July 7, 2008
Most investors confident about Y2K
Fifty-seven percent of stock market investors think any Y2K-related problems on Wall Street will be resolved within the first two weeks of January 2000, according to a poll conducted for the Securities Industry Association. Only 5 percent believe problems will continue throughout the year.
The survey of 803 investors found that only 6 percent of respondents plan to exit the market because of concerns about Y2K.
Insurers likely to face big payout
Insurance companies will face somewhere between $15 billion and $35 billion in legal costs and claims related to Y2K. The actuarial firm of Milliman & Robertson Inc. developed the estimate, published in the June issue of Best's Review, an insurance industry magazine. According to The Wall Street Journal, insurance industry analysts say the large costs won't be calamitous to the industry as a whole, but could create stability problems at smaller companies.
"The industry is very well capitalized today, but there are certain pockets of companies" that don't have enough money to handle "surprise, significant losses," Martin Sheffield, of the property-casualty rating division of A.M. Best Co. told the Journal.
The Milliman & Robertson study projects that the biggest Y2K-related expense to insurers will be legal costs, incurred by battling their own customers over interpretation of what is covered by policies and what isn't.
Fed member: Public needs Y2K info
Describing Y2K as a "public confidence concern," a member of the Federal Reserve Board urged businesses and governments to send out a "steady flow" of information about their Y2K readiness.
"Inadequate details in a business environment can well lead to negative perceptions in the marketplace, which may have pronounced market and/or economic consequences," said Fed Gov. Roger Ferguson in a speech to the Global Y2K National Coordinators Conference at the United Nations. He described "a better-informed public" as "a more confident and calm public."
Mr. Ferguson also had advice for reporters, urging them to "engage in balanced and accurate reportage." He said they should not "hide important facts" but neither should they seek "the most sensational coverage."
On the international front, 'much left to do'
Developing nations, as well as China and Russia, still face huge hurdles in getting their computer systems Y2K compliant, according to John Koskinen, head of President Clinton's Council on Year 2000 Conversion.
Mr. Koskinen was among leaders from 173 countries who gathered at the United Nations from June 21 to 23 to discuss international readiness. "There is still much left to do," Mr. Koskinen said, "particularly in the area of contingency planning."
Unfortunately, some nations are still in the awareness phase. According to a report in the Philadelphia Inquirer Mexican delegate Carlos Jarque said that only 5 percent of the Mexican public know what the Y2K problem is.
Earlier in the week, leaders of the so-called Group of Eight (G-8) nations met in Cologne, Germany to share information about their Y2K efforts. In a final communique, the leaders of world's seven wealthiest countries, plus Russia, noted that "[p]ublic confidence will be crucial and will depend heavily upon transparency and openness as to the state of preparation in critical sectors."
The communique also urged "responsible bodies to have in place contingency plans to cope with system failures that may occur in the most sensitive areas despite intensive preparations." A special G-8 conference on Y2K contingency planning will be held later this year.
Aviation readiness update
A report on international aviation readiness shows sharp variations in the level of Y2K preparations from region to region.
The report, prepared by the U.N.-affiliated International Civil Aviation Organization (ICAO) and reported by The Wall Street Journal, notes that most Western nations are nearing completion of Y2K projects. At the same time, some nations in Africa still are in the assessment phase, a very early stage of Y2K remediation.
ICAO officials are having particular difficulty getting adequate information about Y2K status in western and central Africa, the report states.
Meanwhile, International Monitoring, a London-based consulting firm that assesses Y2K infrastructure readiness, predicted that Y2K-related aviation problems worldwide could delay air passenger traffic by as much as seven days in the early part of next year.
Power company: We're ready
The Southern Company, one of America's largest electric power producers and distributors, announced that all its systems "critical to keeping the lights on. . .are year 2000 ready."
Based on months of company testing, "we believe service interruptions related to year 2000 challenges are unlikely," said Mike McClure, head of the company's Millennium Project.
Just in case, however, the energy firm "will have employees on duty to anticipate and respond to any potential challenges," according to a company press release.
Southern Company is the parent firm of Alabama Power, Georgia Power, Gulf Power, Mississippi Power, and Savannah Electric. Through a subsidiary, the company also supplies electricity in ten nations on four continents.
Printed with permission from Christian Financial Concepts.