterations to a work of art;

• Identify what can be restored;

• Identify inherent vice (Becker defines this as when something is made a certain way, it inherently will have problems that may age the piece faster, because of the way in which it was made);

• Identify living artists’ rights;

• Identify triage options that can minimize claim costs;

• Identify mediums and materials; and

• Identify potentials for betterment;

However, it’s important to note that conservators are not appraisers or authenticators.

“Authenticators authenticate that it’s by a certain artist, and appraisers identify the value of the piece. Conservators should not be involved in either, because it’s considered a conflict of interest. But the one thing a conservator can tell you is, technically identifying the medium of the piece,” Becker says.

The medium refers to the materials used to make the piece. A common issue arises when an owner thinks they know what they have when it may be a reproduction. “It could be a piece that was falsely created and replicated by another artist,” says Becker.

Because of the confusion regarding identification, one of the first things a conservator will do when an item arrives in the laboratory is look at it closely. This examination includes the front, back, sides, and all of the materials. Using a microscope and a black light, they can help determine the medium, materials, and artist’s techniques.

Consider Living Artists’ Rights in Evaluation

A relatively new concern for adjusters when dealing with a work of art concerns living artists. The artist has the right to consent regarding what a conservator suggests to do to their piece.

“So, if a claim happens and a conservator receives a piece, and the artist is still living, theoretically, they should contact the artist or the artist’s foundation and review their suggested approach for consent by the artist, studio, or foundation,” says Becker.

AXA’s director of claims, Colin Quinn, agrees.

“The artist participation in the claims process is encouraged by the Visual Artist Rights Act of 1990 (VARA) which serves to protect the artist work and allows the artist to have his or her name removed from a work he or she created in the event that the work is distorted or otherwise changed, as indicated when the process of doing so would be harmful to the artist’s honor and reputation. Since we work closely with the art community we are respectful of the artists’ rights and endeavor to work with them during the claims process to ensure that the work has been restored to the artists’ original intent,” says Quinn.

Decision Methodology

There are many factors involved in evaluating a fine art and/or collectible claim. As a result, Becker recommends a series of questions to aid in the claim evaluation process. The decision methodology contains several questions:

1. Was the item scheduled? If so, with blanket limits or individual item limits?

2. What value basis was used in the policy – agreed value, fair market value, retail replacement value, actual value? If value needs to be established, proceed with appraisal.

3. Is the piece authentic?

4. Can the piece be repaired? If so, what will repairs cost?

5. Is diminution in value anticipated after repairs? If so, to what percentage?

6. Does the cost of conservation plus diminution in value exceed the value of the piece?

7. If yes, the item should be considered a loss and salvage options can be considered. If no, conservation should be considered a viable option.

8. Secure a condition and treatment proposal from a professional conservator and proceed with treatment.

9. Conduct post-conservation inspection to assess if diminution in value occurred.

10. Receive post-treatment report from the conservator for file documentation.

Triage Savings

With high value art and collectibles, it’s vital to mitigate damage immediately.

When LaSalle Bank suffered a fire, there were 4,000 significant works of photography scattered throughout. Becker and her staff immediately triaged several pieces that were wet and covered with soot and mold. Inside the lab, they opened every single one of the frames, took the photographs out of the framing materials and removed the hinges. The damage was stabilized temporarily until claim decisions were made.

She says minimal expenses were incurred in order to curtail future costs of what would have been much more extreme damages, had the photographs continued to remain inside the frames while further decisions were made.

Another example of using triage as a way to minimize repair costs involves an Early American portrait painting damaged in a hurricane.

“Someone had a piece that was literally floating around in four feet of water for about six hours, and the paint was lifting and flaking considerably by the time the water was removed. We attached what’s called Japanese tissue facing which took less than an hour, and essentially that just stabilizes the paint right where it is,” says Becker. “It’s a temporary stabilization method, and that allowed the adjuster to proceed and go through the proper claim processes. It was determined about three weeks later that it was viable and worthy of treatment and we were approved to proceed.”

She says if the piece had been left as it was, it might have been considered a total loss at a value of almost $28,000.

Becker estimates conservation saves the insurance industry about 80 percent. “If you choose conservation and you’re able to return the piece to pre loss condition, without any diminution in value, there’s going to be a tremendous savings there for the carrier,” Becker says.

Art Education Equals Customer Satisfaction

In addition to the restoration experts, AXA emphasizes a claims staff that has a strong educational background and work experience in art. “This has helped us communicate effectively with our insureds and ensures claims are handled professionally and expeditiously,” says Quinn.

While much of the insurance-related work Becker sees is related to water and fire damage, she admits she’s seen just about everything. “We’ve seen food thrown on art. We’ve seen bullet holes. We’ve seen dogs chewing up precious significant things. We’ve seen children who have taken their crayons and written all over a major work of art.”

Source: http://www.claimsjournal.com/news/national/2011/07/26/188662.htm