What are the odds? Pretty good. . .

New York Times columnist David Leonhardt discusses how people think about probability:

People understand that if they roll a die 100 times, they will get some 1’s. But when they see a probability for one event, they tend to think: Is this going to happen or not?

They then effectively round to 0 or to 100 percent. . . . It’s . . . what many Americans did when they heard Hillary Clinton had a 72 percent or 85 percent chance of winning. It’s what football fans did in the Super Bowl when the Atlanta Falcons had a 99 percent chance of victory.

If you tell someone a thing is unlikely, they will tend to think it is impossible. When the unlikely happens, they are more likely to blame you (or your mathematical model) than their leap of logic.

In insurance, we hear about it when a flood encroaches a 500-year floodplain or a 1-in-250 year storm hits.

It is one of the biggest challenges we face in helping to create a more resilient world – convincing people that what is unlikely today is inevitable someday.

 

Auto theft projected to rise for the third consecutive year

The steady decline in auto thefts which started in 1991 is largely attributable to the rise of modern keys, fobs and ignitions, and the ubiquity of statewide anti-theft taskforces. But insurers are keeping an eye on the increase in auto thefts that occurred in 2015 and 2016 and which is projected to continue in 2017, according to a recent Risk Information newsletter.

Car owners have become complacent about theft, with 56 percent of Americans reporting that they rarely or never worry that their car will be stolen. In fact, car owners are getting so relaxed about theft that thousands of vehicles are stolen each year because keys or fobs are left in the vehicle, according to the National Insurance Crime Bureau.

Thieves are also constantly devising new and sophisticated means of stealing autos. Tactics include acquiring smart keys, switching vehicle identification numbers; and using stolen identities to secure loans for expensive vehicles.

Thieves also now have access to devices which search for signals from nearby wireless key fobs and use that signal to unlock and start cars. To counteract this trend a growing market has sprung up for boxes or pouches for key fobs especially designed to block radio transmissions. You can purchase one on Amazon.

The FBI estimates that the number of motor vehicle thefts increased 7.4 percent in 2016 over the prior year. Approximately $5.9 billion was lost nationwide to motor vehicle thefts in 2016 with the average dollar loss per stolen vehicle of $7,680.

The I.I.I. has Facts and Stats on auto theft here.

The Week in a Minute, 12/22/17

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

California’s Thomas Fire (Santa Barbara and Ventura counties) is now the second-largest in state history, having burned more than 270,000 acres.

Three people died when an Amtrak train derailed near DuPont, Washington (Pierce County) on Monday, December 18.

An 11-hour power outage at Atlanta’s Hartsfield-Jackson airport on Sunday, December 17, will likely cost airlines millions of dollars, and perhaps generate business interruption insurance claims.

 

Drivers, beware – perdiddle alert!

 

These are the longest nights of the year, so here’s a driving tip: check the headlights on your car.

This advice comes from my mechanic, who in the course of two weeks replaced the left headlight on both our vehicles. This is the season for headlights to burn out, he said – something about a wearing out of the bulb straining the filament, which then snaps when temperatures drop.

So take a second before you drive to turn on your headlights and walk around the car. You may find a perdiddle.

Click here for more winter driving tips from the I.I.I.

Swiss Re’s preliminary insured catastrophe loss estimates for 2017 – $136 billion, third highest on record

Swiss Re sigma has released its preliminary 2017 catastrophe loss estimates today. Here are some of the findings:

  • Total global economic losses from natural disasters in 2017 came to $306 billion, up from $188 billion in 2016, according to Swiss Re sigma estimates.
  • Insured losses from catastrophes are estimated to be $136 billion, the third highest recorded by sigma.
  • Losses were heaviest in U.S. which was pummeled by hurricanes Harvey, Irma and Maria making 2017 the second costliest hurricane season after 2005.
  • Over 11,000 people died because of disaster events in 2017.

In addition to the intense hurricane season other major disasters of 2017 include:

  • Major wildfires in October through December in California, which led to significant losses which are still being tallied. Property Claims Services estimates combined insured property losses from the fires to be $7.3 billion.
  • In mid-September, two powerful earthquakes in Tehuantepec and Puebla, Mexico, which led to numerous building collapses, claiming many victims and resulting in insured losses of over $2 billion.
  • In late March, tropical Cyclone Debbie, which hit the northeastern coast of Australia as a category 4 storm. Wind gusts and widespread flooding in central and southeast Queensland and northeast New South Wales led to insured losses of $1.3 billion.
  • Europe suffered a cold snap at the end of April, followed by a summer of record temperatures.
  • Severe floods in Southeast Asia claimed many victims and caused large devastation.

