Fundraising Dinner Features Sporting Greats

Major League baseball great Ken Griffey Jr. and hockey legend Mark Messier will be the featured speakers at the Insurance Industry Charitable Foundation (IICF) 2010 benefit dinner on December 8 at the Waldorf-Astoria Hotel in New York City.

This year’s dinner chair  is Greg Case, president and chief executive officer of Aon Corp. Case  commented:

“Aon is a strong supporter of the work of IICF, which pools our industry resources to provide grants, volunteer service, and leadership to the communities where we live and work. It is my pleasure to serve as dinner chair and to assist the foundation in raising funds for life-changing community grants.†

The IICF also said it will present Maurice R. “Hank† Greenberg, chairman and chief executive officer of C.V. Starr & Co with the 2010 Double I award for influence in the industry and impact in the community.

For gala information, including ticket sales, please contact the IICF Benefit Office at (212) 763-8597 or iicf@cmevents.net. The event raises funds for charities in the New York tri-state area.

Atlantic Hurricane Season Update

Latest glance at the National Weather Service National Hurricane Center (NHC) site shows that as of this morning there are now two active major hurricanes in the Atlantic basin.

Hurricane Igor and Hurricane Julia, the fourth and fifth hurricanes respectively of the 2010 Atlantic hurricane season, are both currently at Category 4 status (sustained winds of 131-155 mph).

Catastrophe modeling firm Risk Management Solutions (RMS) points out that the last time there were two hurricanes of category four strength or greater, active on the same day, was on this very day (September 15) in 1999 when Floyd and Gert were both category four hurricanes.

While both hurricanes right now remain far from the U.S. East coast, the NHC’s five-day forecast has Hurricane Igor heading for Bermuda.

Over at Wunderblog, Dr. Jeff Masters tallies up the season’s numbers thus far:

The intensification of Julia into a hurricane brings our activity tally for the 2010 Atlantic hurricane season to 10 named storms, 5 hurricanes, and 3 intense hurricanes. An average season has 10 named storms, 6 hurricanes, and 2 intense hurricanes, so we’ve already had a full season’s worth of activity, with about 45% of the season still to come.”

Make that 11 named storms. Tropical Storm Karl – the 11th tropical storm of the 2010 Atlantic hurricane season has since formed over the northwestern Caribbean Sea.

Check out I.I.I. facts and stats on hurricanes.

Reinsurance Rendezvous

Reinsurance executives have been gathered in Monte Carlo this past weekend for the sector’s 2010 September Rendezvous.

If you weren’t able to make the trip this year, not to worry, reinsurance girl’s blog will transport you to the gilded ballrooms  with its virtual Monte Carlo reports. Also, check out Twitter #rvmc2010 for the conference gossip.

Several  newly-published studies on the state of the reinsurance market are also worth reading.  Here are a few selections.

Guy Carpenter’s World Catastrophe Reinsurance Market 2010 report finds that reinsurance rates continue to decline, despite costly disaster losses in the first half of the year.

Global catastrophe reinsurance rates fell by 6 percent on average throughout the 2010 renewal season, according to the Guy Carpenter World Rate on Line (ROL) Index.

Guy Carpenter estimates that the reinsurance market was overcapitalized by as much as $20 billion, or 12 percent, at the beginning of 2010. While this amount came down to approximately 8 percent by the end of June, reinsurers’ excess capital continued to be the main driver of rate reductions at the 2010 renewals.

If no market-changing event were to occur in the second half of the year, surplus capital is likely to remain the driving force behind continued rate softening at next year’s January 1 renewal, according to the study.

Meanwhile, ratings agency A.M. Best says robust earnings reports mask challenges ahead for the global reinsurance industry: a convergence of market pressures, low interest rates and tightening financial and market regulations that could impact the industry’s capital.

Despite seemingly ripe conditions for consolidation – excess capital and a soft market – the bleak outlook for profitability has reinsurers across the board trading near or below book value, which constrains the market for mergers and acquisitions.†

A.M. Best says that prudent reinsurers are looking at every aspect of their operations – capital management, underwriting discipline, the size of their balance sheets and even their countries of domicile.

It notes that insurers and reinsurers continue to prepare for Solvency II, the European Union’s new solvency directive, which A.M. Best believes will drive business to highly rated reinsurers.

Check out I.I.I. information on reinsurance.

San Bruno Explosion

A natural gas explosion on a PG&E pipeline last Thursday in San Bruno, California, killed four people, injured a number of others and destroyed more than 35 homes.

Our colleagues at the Insurance Information Network of California (IINC) report that insurance adjusters are already on the ground at the explosion site.

