London fire renews focus on prevention and safety

Fire safety officials around the world are reinforcing prevention and evacuation guidance to high-rise residents following the deadly 24-story apartment building fire at Grenfell Tower in West London.

So far, at least 17 people are confirmed dead in the fire (Editor’s note: at least 80 people now confirmed or presumed dead). UK prime minister Theresa May has ordered a public inquiry into the blaze. Insurance will play a role in the recovery.

Officials say that while catastrophic fires on the scale of Grenfell Tower are statistically rare, awareness is key.

GlobalNews.ca reports here, NJ.com here, and the Manchester Evening News reports here. USA Today lists the worst high-rise fires in history here.

The National Fire Protection Association (NFPA) reports that the fire death per 1,000 fires and the average loss per fire are generally lower in high-rise buildings than in other buildings of the same property use.

“A major reason why risks are lower is probably the much greater use of fire protection systems and features in high-rise buildings as compared to shorter buildings.”

High-rise buildings are more likely to have fire detection, sprinklers and to be built of fire-resistive construction and are less likely to spread beyond the room or floor of origin than fires in shorter buildings, the NFPA says.

From 2009 to 2013, U.S. fire departments responded to an estimated average of 14,500 reported structure fires in high-rise buildings per year.

Five property types account for three-quarters (73 percent) of high-rise fires: apartments or other multi-family housing; hotels; dormitories or dormitory type properties; facilities that care for the sick; and office buildings.

NFPA adds that high-rise buildings present several unique challenges not found in traditional low-rise buildings, including longer egress times and distance, evacuation strategies, fire department accessibility, smoke movement and fire control.

The two deadliest high-rise fires in U.S. history were caused by terrorism: the fires and collapse of the twin towers after two planes flew into the World Trade Center, New York City on September 11, 2001, and the April 19, 2005 truck bomb outside a nine-story federal building in Oklahoma City.

I.I.I. fire statistics are here.

Eye on commercial insurance prices

Despite ample capital and benign claim cost trends, insurers have held the line on trading profitability for volume, while still responding as needed to emerging trends, according to Willis Towers Watson.

Its most recent Commercial Lines Insurance Pricing Survey (CLIPS) shows that commercial insurance prices in the U.S. were nearly flat in the first quarter of 2017.

Price changes reported by carriers averaged less than 1 percent for the sixth consecutive quarter.

Four lines (workers compensation, commercial property, directors and officers, and surety) showed modest price decreases.

Commercial auto remains the outlier with meaningful price increases reported.

Disaster theme parks coming to a city near you?

In Japan, disaster learning centers that allow visitors to experience simulated earthquakes, typhoons and fires are gaining five-star reviews on travel sites like TripAdvisor and providing valuable lessons in preparedness.

The Japan Times reports that earthquake simulators have become major tourist draws at more than 60 disaster education centers nationwide and are attracting growing numbers of foreign visitors.

Some attribute the increased interest in disaster prevention education in Japan to the 2011 Tohoku earthquake and tsunami. Others note that tourists today are more interested in life experiences than shopping.

From The Seattle Times: “Many of the more than 60 centers feature large shake tables where visitors can ride out fake quakes as powerful as the real thing. In some centers, visitors navigate life-size dioramas of crushed cars and teetering power poles while being quizzed on the best response to dangerous situations.”

The emphasis is on personal responsibility and action: how to make your way safely through wreckage and how to find the closest shelter.

So could centers like these form a valuable part of disaster preparation in earthquake-prone parts of the United States?

According to The Seattle Times, civic leaders in Seattle have long wanted to import the concept to quake-prone Western Washington, where many residents have only a vague understanding of the risks.

It quotes Bill Stafford, a retired director of the Trade Development Alliance of Greater Seattle: “If people could experience the visceral jolt of being rattled on a shake table or of picking their way through a recreation of a post-quake Seattle, they might take the risks more seriously.”

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

May severe weather: multi-billion dollar insurance payout aids recovery

Severe weather across the United States in May resulted in combined public and private insured losses of at least $3 billion.

Aon Benfield’s latest Global Catastrophe Recap report reveals that central and eastern parts of the U.S. saw extensive damage from large hail, straight-line winds, tornadoes and isolated flash flooding during last month’s storms.

