Expert Witness Blog

In Discussion of Insurance Capital as a Shared Asset, actuarial expert witness Robert Bear discusses what he describes as Donald Mango’s ground breaking work Insurance Capital as a Shared Asset:

Actuaries frequently allocate capital to line of business or individual risk in an effort to calculate risk loads or evaluate profitability by calculating a risk adjusted return in the form of a return on equity (ROE) metric. Concerns have been expressed about ROE methods, especially the fact that the value inherent in the unallocated surplus is ignored (the entire surplus supports each and every risk). In 2005 ASTIN Donald Mango’s paper on “Insurance Capital as a Shared Asset” has introduced a method that eliminates the need for allocation of capital which he believes is more grounded in insurer realities.

Donald Mango treats insurance capital as a shared asset, with the insurance contracts having simultaneous rights to access potentially all of that shared capital. Shared assets can be scarce and essential public entities (e.g., reservoirs, fisheries, national forests), or desirable private entities (e.g., hotels, golf courses, beach houses). The access to and use of the assets is controlled and regulated by their owners; this control and regulation is essential to preserve the asset for future use. The aggregation risk is a common characteristic of shared asset usage, since shared assets typically have more members who could potentially use the asset than the asset can safely bear.

In What the Defendant Can Do Wrong,

security management expert witness Ira Somerson, BCFE, CPP, CSC, writes that “failing to preface your security plan with a risk assessment would violate standard security industry practices. If your risk assessment lacks sufficient qualitative (unscientific) or quantitative (scientific) analysis, it probably will be below a standard security industry practice.”

Risk Assessment is the art and science of identifying security vulnerabilities, measuring the likelihood that each vulnerability will occur (foreseeability), the opportunity for each to occur, measuring each event’s impact upon the organization’s assets (criticality) and prioritizing each identified vulnerability in comparison to all others (queuing).

Insurance fraud expert witness Barry Zalma shares this from Reports of Convictions From the Coalition Against Insurance Fraud:

The sisters should’ve at least coordinated their stories before making their insurance claims.

Jackeline Morales and Gloria Perez claimed they crashed into each other at Interstate 495 South, in Haverhill, Mass. But neither remembered the color of the other’s car, prosecutors say. Nor could they remember if the crash happened while they were getting onto or off the highway, or other details.

In Site Security Planning and Design Criteria, security expert witness Randall Atlas Ph.D., AIA and Anthony DiGreggario of Atlas Safety & Security Design, Inc. write on security layering: the Onion Philosophy (part 2):

New developments in blast curtains, window films, and break resistant and bullet resistant glazing provide the designer with more choices for protection. Yet, a building that is resistant from an exterior bomb blast may be in conflict with the threat of an interior bomb blast and having no ability for decompression or blast out walls. Inside the building, zones or layers of security may be established with various types of access control devices reinforcing physical separations. Protected work stations are critical in many occupations, and safe rooms for CEO protection. Building design should also contribute to or ease implementation of operational security policies and procedures.

The site perimeter is the first, not last, line of defense. The State Department seeks setbacks of at least 100 feet for new buildings, and even that distance is difficult to obtain in most urban settings. While most perimeter fences and walls are designed to discourage intruders, they are of little use against a determined person or bomb vehicle. Designs are now available for vehicle-stopping capabilities. However, the bomb of the future may be delivered by a moped or pedestrian, thus rendering truck bombs unnecessary.

Auto insurance expert witnesses will be testifying in New Mexico cases that cover multiple insurance fraud schemes. The NM Senate passed a bill that would increase insurance fraud penalties by empowering courts to combine the insurance money stolen by multiple schemes into one larger dollar amount and longer sentences. ClaimsJournal.com reports:

State Sen. Carroll Leavell sponsored SB 117, which passed Feb. 17, 2009. A staged-accident ring, for example, might bilk several auto insurers out of hundreds of thousands of dollars with dozens or more fake injury claims. Combining these claims into one larger dollar sum for sentencing purposes can greatly magnify the final penalty, according to the Coalition Against Insurance Fraud. Several states permit courts to aggregate stolen insurance money when sentencing swindlers. Some laws fall under the state’s insurance codes, and others under their general criminal code.