Martin Bertogg, Head of Catastrophe Perils at Swiss Re:

“In recent years, annual insurance losses from disaster events have exceeded USD 100 billion a few times. The insurance industry has demonstrated that it can cope very well with such high losses. However, significant protection gaps remain and if the industry is able to extend its reach, many more people and businesses can become better equipped to withstand the fallout from disaster events.”

Determining the relative impact of winter snowstorms

It’s mid-December and some areas of the country have already had heavy snowfalls.  Winter storms can have a serious economic impact with disruption of business and travel, collapsed roofs and stresses on municipal governments. It’s useful to know the relative impact of winter storms, and in a recent blog post,  AIR Worldwide spotlights a rating scale called Northeast Snowfall Impact Scale (NESIS), developed by the  Weather Channel and the National Weather Service.

NESIS provides a relative measure of Northeast winter storm impact based on total snowfall amount, geographic distribution, and population density. The scale does not consider the replacement value of property, however.

NESIS has five categories: Extreme, Crippling, Major, Significant, and Notable. The Great Blizzard of 1993 holds the record for maximum NESIS value for a single storm at 13.20

The I.I.I. has a Facts & Stats about Winter Storms here.

The Week in a Minute, 12/15/17

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

More than 90,000 people have been evacuated in recent weeks as California’s Thomas Fire—the fourth largest in the state’s history in terms of acreage burned—migrated last weekend (December 9-10) into Santa Barbara County from Ventura County.

The total insured damage caused by 2017’s hurricanes Harvey, Irma, and Maria, coupled with two Mexican earthquakes, could rival 2011’s record catastrophe-related payouts from that year’s major earthquakes in Japan and New Zealand, according an analysis published in The Wall Street Journal’s Wednesday, December 13, print edition.

The I.I.I.’s Market Report webinar, “Protecting Small Business Against #cyberfail,’ was held on Monday, December 11.  It is archived online.

 

I.I.I. Market Report Webinar: Protecting Small Business Against #cyberfail”

“Small businesses are an easy target,” said Steve Clarke, Vice President, Government Relations, ISO. Clarke was one of several experts describing the cyber threat small business owners face in an Insurance Information Institute webinar Dec. 11, “Protect Your Business from #cyberfail.”

Many of these enterprises are data-rich businesses, Clarke continued, pointing to how a recent study estimated 28 percent of cyber thefts occur at health care companies while another 17 percent came at financial services firms.

Other issues which arose—

Cutting down the time between when a cyber breach takes place, and when the victim notices it has happened, also known as the ‘dwell time.’

The importance of educating employees about cyber risks, and how many cyber breaches occur because a company’s employees unknowingly open emails which are part of phishing operations aimed at gaining access to a company’s computer network.

The U.S. Small Business Administration has materials on cybersecurity on its website.

Watch this webinar now.

Presentation Date
Monday, December 11, 2017

Speakers

Introduction: James Lynch, Chief Actuary, Insurance Information Institute

Moderator: Marty Frappolli, Senior Director of Knowledge Resources, The Institutes

Panelists:
• Steve Clarke, Vice President, Government Relations, ISO
• Nick Graf, Ethical Hacker, CNA Insurance
• Donald Smith, Director of the Office of Entrepreneurship Education, Small Business Administration
• Michael Rohrs, Associate Director of Global Cyber Practice, Control Risks

Marijuana in the Workplace: What Happens When Business Managers in Legal-Use States “Just Say ‘No’”?

By James Ballot, I.I.I. senior advisor, special content projects

The conversation about marijuana use has evolved. Once, in the not too distant past, we (meaning our appointed civic leaders, parents and other authority figures) had the luxury of taking an absolutist stance about weed. Fast-forward to today, and the discussion is mostly a constructive exchange between or among parties invested in positive outcomes, and willing to embrace wide-ranging points of view.

Marijuana users—particularly persons permitted lawful therapeutic use of cannabis—are both empowered and motivated to pursue legal protection from discrimination potentially caused by employer “zero tolerance” policies.

So, what’s an employer to do? In “Marijuana, the Workplace and EPLI – Clearing the Haze,” Mindy Pollack, J.D., Product Specialist and Vice President in Gen Re’s Treaty department, lays out a few hypotheticals to clarify the situation (i.e., legal use of cannabis by new hires and employees). She also identifies solutions like EPLI policies that offer coverage against claims, as well as guidance for how employers can tailor conduct bylaws to better fit the new realities as legal marijuana use becomes the norm.

In short, the courts are split on discrimination claims related to marijuana use. That leaves employers with no single answer when the marijuana question comes up. Add to that the variations in state laws and workplace scenarios, and you have even less clarity.