Some 6.5 million U.S. homes with a total reconstruction value of nearly $1.5 trillion are at risk of damage from hurricane-driven storm surge, and more than $986 billion of that risk is concentrated in 15 metro areas, according to an annual report by CoreLogic.

The 2014 analysis by CoreLogic found that by state, Florida ranks number one for the number of homes at risk, with nearly 2.5 million homes and $490 billion in total projected reconstruction costs.

At the local level the New York metropolitan area (including northern New Jersey and Long Island) contains not only the most number of homes at risk for potential storm surge damage (687,412), but also the highest total reconstruction value of residential homes exposed, at more than $251 billion.

Ranked second among the major metropolitan areas at risk is Miami, Florida with 562,410 homes exposed and a total reconstruction value of $103.2 billion, followed by Tampa, Florida with 444,765 homes at risk and a total reconstruction value of $79.1 billion.

CoreLogic makes the point that just one storm of sufficient intensity occurring in or near one of the major metropolitan areas in the report is all that would be needed to cause tens of billions in property damage:

Past hurricane seasons have demonstrated the impact that just one storm of sufficient severity, located in exactly the wrong place, can achieve. Andrew, Katrina, and finally Sandy are still reminders that it takes no more than one hurricane roaring through a metropolitan and densely populated area to cause widespread property damage and threaten lives.”

CoreLogic goes on to explain that extensive regions along both the Gulf and Atlantic Coasts are vulnerable to storm surge, and yet many of the homeowners who live in these areas are not required to carry flood insurance because they are not located within a designated FEMA 100-year floodplain.

Since standard homeowners insurance excludes flood losses from either fresh or salt water, homeowners who are not located in FEMA Special Flood Hazard Areas, but are in high-risk surge zones, often do not consider buying National Flood Insurance Program (NFIP) coverage for their properties.”

Sporting organizations around the world and their liability insurers have to be keeping a close eye on the latest developments in a multi-million dollar settlement which will see the National Football League (NFL) pay out an uncapped amount to compensate retired football players suffering from certain severe concussion-related neurological conditions.

A federal judge approved the preliminary revised settlement yesterday after the original $765 million settlement proposed by the NFL was rejected by U.S. District Court Judge Anita B. Brody in January over concerns that the amount would not be enough to cover the claims from more than 20,000 retired players over the 65-year life of the settlement.

Concerns have been growing over the risks of sports-related concussions in recent years since the filing of the first lawsuits by injured professional football players against the NFL in 2011.

Young people participating in a range of sports including soccer, basketball and ice hockey are also affected. The Centers for Disease Control and Prevention estimates that 173,285 sports- and recreation-related traumatic brain injuries (TBI), including concussions, among children and adolescents are treated in U.S. emergency rooms annually.

The New York Times reports that despite being uncapped, the new settlement does allow the NFL to contest an unlimited number of requests for awards by retired players as a way to prevent fraudulent claims.

Retired players will receive packets explaining the terms of the settlement over the coming weeks and players will be deemed to be in favor of the deal unless they opt out, which would preserve their legal rights, the NYT says. They can also object to parts of the deal.

A fairness hearing on the settlement is scheduled for November 19 in Philadelphia.

The settlement provides for a $75 million baseline assessment program that will offer all retired NFL players baseline neuropsychological and neurological evaluations to determine the existence and extent of any cognitive defects.

The 65-year monetary award fund will award cash to retired NFL players who already have a qualifying diagnosis or receive one in the future.

The court order details potential awards for qualifying diagnoses of up to $3.5 million for neurocognitive impairment, $3.5 million for Alzheimer’s Disease and Parkinson’s Disease, $5 million for amyotrophic lateral sclerosis (ALS), and $4 million for players who die with chronic traumatic encephalopathy.

The awards may be reduced based on a retired player’s age at the time of diagnosis, the number of NFL seasons played, and other offsets outlined in the settlement.

Business Insurance reports that the settlement approval notes that players who receive awards from the NFL fund are not required to release claims against the NCAA (National Collegiate Athletic Association) or any other amateur football organizations for concussion claims.

A 2013 article by then National Underwriter reporter Chad Hemenway provides invaluable insight into sports-related traumatic brain injuries and how the legal fallout may change the way sports are insured.

Check out I.I.I. facts and stats on sports injuries.

June is Pride month so it’s time for our annual round-up of the latest LGBT (lesbian, gay, bisexual and transgender) insurance news.