In Site Security Planning and Design Criteria, security expert witness Randall Atlas Ph.D., AIA and Anthony DiGreggario of Atlas Safety & Security Design, Inc. write on security layering: the Onion Philosophy:

The first layer is the outside skin of the onion which translates to the site perimeter of the property. The building skin of the architecture is the next layer. Sensitive areas within a building are deeper layers requiring protection, and finally special persons,

information, or property may require point protection or the center of the onion. The site perimeter is the first, not last, line of defense. The State Department seeks setbacks of at least 100 feet for new buildings and even that distance is difficult to obtain in most urban settings. While most perimeter fences and walls are designed to discourage intruders, they are of little use against a determined person or bomb vehicle.

In 8 & 15 Years Jail for Auto Arson in Idaho, Insurance fraud expert witness Barry Zalma writes:

On January 21, 2009, the Idaho Department of Insurance reported that Spencer Jay Maschek and Patrick Anthony Morrissey, 23 were convicted of arson to their vehicles. In February, 2008, Jerome County Sheriff’s Department found a burning vehicle belonging to Maschek. Maschek subsequently filed a claim with his insurance company. Farm Bureau Insurance contacted the Department of Insurance about the suspicious nature of the claim. Twin Falls Police Department discovered that Maschek had asked Morrissey to set the vehicle on fire. Department of Insurance Investigator Jan Heinz gathered information and assisted Twin Falls County Sheriff’s Department and Farm Bureau Insurance in the investigation. Arson and Conspiracy to Commit Arson are felonies punishable by up to 25 years in prison and a $100,000.00 fine.

Morrissey was found guilty of two felony charges, Conspiracy to Commit Arson in the First Degree and Arson in the First Degree. He was sentenced August 5, 2008, to 15 years, five years fixed, for each crime. The sentences will run consecutively. Morrissey was also ordered to pay restitution. Maschek pleaded guilty to Conspiracy to Commit First Degree Arson, a felony. He was sentenced January 12, 2009, to eight years in jail.

In Site Security Planning and Design Criteria, security expert witness Randall Atlas Ph.D., AIA and Anthony DiGreggario of Atlas Safety & Security Design, Inc. describe design criteria:

Threat: Tactics; weapons, explosives, tools Assets Levels of protection Constraints The result of the assessment will be a set of recommended countermeasures that may be priced and presented to the owner in a priority order so selections may be made of those recommendations that are prudent and cost effective. In the case of the government standards, the assessment results in the assignment of a defined Level of Protection (LOP) with specified countermeasures. When the LOP is defined, the specified countermeasures are priced and again the owner may select appropriate measures depending on a prudent level of protection and the cost effectiveness of the measure.

In Ethics & Fraud Investigation insurance expert witness Barry Zalma writes:

Ethical underwriters and claims persons should not use technicalities to reach a decision on a policy or a loss. Rather, the ethical underwriter or claims person must apply the facts to the issue raised and provide the indemnity promised. Similarly, the insured must also clearly, fairly, and completely advise the underwriter of all of the facts known, or that he should know, that would be material to the decision of the insurer to accept or reject the risk. The California Court of Appeal explained the situation as follows:

An insurance company is entitled to determine for itself what risks it will accept, and therefore to know all the facts relative to the applicant’s physical condition. It has the unquestioned right to select those whom it will insure and to rely upon him who would be insured for such information as it desires as a basis for its determination to the end that a wise discrimination may be exercised in selecting its risks. (Emphasis added) [Robinson v. Occidental Life Ins. Co. (1955) 131 Cal. App. 2d 581, 586 [281 P.2d 39].]