# 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.

# The challenges to building better after a disaster

The pressures to rebuild quickly after a disaster can pose a challenge to the notion that immediately after a disaster is the perfect opportunity for creating more disaster resilient buildings and infrastructure.

The author of this blog, Robert Muir-Wood, chief research officer for RMS, cites several recent examples – “Whether this is to elevate buildings out of the flood zone in Houston or raising wind design code standards in Dominica, the political instinct will be to remove any barrier in the path of rapid reconstruction.”

He concludes that we should try harder to argue for making the transformation at the time of the disaster and not give in to the political arguments where economic recovery is the number one priority.

# Texas braces for Hurricane Harvey

As Texas prepares for the imminent arrival of intensifying Hurricane Harvey, already a Category 2 storm, latest analysis shows the enormous potential values at stake.

Just in from CoreLogic: More than 200,000 homes in Texas have the potential for storm surge damage with an estimated total reconstruction cost value (RCV) of almost \$40 billion.

Houston, Texas ranks number 7 among the top 15 metropolitan areas for storm surge risk, with a potential 283,380 at-risk homes and an RCV of \$53.4 billion.

But don’t forget the potential impact of strong hurricane-force winds.

Earlier from AIR Worldwide: The insured value of residential and commercial properties in coastal areas of Texas totaled \$1.2 trillion in 2012, accounting for 26 percent of the state’s total insured property exposure.

The Texas Windstorm Insurance Association (TWIA), is the state’s insurer of last resort for wind and hail coverage for Texas Gulf Coast residential and commercial property owners in the event of catastrophic loss. TWIA covers wind and hail in 14 coastal counties and parts of Harris County. TWIA has initiated its catastrophe plan.

Insurers stand ready to assist all policyholders impacted by Harvey.

# “London Calling…”

I.I.I.’s James Ballot, Senior Director of Marketing and Content Strategy, contributes these highlights from the IIS Global Forum 2017.

Established millennia ago and since visited continually by perils ranging from fire, flood, pestilence, civil unrest and wave upon wave of attacking foreign enemies, it’s no great stretch to call London the de-facto global headquarters of resilience. So it’s fitting that London should host this year’s International Insurance Society’s (IIS) Global Insurance Forum (GIF), given that the event’s focus was set squarely on Global Resilience and the Role of Insurance.

At the Forum more than 500 delegates and other attendees gathered to set a truly global agenda for how insurance and other parties–NGOs, policymakers, businesses, educational institutions, the media, among others—will respond to challenges ranging from political instability to cyberthreats to the need to create the right talent infrastructure to master the technological changes presently shaping our industry to innovating ways to address threats posed by intensifying natural catastrophe cycles.

Among the highlights:

• A video address from HRH The Prince of Wales to open the Day 3 Insurance Development Forum (IDF) in which he outlines four key areas where insurance can assume leadership in fostering resilience.
• Wide-ranging discussions of the “insurance gap” and how narrowing it is essential to building financial resilience against cyberattacks, as well as mitigating uninsured natural catastrophe losses among vulnerable populations in developing nations.
• The Nature Conservancy, a top-line partner at this year’s GIF, introduced an innovative insurance product underwritten by Swiss Re that insures coral reefs and other natural coastal fortifications.
• Insurtech and emerging innovations are changing the business—mostly by creating a climate in which, as one insurance fund capital manager asserted, insurance and tech startups can partner to help make “yesterday’s risks insurable today.”

A lot to cover in a single posting, to be sure. For a deeper dive into the goings-on at IIS Global Forum, Asia Insurance Review (AIR) offers gavel-to-gavel coverage of the event, as well as valuable insights from Forum participants.

# NHC warns on rainfall and flooding from Tropical Storm Cindy

Heavy rainfall due to Tropical Storm Cindy is expected to produce flash flooding across parts of southern Louisiana, Mississippi, Alabama, and the Florida Panhandle, according to the National Hurricane Center (NHC).

Total rain accumulations of 6 to 9 inches with isolated maximum amounts of 12 inches are expected in those areas, the NHC says.

On Tuesday, Alabama Governor Kay Ivey declared a statewide state of emergency in preparation for severe weather and warned residents to be prepared for potential flood conditions.