Corporate Equality: A record 304 businesses, including 16 insurers scored 100 percent in the Human Rights Campaign Foundation’s 2014 Corporate Equality Index (CEI) based on their LGBT workplace policies, benefits and practices. The number of insurers achieving the top ranking has seen a steady increase over the last decade, going from zero in 2002, to 10 in 2008 and 16 in 2014. A total of 734 businesses were rated in the 2014 CEI. This year marks the first time in history that over 60 percent of the Fortune 500 include both sexual orientation and gender identity protections.

LGBT Marketing: There’s been a surge of marketing directed at LGBT consumers – and with good reason. The total buying power of the LGBT adult population in the U.S. for 2013 was projected at $830 billion, according to a November analysis by Witeck Communications. But it’s not just LGBT consumers who respond to this advertising. Some 70 percent of non-LGBT adults are likely to consider a brand known to provide equal workplace benefits, Harris Interactive and Witeck Communications found. Just a few weeks ago, insurer Allstate launched its “Out Holding Hands” program, to encourage members of the LGBT community to share special and everyday moments out holding hands with their loved ones. Allstate teamed up with singer-songwriter Eli Lieb to create a video that illustrates the company’s belief that everyone should be treated with respect and without judgment no matter who they love. The video can be viewed on Allstate.com/LGBT.

Allstate’s campaign is certainly eye-catching. On a recent trip to Asbury Park, New Jersey, we couldn’t miss this billboard:

Why are some countries more resistant to supply chain disruption or better able to bounce back?

According to Margareta Wahlström, United Nations Special Representative of the Secretary-General (SRSG) for Disaster Risk Reduction, this is a puzzle that world leaders are perpetually trying to solve.

Hence the inherent value in a new online interactive tool from FM Global that ranks countries by supply chain resilience.

The 2014 FM Global Resilience Index ranks the business resilience of 130 countries around the world.

Nine key drivers of supply chain risk are grouped into three categories: economic, risk quality and supply chain factors. These combine to form the composite index. Scores are bound on a scale of 0 to 100, with 0 representing the lowest resilience and 100 the highest resilience.

Jonathan Hall, executive vice president, FM Global, explains:

Natural disasters, political unrest and a lack of global uniformity in safety codes and standards all can have an impact on business continuity, competitiveness and reputation. As supply chains become more global, complex and interdependent, it is essential for decision makers to have concrete facts and intelligence about where their facilities and their suppliers’ facilities are located.”

So which countries rank at the top of the index?

According to FM Global, Norway (score: 100), Switzerland (score: 98.9) and Canada (score: 93.2) are the top three countries most resilient to supply chain disruption.

At the other end of the scale, the index finds Kyrgyzstan (score: 6), Venezuela (score: 2.5) and the Dominican Republic (score: 0) as the countries least resilient to supply chain disruption.

Where did the United States fall?

Because of its geographic spread and disparate exposures to natural hazards, the U.S. is divided into three separate regions. All three rank in the top 25.

You might also be interested to know that China (also divided into three separate regions) ranks in the top 75. China’s weakest region includes Shanghai and ranks particularly low as a result of poor risk quality due to acute natural hazards.

Another key takeaway is the biggest riser: Bosnia and Herzegovina. The country climbed 19 places from last year, due to improvements in its political risk and in the quality of local suppliers.

And one of the top fallers in the 2014 Index is Bangladesh, with FM Global citing declining quality of both natural hazard risk management and fire risk management.

FM Global commissioned analytics and advisory firm Oxford Metrica to develop the rankings. The index allows you to browse country rankings and scores from 2011 to 2014.

American businesses lose an average of 2.8 million work days each year due to unplanned absences, costing employers more than $74 billion, so it’s with interest that we read of a significant increase in absence due to obesity and skin cancer in a just released study by Cigna.

According to Cigna’s analysis of 20 years of short-term disability claims, claims related to obesity increased by 3,300 percent between 1993 and 2012.

In 1993, obesity ranked 173 out of 267 diagnostic drivers of absence, accounting for 0.04 percent of claims that year. By 2012, obesity had jumped 133 places to number 40 on the list, accounting for 0.70 percent of claims.

Hat tip to Business Insurance which reports on this story here.

Cigna also reports that new claims and absence related to skin cancer increased more than 300 percent in the 20-year period.

Between 1993 and 2012, skin cancer jumped from 91 to 27 on the list of diagnostic drivers of absence, and its share of claims had increased to 0.9 percent in 2012, up from 0.2 percent in 1993.

The analysis also shows a 45 percent increase in work absence due to the surgical treatment of herniated discs, the most significant increase in short-term disability claims among sedentary occupations over the 1993 to 2012 period.

Cigna notes that the most frequently approved short-term disability claims both 20 years ago and today, remain musculoskeletal disorders, which make up 25 percent of all non-maternity absence.