I.I.I. president Dr. Robert Hartwig estimates that insured losses from the disaster could reach into the tens of millions of dollars.

On Friday, PG&E said it has insurance that would cover nearly $1 billion in damages caused by the explosion. An article in the Silicon Valley/San Jose Business Journal has more on this.

In its 8K filing with the Securities and Exchange Commission (SEC), PG&E Corp said:

The utility maintains liability insurance for damages caused by fire in the approximate amount of $992 million in excess of a $10 million deductible. Depending on the final outcome of the investigation, and if insurance recoveries are unavailable or insufficient to cover the losses, PG&E Corporation’s and the Utility’s financial condition or results of operations could be materially adversely affected.†

Meanwhile, the San Francisco Chronicle reminds us that serious accidents along California’s gas pipelines are rare, and ones that kill people are rarer still.

The SF Chronicle cites data from the Transportation Department’s Office of Pipeline Safety showing that four people in California died in accidents on natural gas transmission and distribution lines from 2000 through the end of last year. Another 18 people were injured.

Investigations into the cause of the San Bruno explosion are underway.

Terrorism Threat More Diverse Nine Years After 9/11

Commercial aviation, distinctive Western brand names such as American hotel chains, Israeli/Jewish targets and U.S. soldiers fighting in Muslim countries are the more likely future terrorist targets, according to a new report by the Bipartisan Policy Center’s National Security Group.

Release of the report coincides with the nine-year anniversary of September 11 – the largest loss in the history of insurance until Hurricane Katrina in 2005.

The 9/11 attack produced insured losses of $39.4 billion (adjusted to 2009 dollars), including property, business interruption, aviation, workers compensation, life and liability claims.

The report finds that the terrorism threat facing the U.S. today is more complex and more diverse than at any time in the past nine years.

While the report’s authors believe mass casualty attacks involving weapons of mass destruction are now unlikely, they point to the increasingly prominent role in planning and operations that U.S. citizens and residents have played in terrorist groups. They also note the increasing growth and diversification of homegrown terrorist threats:

The U.S. is arguably now little different from Europe in terms of having a domestic terrorist problem involving immigrant and indigenous Muslims as well as converts to Islam. The diversity of these latest foot soldiers in the wars of terrorism being waged against the U.S. underscores how much the terrorist threat has changed since the September 11, 2001, attacks.†

For more on the report’s findings, check out an article in the Wall Street Journal. Check out the I.I.I. white paper Terrorism Risk: A Reemergent Threat for more information on how terrorism risk impacts property/casualty insurers.

Wildfire Risk

A wind-driven wildfire near Boulder, Colorado has now destroyed at least 135 homes making it the most destructive in the state’s history, according to a report at the DailyCamera.com.

It notes that the property damage has eclipsed that of the 2002 Hayman Fire, which destroyed 133 homes and scorched 138,114 acres southwest of Denver.

So far, the Four Mile Canyon wildfire has burned approximately 7,100 acres, according to authorities. Around 3,500 residents have been evacuated from about 1,000 homes since the fire started Monday, though some will be allowed back into the area today.

The Rocky Mountain Insurance Association is a great insurance information resource for residents in the path of the fire. Also, check out Twitter #boulderpage for local updates on the fire and @YahooNews/boulderfire for latest coverage.

Why some properties survive a wildfire while others burn is the subject of a timely post over at the Disaster Safety blog.

Check out I.I.I. facts and stats on wildfires.

BP Releases Report on Deepwater Horizon Disaster

No single factor, rather a sequence of failures involving a number of different parties led to the Deepwater Horizon explosion and fire which killed 11 people and caused widespread pollution in the Gulf of Mexico earlier this year.

That’s the upshot of a report released by BP today based on a four-month internal investigation led by Mark Bly, BP’s head of safety and operations.

BP concludes that decisions made by “multiple companies and work teams† contributed to the spill which it says arose from “a complex and interlinked series of mechanical failures, human judgments, engineering design, operational implementation and team interfaces.†

Based on the findings of the report, BP says it is unlikely that the well design contributed to the incident. Check out BP’s report website for further info.

The Wall Street Journal notes that the BP report boils the investigation down to eight key findings, with BP accepting some responsibility for the disaster. The New York Times describes the report as a preview of BP’s probable  legal strategy as it prepares to defend itself against possible federal charges, penalties and hundreds of pending  lawsuits.

At  the end of the report BP’s investigation team has proposed a total of 25 recommendations designed to prevent a recurrence of such an accident.

The recommendations are directed at strengthening assurance on blow-out preventers, well control, pressure-testing for well integrity, emergency systems, cement testing, rig audit and verification and personnel competence.

