Why a higher percentage of first half CAT losses were insured

Some $23 billion of first-half 2017 global catastrophe losses were covered by insurance, according to preliminary estimates from Swiss Re sigma.

With total economic losses from disasters at $44 billion in the first-half, that means 52 percent was covered.

As Artemis blog reports, this is actually a relatively high percentage insured which makes for a smaller protection gap.

“The 10-year average economic loss of $120 billion and the average insured loss of $33 billion, show that a more typical percentage insured is just 28 percent.”

The reason?

Severe thunderstorms in the U.S. resulted in the largest losses in the first six months of this year—accounting for $16 billion of the $23 billion insured losses.

Kurt Karl, Swiss Re chief economist explains: “Fortunately, in the U.S., most households and businesses are insured against wind risk so they are financially protected when severe storms strike.”

Things to know before your eclipse viewing party

The first total solar eclipse to sweep across the entire country since 1918 will happen on Monday and understandably there are some insurance issues that arise:

Business Insurance, via today’s I.I.I. Daily, explains what a company needs to know about workers compensation issues that may arise if it is hosting a viewing party.

Amy K. Harper, a director at the National Safety Council, said, “An employer should provide ISO 12312-2 compliant viewing glasses if they are encouraging or hosting a viewing party.” Employers should also be familiar with NASA’s safety guidelines that suggest people not look directly at the sun. Employees injured using a camera, binoculars or telescope to look directly at the sun can cause eye injuries in which employees may be covered under workers compensation.

Erie Insurance brings us a solar eclipse safety check: 1. Don’t look directly at the sun; 2. Keep your eyes on the road; 3. Renting out your home? Check your liability coverage.

NASA’s excellent safety information here.

The Week in a Minute, 8/17/17

The I.I.I.’s Michael Barry briefs our membership every week on key insurance related stories. Here are some highlights.

Insurance coverage for riot-caused damage became a media issue this week after a 32-year-old woman was killed, and scores were injured, in Charlottesville amid violent, dueling protests centered on the removal of Confederate General Robert E. Lee’s statue.

Reporters want to know if the number of car accidents might rise on Monday, Aug. 21, when the population soars in 14 U.S. states, from Oregon to South Carolina (see page 4), as tourists flock to witness a total solar eclipse.  It is the first one to be visible in the U.S. in 38 years.

Gert became the second hurricane of 2017 to develop in the Atlantic Basin but it never came near the U.S. before drifting into the middle of the ocean.

The Litigation Trends Behind Deteriorating Profits in Commercial and Personal Auto

The commercial auto line showed a spectacularly rapid deterioration of reserves beginning in 2012. In 2013 carriers begin to cite their trucking books as the source of increased frequency of severe claims, higher than expected large losses and deteriorating loss ratios. This recent GenRe article examines the causes which include:

  • A driver shortage affected the quality of the driver pool with more young, inexperienced drivers operating trucks.
  • Vehicle utilization levels increased due to an improved economy and lower gas prices.
  • Increase in vehicle miles travelled
  • Greater availability of safety data on motor carriers has led to attorneys use of this information to target commercial auto cases and win them.
  • Attorneys are succeeding in shifting responsibility from the person behind the wheel to the employer and winning large “nuclear verdicts” of over $10 million.
  • Increase in traumatic brain injury (TBI) cases. if an attorney can find an expert to allege a TBI, verdicts can be driven to higher levels. The “super experts” are winning TBI arguments in front of today’s jurors.

Some of these trends are the same ones affecting personal auto lines. The author warns that claims departments need to be prepared and proactive.

Tips for Wildfire Resiliency

Janet Ruiz, I.I.I.’s California representative wrote about what it takes to prepare for wildfires in this post last week. The first tip:

“Conduct an annual insurance check-up. Call your agent or insurance company annually to discuss your policy limits and coverage. Make sure your policy reflects the correct square footage and features in your home. Consider purchasing building code upgrade coverage.”

Property Casualty Insurers Association has come out with this wildfire preparedness tip list.

The I.I.I. has this frequently updated Wildfires Facts & Statistics page.

Proper protection is key in a sharing economy

Whether you’re sharing rides, homes, workspaces, driveways, food experiences, or even, as in China, umbrellas and basketballs, the sharing economy continues to expand into new areas.

And so do the associated risks and liability.

