Jones Act Waiver Granted for Puerto Rico

A request to temporarily waive the Jones Act for Puerto Rico that was denied on Monday has been approved. President Donald Trump waived shipping restrictions on Thursday to help speed up fuel and supply deliveries to Puerto Rico, devastated by Hurricane Maria, the White House said.
Maria wiped out power on the island and destroyed infrastructure and cell towers, leading to massive shortages. Even though a waiver had been granted to Texas and Florida after Hurricanes Harvey and Irma, the Department of Homeland Security initially said there was no need to waive the restriction for Puerto Rico, as it would not address the issue of the island’s damaged ports.

The Jones Act, or the Merchant Marine Act of 1920, was initiated almost 100 years ago to keep foreign-flagged vessels from shipping fuel and goods between U.S. ports. The last previous waiver was in December 2012 to allow petroleum products to be delivered for relief assistance after Hurricane Sandy.

Sen. John McCain, R-Ariz., disagreed with the initial decision to deny suspension of the act for Puerto Rico. He wrote to the Department of Homeland Security urging it to allow a waiver and ultimately “a full repeal of this archaic and burdensome act.” Without the waiver, McCain said residents of Puerto Rico would end up paying at least twice as much for food, drinking water and other supplies.

Supporters of the Jones Act, including ship builders, have maintained that it supports American jobs, including jobs in Puerto Rico and keeps shipping routes reliable, according to Reuters. They also contend that the issue in Puerto Rico is distributing shipments across the island once they are delivered.

The temporary waiver was not a surprise, as Puerto Rico Gov. Ricardo Rossello said on Wednesday that he expected the federal government to suspend the Jones Act. He said he had been speaking with members of Congress from both parties who supported an emergency waiver.

RIMS Membership Has a Say in COSO’s New ERM Framework

When Risk & Insurance Management Society (RIMS) members use the new ERM framework published Sept. 6 by the Committee of Sponsoring Organizations of theTreadway Commission (COSO), they may recognize their own ideas prominently displayed. Carol Fox, RIMS vice president of strategic initiatives announced the call for public comment on Risk Management Monitor in June 2016. She said feedback from the industry, and particularly RIMS members, is reflected in COSO’s ERM Framework: Integrating with Strategy and Performance.

“RIMS members took advantage of the unique opportunity to influence one of the industry’s major guidance documents. For several weeks, members collaborated and drafted a response, which was publicly available through the end of last year,” said Fox, who participated on the project’s advisory council. “We were very appreciative that COSO reached out to RIMS and other professional associations, whose input strengthened the content, ideas and approaches featured in Integrating with Strategy and Performance.

A summary of the public comment feedback includes:

  • More than 200 responses–double that of the internal control update
  • Over 70% of responses from individuals
  • Over 50% of participation outside of North America
  • Almost 50% had affiliations beyond COSO memberships
  • Almost 50% of respondents had 10 or more years of risk management experience
  • Positive ratings outnumbered negative ratings by 4.5 to 1

The new publication serves as an update to 2004’s Enterprise Risk Management – Integrated Framework, which is internationally regarded as the standard for applied risk management frameworks. Developed by PwC under the direction of the COSO Board, its simple, five-component structure considers various viewpoints and operating structures while highlighting the importance of enterprise risk management in strategic planning. It also emphasizes embedding ERM throughout an organization, as risk influences strategy and performance throughout the organization.

“The complexity of risk has changed, new risks have emerged, and both boards and executives have enhanced their awareness and oversight of enterprise risk management while asking for improved risk reporting,” said COSO Chair Robert B. Hirth Jr. “Our overall goal is to continue to encourage a risk-conscious culture.”

Enterprise Risk Management: Integrating with Strategy and Performance is available in printed form, e-book, on-line subscription and pdf licensing for large organizations, accounting and consulting firms. Additionally, COSO is planning for the framework to be translated into several languages, including Chinese, Japanese, Spanish and French.

Visit www.coso.org for purchase information and for a link to the framework’s executive summary.

Telemetry Data: What Information Works Best?

Direct measurement of driving behavior, the heart of usage-based insurance (UBI), is the best way to match risk to premium. Insurers offer insurance discounts to safe drivers via UBI in order to acquire and retain the best risks. As a result, safer driving is promoted among these customers, which can amount to savings for organizations insuring drivers.

UBI is among the first attempts by insurers to adopt state-of-the-art technology for the underwriting process. Insurance companies and other service providers have struggled with some essential questions including those about the kind, resolution, frequency, and duration of data to collect, as well as what sensors to use. Indeed, many companies underwent independent efforts to establish data collection methodologies, generally resulting in a lack of any industry standard data “dictionary” or shared methodology for UBI. Still, it is possible to identify common approaches to collecting UBI data and how they are likely to evolve in the future.