Check out our updated presentation on the Deepwater Horizon Disaster for a review of the insurance issues relating to the loss.

NZ Earthquake

And so it was an earthquake, rather than a hurricane that fueled the catastrophe headlines of the long weekend.

A 7.0-magnitude earthquake that struck near Christchurch on New Zealand’s South Island early Saturday follows major earthquakes in Baja (California), Chile, Haiti and China earlier this year.

The blow to New Zealand’s second largest city underscores the key role played by insurers and reinsurers around the world in defraying the economic costs of disasters.

Damage was reported to be widespread but remarkably it appears there were no fatalities.

Catastrophe modeling firms have already begun to release estimates of industry losses.

AIR Worldwide estimates insured losses will be between NZD2.7 billion ($2 billion) and NZD6.0 billion ($4.5 billion). This estimate includes insured physical damage to residential and commercial/industrial property (structures and contents) and direct business interruption losses.

Risk Management Solutions (RMS) warns that this is likely to be the largest insured loss in New Zealand for many years.

According to New Zealand GNS Science this is the most damaging earthquake in New Zealand since the 1931 Hawke’s Bay earthquake that killed 256 and left thousands injured.

New Zealand’s Earthquake Commission (EQC), a state fund, is the primary provider of natural disaster insurance to residential property owners.

A Wall Street Journal report says the EQC currently has around NZ$5.6 billion and is backed by reinsurance from overseas groups and a government guarantee. It adds that this will be the single biggest claim on the fund since it was established in the 1940s.

RMS noted that commercial and industrial losses (covered by the private re/insurance market) will likely be less than half the total loss, given the nature of the exposure in the affected region.

Check out I.I.I. facts and stats on global catastrophes and earthquakes.

Worker Safety and Health in Hurricanes

The combination of a major East coast hurricane and the Labor Day holiday weekend has us thinking about the thousands of emergency workers who will be helping keep our basic infrastructure like roads, power supply and telecommunications systems up and running as Hurricane Earl blows through.

The Occupational Safety & Health Administration (OSHA) reports that many of the hazards occur to workers immediately after the storm has passed, such as during cleanup and utility restoration work. These activities are even more hazardous in areas of flooding, which are often caused by these storms.

According to the National Weather Service, about 70 percent of injuries during hurricanes and tornados result from vehicle accidents, and about 25 percent of injuries result from being caught out in the storm.

OSHA says some of the specific hazards associated with working in hurricanes or tornados include:

  • ï  ® Hazardous driving conditions due to slippery roadways
  • ï  ® Slips and falls due to slippery walkways
  • ï  ® Falling and flying objects such as tree limbs and utility poles
  • ï  ® Electrical hazards from downed power lines or downed objects in contact with power lines
  • ï  ® Falls from heights
  • ï  ® Burns from fires caused by energized line contact or equipment failure
  • ï  ® Exhaustion from working extended shifts
  • ï  ® Dehydration

Check out OSHA resources on disaster recovery hazards  as well as  emergency response resources from the CDC’s National Institute for Occupational Safety and Health (NIOSH).

Earl and Coastal Exposure

Five of the top 10 states in terms of the value of  insured coastal property vulnerable to hurricanes are situated in the northeast. Something to bear in mind as Hurricane Earl tracks up the east coast.

New York, Massachusetts, New Jersey, Connecticut, and Maine are situated parallel to Earl’s path and have some of the highest insured coastal property values in the country, according to the I.I.I.

Figures compiled by catastrophe modeler AIR Worldwide show the total value of insured coastal exposure in these five states was $4.4 trillion in 2007. That’s about half the $8.9 trillion value of insured coastal property in hurricane prone states as a whole.

The data from AIR Worldwide also shows significant increases in  insured coastal property values in all five states. Consider the following:

New York: the total value of insured coastal exposure increased by 25.1 percent, from $1.9 trillion in 2004 to $2.3 trillion in 2007.

Massachusetts: the total value of insured coastal exposure increased by 16.7 percent, from $662.4 billion in 2004 to $772.8 billion in 2007.

New Jersey: the total value of insured coastal exposure increased by 26.5 percent, from $505.8 billion in 2004 to $635.5 billion in 2007.

Connecticut: the total value of insured coastal exposure increased by 18.5 percent, from $404.9 billion in 2004 to $479.9 billion in 2007.

Maine: the total value of insured coastal exposure increased by 29.7 percent, from $117.2 billion in 2004 to $146.9 billion in 2007.

And AIR Worldwide expects the total insured value of property in hurricane prone states to double every 10 years.

Check out I.I.I. hurricane fact files and market share by state.