FEMA flood safety and preparation tips are here.

Flood damage is excluded under standard homeowners and renters insurance policies. However, flood coverage is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers.

Insurance Information Institute flood insurance facts and statistics show that the number of flood insurance policies increased in Alabama, Louisiana and Mississippi after 2005’s Hurricane Katrina.

Here are the numbers:

# 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.

# 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.

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.

# Prepare The Same For Every Hurricane Season

Early 2017 Atlantic hurricane forecasts are predicting fewer storms, but here’s why coastal residents shouldn’t let their guard down.

Colorado State University’s (CSU) Tropical Meteorology Project: “Coastal residents are reminded that it only takes one hurricane making landfall to make it an active season for them, and they need to prepare the same for every season, regardless of how much activity is predicted.”

London’s TSR (Tropical Storm Risk): The precision of hurricane outlooks issued in April is low and large uncertainties remain for the 2017 hurricane season.

Forecasters believe development of potential El Niño conditions in the coming months will suppress storm activity.

What are the numbers?

CSU: 11 named storms, with 4 hurricanes and 2 major (Category 3-4-5) hurricanes. The median between 1981 and 2000 was 12 named storms, 6.5 hurricanes and two major hurricanes. U.S. major hurricane landfall is estimated at 80 percent of the long-period average.

TSR: 11 named storms, with 4 hurricanes and 2 major hurricanes. 2017 Atlantic hurricane activity will be 30 percent below 1950-2016 long-term average.

I.I.I. hurricane facts and statistics here, plus information on flood insurance here.

Following Insuring Florida blog for more on hurricane preparedness.

# Cyclone Debbie: Storm Surge Biggest Threat

More than 30,000 people in low-lying coastal areas have been urged to evacuate their homes ahead of powerful Cyclone Debbie, as it bears down on the Queensland coast in northeastern Australia.

With landfall expected early Tuesday, Cyclone Debbie is currently a Category 4 storm and could intensify to Category 5. A Category 4 storm on the Australian scale equates to wind gusts of more than 140 miles per hour, the New York Times said.

Storm surge poses the biggest threat as the cyclone strengthens, according to major weather forecasters and news outlets.

The warnings are a good reminder that while we may think of destructive winds as the biggest danger in a cyclone or hurricane, storm surge is often more deadly.

Here in the U.S. the National Oceanic and Atmospheric Administration this hurricane season will use a storm surge watch/warning system to highlight areas along the Gulf and Atlantic coasts that are at risk of life-threatening inundation.

The new tool will alert residents to the risks of rising water and the need to evacuate, the Tampa Bay blog said.

A 2016 updated study by CoreLogic found that more than 6.8 million homes located along both the Gulf and Atlantic coasts of the United States are at risk of damage caused by hurricane-driven storm surge flooding. More on storm surge risk via the Insurance Information Institute facts and statistics on flood insurance.

It’s the first day of Spring and here in New Jersey we’re expecting a balmy 50 degrees Fahrenheit. Rising temperatures + snowmelt = flooding.

NOAA’s Spring Outlook calls for moderate to major flooding in northern North Dakota and in the Snake River basin in Idaho and flags California, which saw extensive flooding in February, as susceptible to additional flooding in the coming weeks.

Spring also marks the start of severe weather season for many states. Resources on severe weather preparedness are available at the Insurance Information Institute ( I.I.I.) website and weather.gov.

Which brings us to this:

Many homeowners incorrectly believe that flooding is covered by standard homeowners insurance, according to the I.I.I. Consumer Insurance Survey.

In fact, flood insurance is available from FEMA’s National Flood Insurance Program (NFIP) and a few private insurance companies.

How to change the misperception?

Part of the answer lies in education, as the I.I.I. says:

“Consumers can—and should—educate themselves about their coverage, recognize that they may have gaps in their coverage and seek guidance from an insurance professional when they purchase or renew a policy.”

The other part of the challenge, as outlined by Wharton professor Howard Kunreuther in an issue brief, lies in how to communicate to people that the best return on an insurance policy is no return at all.

“In reality, insurance is a protective measure should one suffer a loss. Homeowners should celebrate not having a loss because the financial consequences for an uninsured individual could be staggering.”

What do you think?