Since the initial trials of UBI, the three cost factors—hardware, data, and analytics—have been the primary considerations as to how and what data elements each company collects. And even though prices of all three generally continue to decrease, the typical cost of setting up a full UBI program with filed predictive models remains significant. In the absence of industry-wide standards, it can be difficult to outline the breadth of the types of data collected. Even so, the following list covers most of the UBI data types found in the auto insurance market:

Verified mileage: This most basic mean of UBI is based on the well-validated assumption that more driving means more exposure to risk. Still, the advantage of verified mileage over declared mileage alone usually doesn’t justify a UBI operation for many companies.

Trip timing: A small advancement over verified mileage is trip timing. This goes beyond the pure mileage factor to estimate risk by studying when a driver is on the road, on the premise that some time slots tend to be riskier than others (Friday night, for example, with associated risk characteristics such as fatigue or drunk driving).

Driving events: Basic, yet powerful, behavioral aspects of driving are measured through collection of driving event data, mostly braking, accelerating, and turning. Sometimes absolute speeding events (exceeding 80 mph) and relative speeding events over the posted speed limit are recorded. Note, however, that onboard telematics units have relatively limited accuracy in collecting such data.

Full data log: As dongles came to market, they introduced improved collection capabilities, such as advanced GPS modules, CPU, accelerometers, OBDII, and large storage. With the falling cost of mobile data, companies started collecting full data logs and compressed them on dongles. Full data logs may provide endless analytics opportunities.

Smartphone data: The first technology to break the cost paradigm centering on device, data, and analytics is that operating from smartphones. Smartphones are also smart telematics devices owned by many, offering great collection and storage capabilities and data transfer at practically no additional cost. Unfortunately, smartphone data introduces many analytic challenges, including not knowing whether an insured is a driver or a passenger, whether the phone is turned off, and whether a driver operates an insured car.

What should we expect in the future? Against the background of rapidly changing technology and growing analytic complexity, future UBI is likely to rely on some of the following data elements:

Mobile data: As mobile apps become more sophisticated and reliable and as phone sensors become more accurate, more insurers are likely to use data obtained from mobile apps as a low-cost solution.

OEM data: Connected cars are growing in number (Gartner forecasts that by 2020, some 250 million cars will be connected). Data sets collected by connected cars aren’t as rich as those collected by dongles and provide more basic attributes (such as verified mileage, trip timing, and driving events). Nevertheless, they allow insurers to consume data more easily through data exchanges, where original equipment manufacturers (OEMs) take responsibility for the data collection process. Clearly, OEM capabilities will probably become even more advanced as manufacturers see more value from their investment.
Distribution of projected connected cars (source Business Insider)

Advanced Driver Assistance Systems (ADAS) data: ADAS can provide driving alerts and override driver inputs in certain situations. To date, these devices haven’t become part of the UBI ecosystem but can potentially contribute tremendous value to analytics for driving behavior and may play a significant role in the future.

A final question about autonomous cars: Will they render UBI obsolete? Probably not, and for two reasons. First, penetration of autonomous cars and shared vehicles may well be slow and gradual. Second, many events currently measured by UBI will probably remain important when autonomous driving is used (for example, time and destination of journeys). UBI is likely here to stay.

Lessons from Distracted Driving Awareness Month

June is Distracted Driving Awareness Month, and while it is quickly drawing to a close, the message remains: Distracted driving is escalating, with 25% more vehicle accidents resulting from drivers talking or texting on cellphones. More cars on the road, especially during summer months, also translates to more accidents.

Organizations with fleets should take note as motor vehicle crashes are the number-one cause of work-related deaths, accounting for 24% of all fatal occupational injuries, according to the National Safety Council (NSC). On-the-job crashes are also costly, with employers sustaining costs of more than $24,500 per property damage crash and $150,000 per injury crash.

Zurich sums up NSC statistics:
Employers can and are being held liable for damages resulting from employee accidents. “We might expect an employer to be held liable for a crash involving a commercial driver’s license holder who was talking on a cell phone with dispatch about a work-related run at the time of an incident—especially if the employer had processes or a workplace culture that made drivers feel compelled to use cell phones while driving,” the NSC said.

The lines believed to exist between employment-related and personal or private life get blurred in some cases involving:

  • Cell phones owned by employees as well as employer-provided equipment
  • Vehicles that were employee-owned as well as employer-owned or leased
  • Situations where employees were driving during non-working hours or were engaged in personal phone calls

To protect themselves and their employees, the NSC recommended that organizations implement and enforce a total ban policy.

“The best practice is to prohibit all employees from using any cell phone device while driving in any vehicle during work hours or for work-related purposes. Regarding off-the-job hours, precedent has been set by lawsuits. Thus employers may want to extend their policies to cover off-the-job use of company-provided wireless devices, use of personally-owned devices that are reimbursed by the company, and use of devices in company-provided vehicles. All work-related cell phone use while driving should be banned 24/7,” the NSA advised.

Companies should also pay attention to other common distractions that can lead to accidents, Zurich adds: