Accidents involving cell phones & similar devices

       Love them or hate them, cell phones & other messaging devices, such as the BlackBerry, are a fact of life. Unfortunately, they are also a fact of driving. According to the phone industry’s own figures, there are more than 150 million cell phones in use, with 85% of users saying they use the phone while driving. These are disturbing numbers & the amount of time each user is on the phone, including while driving, is rising dramatically. & text messaging devices have recently added greatly to the amount of time people spend being electronically distracted while driving.

      Talking on the phone while driving increases the risk of an accident significantly. A number of studies have now shown beyond any doubt that a phone conversation is a major distraction. In a landmark study, University of Toronto researchers found that using a phone while driving quadruples the risk of an accident & using a speaker or headset instead of your hands makes no difference in the risk. This is the same risk factor as driving while intoxicated. Another experiment by the University of Utah showed that cell phone use reduces reaction time even more than a legally prohibited blood alcohol level. The University of Toronto findings were confirmed by the insurance institute for highway safety, which published its report of cell phones use accidents in the British medical journal in July 2005.

      The explanation for the heightened risk is that there’s dramatic drop in your concentration while you are talking on the phone. When a person performs two tasks at once, the brain has a reduced ability to perform either one. The national transportation safety board has found that a distracted driver responds up to 1.5 seconds more slowly to a road hazard than a focused driver & that’s an eternity behind the wheel.

     A 2008 study by Carnegie Mellon University scientists emphasized that the act of listening itself even without dialing, holding a phone, or even talking is a major culprit, the study showed that merely listening to someone talk to you while you drive reduces by 37% the amount your brain can devote to driving tasks.

A landmark 2006 study by the national highway traffic safety administration & the Virginia tech transportation institute revealed that nearly 80% of all traffic accidents involve some form of driver inattention, with cell phones & text message devices the most rapidly increasing form of distraction.

     If you have had a traffic accident with someone who was on the phone or texting, you have a powerful argument that using the device, by itself, means that the other person was at fault. You can make the other driver’s phone or text use a central part of your demand for compensation. If the accident occurred in a state, country, or city where phone use or texting is illegal, your argument is even stronger.

      Some insurance adjusters reply to arguments that cell phone use is unsafe by citing a University of North Carolina study sponsored by the American Automobile Association. This study looked at 1995-1998 accident reports in North Carolina. It found that of drivers who admitted that some distraction contributed to their accidents, only 1.5% named cell phones use. The cell phone industry claims this shows phone use is not a significant driving danger. In fact, it does no such thing. The study includes no date about the number of cell phones in North Carolina in the mid 1990s. As relatively poor & rural state, & in years before cell phone use hit its stride, it is likely that cell phone use in North Carolina was not that widespread. The small number of cell phones involved makes the study scientifically meaningless it is like saying that the low number of alcohol related accidents in Saudi Arabia (where alcohol is prohibited) proves that driving while intoxicated is not dangerous.

      Of course, making an argument about the dangers of cell phones use or texting depends on being able to show that the other driver really was using the phone or other device. The police report might so indicate. Or a witness in your vehicle, in another vehicle, or on the street may say so. Even if you have no support, but you truly did see the other driver on the phone or texting, you should raise the point in your demand for compensation. You may find that the other driver does not deny being on the phone or texting, particularly if you remind the insurance adjuster that if the matter goes to court, you will be permitted to see the other driver’s cell phone records for the accident day.

Risk Management

In Order that everybody speaks a common language and to avoid misunderstandings with the aim to anchor adequate governance within the company it is necessary to define some roles and functions as follows.

1. Risk owner     : Executive committee, through setting limits and appetite for risks and approving risk policies & governance, owns the risks, through the delegation of authority and responsibility for these risks through the company’s management processes.

2. Risk taker/Line Management : The business functions (product/operation/distribution) through writing business and implementing the risk policies and governance framework as well as management controls, take risks. In addition, corporate functions take risks, e.g. Finance through its balance sheet and control management activities.

3. Risk controlling & reporting  : The risk specialist functions, through identification of emerging issues, creation of risk policies, and review of the business function, provision of management information and consolidated risk committee/executive committee reporting, perform core controls in the risk management process. The chief risk officer, through periodical review of any part of the risk assurance matrix as he deems appropriate, performs additional controls.

4. Independent assurance   : Internal audit, through their audits of process and policy compliance by both business functions and risk specialist, provide independent (from management / risk committee) assurance that framework is compiled with.

5. Risk policy    : The risk policies are governance documents with the aim to ensure that an adequate risk frameworks is in place for a certain type of risk. These documents are prepared by the risk management function (second line of defense) and they are adopted by the risk owners. Risk policies are published by the chief risk officer. The company sets the risk appetite for the business. For most of the policies the implementation is the responsibility of the line management.

6. Policy owner   : The policy owner is the manager within the first line of defense who is responsible for the corresponding policy in the business.

About Insuarance

       Life Insurance is the key to good financial planning. On one hand, it safeguards your money and on the other, ensures its growth, thus providing you with complete financial well being. Life Insurance can be termed as an agreement between the policy owner and the insurer, where the insurer for a consideration agrees to pay a sum of money upon the occurrence of the insured individual’s or individual’s death or other event, such as terminal illness, critical illness or maturity of the policy.

       Life insurance plans, unlike mutual funds, are beneficial when you look at them as a long term avenue of investment which also offers protection through life cover. Life insurance policies are broadly categorized into 2 types, Traditional plans and Unit Linked insurance plans.

      Traditional policies offer in-built guarantees and define maturity value. The investments risk in traditional life insurance policies is borne by life extent by IRDA rules and regulations, ensuring stable returns with minimal risk Investment income is distributed amongst the policy holders through annual bonus. These policies are ideal for policy holders who are not market savvy and do not wish to take investment risks.

     ULIPs, on the other hand provide a combination of risk cover and investment. More importantly they offer a flexibility to decide your risk taking profile.

Insurance Liabilities

            In this it is not possible to describe & value all possible insurance liabilities & hence we should to focus on the most important life insurance liabilities. We can distinguish between insurance liabilities where the policyholder assumes all risk & consequently invest in funds. Here the value is normally quite clear & so we can focus on life insurance forms with investment guarantees. In this case the majority of the investment risk is born by the insurance company. From a conceptual point of view life insurance cover behaves very similar to a bond. In principle one agrees some payments, which have to be weighted with the corresponding probabilities. In the following we want to introduce the corresponding concepts.

            Insurance liabilities can be valued according to a book value or a market value principle. In the first case future cash flows are discounted using discount rates based on the technical interest rate i. in Europe this rate is determined in as prudent way & should according to the 3^rd life insurance directive normally not exceeding 60% of the yield of governance bonds. So if we assume that governance bonds in EUR yields 4%, the maximal technical interest rate would be 2.4%. In reality the rule is interpreted in a somewhat more ingenious way & one looks for example at rolling averages of yield of government bonds. Based on the technical interest rate a payment of 1 due in one year is discounted with v = 1/1+i. So here the value approach yields to higher liabilities representing a prudent valuation approach.

            In this section we will also focus on the market valuation on a best estimate basis. This is the first step to determine the market value of an insurance liability. We assume however that the insurance cash flows are certain. Since there is in reality a risk involved, it will be necessary to revisit the concept of market values for liabilities later. We will see their how risk enters in the valuation & how we can use this knowledge for risk adjusted performance metrics.