In a press release, Dr Robert Anfield, chief medical officer for Cigna’s disability insurance unit says:

The aging workforce and a trend towards growing waistlines has made some medical conditions more dominant factors for short-term disabilities than they were 20 years ago. For example, arthritis and tendonitis-related absences have both increased more than 50 percent since 1993.”

However, the study found significant changes in short-term disability rates for obesity, cancer, depression and herniated discs that uncover the impact of medical advances on absence and productivity.

Check out I.I.I. facts and statistics on disability.

Check out an I.I.I. study on obesity, liability and insurance here.

Multiple outbreaks of severe weather led to a costly month for insurers in the United States in May, as thunderstorm events continued to dominate the catastrophe record.

According to the latest Global Catastrophe Recap report by Aon Benfield’s Impact Forecasting, no fewer than four stretches of severe weather affected the U.S. during the month of May.

Aggregate insured losses exceeded $2.2 billion and overall economic losses were at least $3.5 billion, with large hail and damaging winds the primary driver of the thunderstorm-related costs, Impact Forecasting reports.

The costliest stretch occurred during a five-day period (May 18-23) which saw damage incurred in parts of the Midwest, Plains, Rockies, Mid-Atlantic and the Northeast, including the major metropolitan areas of Chicago, IL and Denver, CO.

According to Impact Forecasting’s report, baseball-sized hail and straight-line winds gusting in excess of 70 mph (110 kph) were recorded that severely affected residential, commercial and auto interests. Total economic losses were estimated at $2.5 billion, with insurers reporting losses minimally at $1.5 billion.

Meanwhile, the combination of excessive heat, extreme drought conditions, low relative humidity and gusty winds led to dozens of wildfires across parts of the Texas Panhandle and Southern California, leaving two dead.

Overall fire costs/damages from the two states approached $100 million, according to Impact Forecasting.

In Texas the most significant fire was in Hutchinson Country, where at least 225 homes and 143 unoccupied structures were damaged or destroyed.

In California, at least 14 fires were ignited in the greater San Diego metropolitan region, including the Poinsettia Fire that destroyed eight homes, an 18-unit condominium complex, and two commercial buildings.

The report adds that through the end of May, tornado activity in the U.S. remained in the bottom 25th percentile of all years dating to the early 1950s.

Check out I.I.I. facts and statistics on thunderstorms.

If a strong hurricane were to pass through the Gulf of Mexico the overall effect on U.S. oil and natural gas supply would not be as severe as in past years, due to declining production in the region, according to a report from the U.S. Energy Information Administration (EIA).

However, Artemis blog warns that this won’t change the potential impact to insurers and reinsurers, particularly with the removal and decommissioning of rigs also being insured.

In its post, Artemis notes that the reinsurance and insurance-linked securities (ILS) market in recent years has been placing an increasing focus on gaining access to underwriting energy risks, particularly physical damage risks due to storms and earthquakes.

With an increasing amount of ILS capital at risk in the Gulf of Mexico, as well as on the shore through catastrophe bonds and collateralized reinsurance, the exposure to hurricane impacts on the oil and gas production network in and around the Gulf is growing.”

The EIA estimates that up to 11.6 million barrels of crude oil and 29.7 billion cubic feet of natural gas production could be disrupted by storms during the 2014 Atlantic hurricane season. Its estimate is based on NOAA’s Atlantic Hurricane Season Outlook released May 22.

NOAA expects that 8 to 13 named storms are likely to form within the Atlantic Basin over the next six months, including 3 to 6 hurricane, of which 1 to 2 will be intense.

In recent years offshore energy production has experienced relatively minor disruptions due to tropical weather, the EIA reports. However, a single strong storm can cause significant levels of shut-in production:

During September of 2008, category-4 hurricanes Gustav and Ike at one point caused nearly 100 percent of production capacity to be shut in. EIA estimates that these two storms (along with a tropical storm in July) resulted in the loss of 25 percent of the GOM crude oil and natural gas that would have been produced during the 2008 hurricane season.”

Check out the EIA chart showing recent impact of storms on GOM oil and natural gas production:

Check out I.I.I. facts and statistics on energy.

A report just released by the National Highway Transportation Safety Administration (NHTSA) puts a $277 billion price tag on the economic costs of traffic crashes in the United States in 2010, a 20 percent increase over its 2000 data.

The economic costs are equivalent to approximately $897 for every person living in the U.S. and 1.9 percent of U.S. Gross Domestic Product, the NHTSA says, and based on the 32,999 fatalities, 3.9 million non-fatal injuries, and 24 million damaged vehicles that took place in 2010.

Included in these economic costs are lost productivity, medical costs, legal and court costs, emergency service costs (EMS), insurance administration costs, congestion costs, property damage and workplace losses.

