III: Dog-Bite Claims Exceeded $400 Million in 2009 on Higher Medical Costs
Insurers' payouts for dog bites rose 6.4% in 2009, accounting for one-third of all homeowners insurance liability claims, according to analysis by the Insurance Information Institute.
The rise can be attributed to higher medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, which have risen above the rate of inflation, Loretta Worters, vice president at the III, said in a statement.
Allstate Insurance Group excludes certain breeds from coverage in homeowners policies, but it varies by state, spokeswoman Christina Loznicka said. For example, in Ohio, Allstate excludes pit bulls, Doberman pinschers and Rottweilers, she said.
Other insurers often tackle the issue on a case-by-case basis, and companies including State Farm Group, Farmers Insurance Group and Liberty Mutual Insurance Cos. don't have blanket dog-breed bans in homeowners policies. For State Farm, an exception is Ohio, the only state with a law that says the pit bull meets the definition of a "vicious dog." Legislation to revoke the law, which has been in place since 1987, is working its way through the Ohio legislature.
At $412 million, the cost of claims has risen 27.1% since 2003, when payouts totaled $324.2 million, III said. The cost of the average claim edged up 1.6% in 2009 to $24,840 from $24,461 in 2008, and up 29.6% from $19,162 in 2003, the earliest year for the III analysis.
"We believe there are good dogs and bad dogs with every breed, just as there can be responsible and irresponsible owners of each breed," State Farm spokesman Kip Diggs said in a statement.
In the United States last year, State Farm, which has the largest market share in the U.S. homeowners multiperil market, paid $90.1 million in claims related to dog bites, up from $82.5 million in 2008. Allstate doesn't track dog-bite claims separately from other liability claims, Loznicka said in a statement, while Farmers Insurance declined to reveal dog-bite related payments, citing competitive reasons.
Farmers Insurance doesn't prohibit policyholders from owning certain dog breeds. "However, if a dog exhibits aggressive tendencies, a dog exclusion may be required," Jeff Reining, senior vice president of home product management for Farmers, said in a statement.
Liberty Mutual "does review some breeds for homeowners insurance acceptability. These breeds include Akita, Alaskan malamute,chow, Doberman pinscher, German shepherd, pit bull terrier, Rottweiler, Siberian husky, and canary dogs," Liberty Mutual spokesman Glenn Greenberg said in a statement. "We do this because these dogs pose increased risk of loss."
In such cases, Liberty Mutual considers the dog's temperament, the training the animal has received, any prior losses, and vaccinations. The company also gives special consideration to applicants when the dog is providing assistance to the blind or visually impaired, Greenberg said.
State Farm, Allstate and Farmers Insurance said that at this time, they have no plans to change their approach to handling dog-bite liability issues.
The number of claims rose to 16,586 in 2009, up 4.8% from 2008, but down 2% from 16,919 claims reported in 2003. The number of claims fluctuated from year to year, but has been edging higher since 2007.
More than 4.5 million people are bitten by dogs annually, with more than 300,000 visits to U.S. hospital emergency rooms, according to the Centers for Disease Control and Prevention. Among children, the rate of dog-bite related injuries is highest for children between the ages of 5 and 9.
The companies with the largest market share in the U.S. homeowners multiperil market are State Farm Group, with 21.64%; Allstate Insurance Group, with 10.29%; Farmers Insurance Group, 7.51%, Liberty Mutual Insurance Cos., with 5.21% and Travelers Group, with 4.64%, according to BestLink, which provides online access to A.M. Best Co.'s Global Insurance & Banking Database.
State Farm Group has a current Best's Financial Strength rating of A++ (Superior). Allstate Insurance Group has a current Best's Financial Strength Rating of A+ (Superior). Farmers Insurance Group has a Best's Financial Strength Rating of A (Excellent), and Liberty Mutual has a Best's Financial Strength rating of A (Excellent).
(By Diana Rosenberg, senior associate editor, BestWeek)
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