From today’s I.I.I. Daily, via The New York Times: “Airbnb, the peer-to-peer vacation rental and hospitality site, is facing a lawsuit in which a guest says that the company did not perform appropriate background checks on a host who allegedly sexually assaulted her. According to the plaintiff, a background check would have uncovered information that the owner had been arrested and charged with battery, preventing him from listing property on Airbnb according to the terms of service.”

Whether you’re looking to rent out your space to someone or rent a space from someone via a peer-to-peer network, it’s important to know whether you’re insured.

Some tips on peer-to-peer home rental from the I.I.I.

Note: Airbnb has a Host Protection Program that provides hosts and landlords up to $1 million coverage for property damage and liability claims that occur in a listing or on an Airbnb property, during a stay.

But here are the risks that the Airbnb policy doesn’t cover:

“The Host Protection Insurance program does not apply to liability arising from (1) Intentional Acts including: (i) Assault and Battery or (ii) Sexual Abuse or Molestation – (by the host or any other insured party), (2) Loss of Earnings, (3) Personal and Advertising Injury, (4) Fungi or Bacteria, (5) Chinese Drywall, (6) Communicable Diseases (7) Acts of Terrorism, (8) Product Liability, (9) Pollution and (10) Asbestos, Lead or Silica.”

 

What if a Hurricane the Size of Andrew Hit Miami?

It’s been nearly 25 years since Hurricane Andrew devastated southern Florida. More than 25,000 homes were destroyed and another 100,000 damaged. At the time, Andrew was the costliest disaster in U.S. history, one that led to a major overhaul of building codes in Florida.

As the anniversary of the monstrous storm approaches, Swiss Re has released a report called Hurricane Andrew: The 20 miles that saved Miami. The report speculates what would happen if an Andrew size storm hit Florida today and if a present-day Andrew made landfall in Miami, or 20 miles north of its original landfall.

Since 1992, Miami-Dade County has population growth of more than 35 percent and huge growth in property values and asset concentration.  The same storm today could cause an estimated economic loss between $80 billion and $100 billion, of which only $50 billion to $60 billion would be covered by insurance, leaving a significant shortfall to be made up by taxpayers and governments.

If a present-day Category 5 hurricane made landfall 20 miles north of Andrew’s historical landfall location, putting its eye directly over Miami, losses could be between $100 and $300 billion.

InsurTech disruption: threat or opportunity?

Whether you’re an InsurTech startup with new ideas or an incumbent concerned about protecting your book of business, the greatest risk you can take may be to resist collaboration, according to a post on Willis Towers Watson Wire.

In Threat vs Opportunity? InsurTech is largely a matter of perspective, Andrew Newman, president and global head of casualty at Willis Re, says while it’s understandable that many insurers have perceived InsurTech as a threat to the value chain, the biggest threat lies not in technology itself, but in competitors of any description leveraging these innovations to gain advantage by reducing risk and lowering costs.

“The plain fact is that the vast majority of InsurTech companies aren’t interested in going to war with incumbents. Their focus is on creating value within the insurance value chain – not collapsing it. So if incumbents embrace ‘disruption’, rather than concentrating on defending themselves by keeping these opportunities at arm’s length, then they will find that the available technology is largely complementary to most of the current processes in the industry.”

Download the presentation Insurance: Leading Through Disruption by Insurance Information Institute president and CEO Sean Kevelighan to find out more about how the industry is poised to lead through disruption.

A smart fish tank leaves a casino’s data exposed to hackers

The cyber savvy have heard of phishing – sending thousands of malware-laden emails hoping for one unsuspecting click – but the Internet of Things introduced a new kind of fishing. It involved actual fish.

An internet-connected fish tank in a North American casino was used as an initial entry point into the casino’s network. This is one of nine examples of unusual attack vectors listed in a recent report from the security firm Darktrace. This report contains nine real-world examples where sophisticated methods, advanced technologies, or unusual strategies were employed.

The report warns that “…we are seeing new areas of vulnerability arise as modern companies embrace the ‘Internet of Things’. The proliferation of new connected objects multiplies the inroads to critical networks and data, yet organizations often have remarkably poor visibility of these hidden outposts of their networks. ”

In addition to the threat posed by “things”, the increasing digitization of everyday work processes means that legitimate network users can (accidentally) expose data and systems to significant vulnerabilities.

Another growing security concern is that the automation of malware production means that attackers can spread malicious software at lightning speed, outpacing the efforts of human security teams to identify and block new variants of threats.

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