The most prolific event? A May 8 major storm in the greater Denver, Colorado metro region, where damage from softball-sized hail resulted in an insured loss of more than $1.4 billion in the state alone.

Check out I.I.I. facts and statistics on hail here. The National Weather Service has detailed information on severe storm events, including hail, tornadoes and wind. 2016 data on the number of hail events are posted online.

Total aggregated economic losses from U.S. severe weather in May were in excess of $4 billion, Aon Benfield said.

Will your baby need to learn to drive?

“They’ll be driving soon,” a friend said recently when I sent him a photo of my two young sons. “Hoping car will do that,” I responded, only half-joking.

But if you think about it, we may not be so far from that scenario and insurers are among those saying sooner, rather than later for self-driving cars.

From across the pond, this:

“Babies born today may never have to take a driving test.”

Axa UK’s chief executive Amanda Blanc told The Telegraph that autonomous vehicles could be on the roads within 15 years.

In preparation Ms. Blanc said it is crucial for the insurance industry to build a framework for what happens in the event of a car accident that is caused by a computer, rather than a human.

“Driverless cars will not be able to take to the roads [without that],” she added.

Insurers know that new technology, particularly the rise of autonomous driving, will drive a big shift in liability claims and they are preparing accordingly.

For example, in our earlier post we reported that Allianz has already started building teams of engineers with experience in automotive and driverless technology.

The Trump administration is set to unveil revised self-driving guidelines within months, according to this Reuters report.

Despite advances in safety, the impact of collision/crash, particularly motor-related, is the main driver of liability loss activity in the United States, according to Allianz’s latest global claims review.

Check out the I.I.I. issues update Self-Driving Cars and Insurance.

Storm surge and flooding top of minds this hurricane season

Nearly 6.9 million homes along the Gulf and Atlantic coasts have the potential for storm surge damage with a total estimated reconstruction cost value (RCV) of more than $1.5 trillion.

But it’s the location of future storms that will be integral to understanding the potential for catastrophic damage, according to CoreLogic’s 2017 storm surge analysis.

That’s because some 67.3 percent of the 6.9 million at-risk homes and 68.6 percent of the more than $1.5 trillion total RCV is located within 15 major metropolitan areas.

“A low intensity storm in a population dense, residential urban area has the ability to do significantly more damage than a higher intensity hurricane along a sparsely inhabited coastline.”

The metro area that includes Miami, Fort Lauderdale and West Palm Beach continues to have the greatest number of at-risk homes (784,000) and an RCV of $143 billion.

On the other hand, the New York metro area has slightly fewer homes at risk (723,000), but a much higher RCV of $264 billion due to high construction costs and home values in this area.

CoreLogic’s analysis also shows local areas along the coasts are susceptible to potential damage that could exceed $1 billion for a single event.

Storm surge and other flooding is on the minds of many in 2017 as Congress considers reauthorization of the National Flood Insurance Program (NFIP), CoreLogic says.

Working with nature to build resilience to hurricanes

Strong buildings, levees and seawalls play an essential role in increasing resilience to floods and hurricanes, but insurers are also looking to natural infrastructure to mitigate storm losses.

As the 2017 Atlantic hurricane season officially begins, an ongoing effort by insurers, risk modelers, environmental groups and academics is focused on understanding how natural defenses like coastal wetlands and mangrove swamps can reduce the impact of storms.

A 2016 study led by researchers at the University of California, Santa Cruz, the Nature Conservancy and the Wildlife Conservation Society, found that more than $625 million in property losses were prevented during Hurricane Sandy by coastal habitats in the Northeast.

Where wetlands remain, the average damage reduction from Sandy was greater than 10 percent. Researchers expect analysis of the effects of Hurricane Matthew will demonstrate the value of similar protections.

The study was conducted in association with Risk Management Solutions and Guy Carpenter, with funding from the Lloyd’s Tercentenary Research Foundation and additional support from the Science for Nature and People Partnership.

Business Insurance has more on this story here.

This is just one example of how reinsurers and insurers collaborate with different sectors to build resilience and mitigate storm damage.

For example, Swiss Re is working with the Nature Conservancy to explore the economics of nature-based coastal defenses.

I.I.I. CEO Sean Kevelighan writes about how the insurance industry collaborates with different groups to build resilience to natural disasters in this article on PC360.

Check out I.I.I. issues update Climate Change: Insurance Issues.