When you add in the $594 billion societal cost of crashes, such as harm from the loss of life and pain and decreased quality of life due to injuries, the total impact of crashes is $877 billion.

The following chart breaks out the economic costs:

It’s interesting to note that the most significant components were property damage and lost market productivity. In dollar terms, property damage losses were responsible for $76.1 billion and lost productivity (both market and household) for $93.1 billion.

The NHTSA explains that for lost productivity, these high costs are a function of the level of disability that has been documented for crashes involving injury and death. For property damage, costs are mainly a function of the very high incidence of minor crashes in which injury does not occur or is negligible.

Another takeaway from the survey is the impact of congestion, which accounts for some $28 billion, or 10 percent of total economic costs. This includes travel delay, added fuel consumption, and pollution impacts caused by congestion at the crash site.

There’s a separate chapter of the NHTSA report devoted to congestion impacts that includes some fascinating data.

For additional data on motor vehicle crashes, check out I.I.I. facts and statistics on highway safety.

We’re honored to be hosting Cavalcade of Risk #209. For those of you not already in the know, the CavRisk blog carnival is a round-up of risk and insurance-related posts from around the blogosphere.

With the official start of the 2014 Atlantic hurricane season just days away, there’s no better place to begin this week’s Cav than with a post on hurricane risk pricing. In Hurricane Pricing At All Time Low, Paul Dzielinski of The Dec Page argues that residual market boards and politicians should be taking advantage of this pricing arbitrage to buy more reinsurance.

The techniques insurers use to evaluate and ultimately price a risk have come a long way over the years. InsureBlog’s Henry Stern steps outside his comfort zone with this post on predictive analytics (aka “modeling”) and how this innovative risk assessment tool is used in the commercial risk field in Predictive Analytics (A Risky P&C Post).

Data Breaches are becoming more common in businesses both large and small and these attacks typically are not covered under your standard general liability insurance policy. In Cyber Liability Insurance – A Definition, R J Weiss CFP of WeissIns provides a timely overview of cyber liability insurance and what it covers.

The Supreme Court upheld the Affordable Care Act with one major exception; it declared that states did not have to expand their Medicaid eligibility rules. This puts in play a risky proposition for several states and their constituents. In ACA, Medicaid Enrollment and the Woodwork Effect Jason Shafrin at The HealthCare Economist explains that the ACA may have indirectly increased Medicaid enrollment even in states that did not change their eligibility rules, while David Williams at Health Business Blog highlights the risk to rural hospitals as a result of the refusal of states to tow the line in Medicaid Expansion Rejection Starts to Bite.

And no risk assessment would be complete without a bold prediction into the future. In McDonald’s Workers Fight to Automate Their Jobs, Bob Wilson at workerscompensation.com speculates that for retail and food service employees fighting to double the minimum wage, the true enemy is not the employer, but rather technology and simple economics.

Over and out from us. Jeff Root at http://www.rootfin.com/ will host the next Cavalcade of Risk.

With just over a week to go until the start of the 2014 Atlantic hurricane season, NOAA’s outlook is hot off the press and garnering a lot of attention.

Here’s NOAA’s take on the season by the numbers:

● NOAA is calling for a 50 percent chance of a below-normal season, a 40 percent chance of a near-normal season, and only a 10 percent chance of an above-normal season.

● NOAA predicts a 70 percent likelihood of 8 to 13 named storms (winds of 39 mph or higher), of which 3 to 6 could become hurricanes (winds of 74 mph or higher), including 1 to 2 major hurricanes (Category 3, 4 or 5; winds of 111 mph or higher).

● These numbers are near or below the seasonal averages of 12 named storms, six hurricanes and three major hurricanes, based on the average from 1981 to 2010.

What are the reasons behind NOAA’s predictions for a near-normal or below-normal season?

A key driver of this year’s outlook is the anticipated development of El Niño this summer that is expected to cause stronger wind shear which reduces the number and intensity of tropical storms and hurricanes.

Cooler Atlantic Ocean temperatures this season also suggest fewer hurricanes, NOAA says.

Despite the prognosis for a below-normal or near-normal season, it’s important that coastal residents don’t underestimate the hurricane threat. As Dr. Kathryn Sullivan, NOAA administrator says:

Even though we expect El Niño to suppress the number of storms this season, it’s important to remember it takes only one land falling storm to cause a disaster.”

Note: NOAA’s seasonal hurricane outlook is not a hurricane landfall forecast and does not predict how many storms will hit land or where a storm will strike.

For a round-up of the latest predictions from the major hurricane forecasters check out this post at Dr. Jeff Masters’ Wunderblog.

Check out I.I.I. facts and statistics on hurricanes here.

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