The Week in a Minute, 11/30/17

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

 The I.I.I.’s James Lynch participated in Property Casualty Insurers Association of America’s Thursday, Nov. 30, satellite media tour on the dangers of marijuana-impaired drivers as states liberalize their marijuana laws.

The 2017 Atlantic hurricane season was the first one ever to feature three Category 4 storms making landfall on the U.S. mainland (Harvey in Texas, Irma in Florida) as well as a U.S. territory (Maria in Puerto Rick).

Twelve of 14 post-Hurricane Irma fatalities at The Rehabilitation Center of Hollywood Hills (Broward County) were deemed by the coroner to have been “homicides due to heat exposure.”

 

2017 Atlantic Hurricane Season in Review: One for the Record Books

By Philip J. Klotzbach, Ph.D.

The 2017 Atlantic hurricane season, which officially ends on November 30, has been extraordinary by any standard, with a total of 17 named storms, including 10 hurricanes—six of which were classified as major, storms, measuring Category 3-5 on the Saffir-Simpson Wind Scale.  Historically, 2017 ranked as a top-ten year in most widely recognized tropical cyclone (TC) metrics (Figure 1).

Figure 1: 2017 Atlantic tropical cyclone statistics compared with the 1981-2010 average as well as its rank compared with all historical Atlantic hurricane seasons since 1851.

What really distinguished the 2017 Atlantic hurricane season, however was the month of September (Figure 2).  All other months of 2017’s hurricane season had near-normal activity, while September broke the Atlantic calendar month record for named storm days, hurricane days, major hurricane days and Accumulated Cyclone Energy (ACE). (ACE is an integrated metric that takes into account the frequency, intensity and duration of storms.)

Figure 2: Atlantic ACE by month in 2017 compared with the 1981-2010 average. 

Atmospheric and oceanic conditions were conducive for an active season and this was especially true during September.  During the period from late August to late September when the season was most active, the tropical Atlantic had very low vertical wind shear (Figure 3).  Vertical wind shear is the change in wind direction with height in the atmosphere.  Strong vertical wind shear tilts the hurricane vortex, disrupting the circulation and preventing the pressure fall necessary to sustain a strong hurricane.  Sea surface temperatures were also much warmer than normal, providing more fuel for developing tropical cyclones (Figure 4).

Figure 3:  Vertical wind shear anomalies from late August to late September.  Blue colors indicate reduced vertical wind shear.  Reduced vertical wind shear dominated most of the tropical Atlantic into the eastern and central Caribbean.

 

Figure 4: Sea surface temperature anomalies across the tropical Pacific and Atlantic near the peak of the Atlantic hurricane season.  (The tropical Atlantic and Caribbean were much warmer than normal in 2017.)

Three of the 17 storms that formed in 2017 accounted for the lion’s share of damage.  Hurricane Harvey made landfall in central Texas as a Category 4 hurricane, then stalled near Houston, inundating the metropolitan area with record-setting rainfall.  Hurricane Irma cut a path of destruction across the Caribbean and tropical Atlantic, devastating several islands before becoming the first Category 5 hurricane to make landfall in Cuba since 1924 (Figure 5).  Irma then made landfall on the Florida Keys as a Category 4 hurricane.  Hurricane Maria became the first Category 5 hurricane on record to make landfall in Dominica, then it buffeted the US Virgin Islands before slamming into Puerto Rico as a Category 4 hurricane.  Maria was the strongest hurricane to make landfall in Puerto Rico since 1928.  While the final damage estimates are still being tallied, this season will certainly go down as one of the most devastating Atlantic hurricane seasons of all time.

Figure 5: Satellite imagery of Hurricane Irma as it pummeled the northern coast of Cuba.

Philip J. Klotzbach, Ph.D. is Research Scientist, Department of Atmospheric Science, Colorado State University and an I.I.I. Nonresident Scholar. You can follow him on Twitter at @PhilKlotzbach

Americans’ Attitudes about Marijuana Use and Driver Safety Evolve with the Times. A Preview of I.I.I. Research Polling on the Subject

By James Ballot, Senior Advisor, Content Marketing

Americans’ attitudes about pot use have become more nuanced; 29 states and the District of Columbia (accounting for about 62 percent of the U.S. population in 2016) have passed laws legalizing the use of marijuana for medical or recreational use.

There are clear insurance issues to this trend. The Highway Loss Data Institute found that crash rates rose in states where recreational marijuana was legalized. The National Council on Compensation Insurance has a running conversation about how changes in the use of cannabis could affect workers compensation insurance.

While conducting research for a forthcoming I.I.I. poll, some interesting and unexpected trends emerged, including:

  • Most Americans know the legality of marijuana use where they live
  • A slight majority of Americans believe that driving while high results in more motor vehicle crashes

And yet…

  • Americans also voice greater tolerance of drivers who have used marijuana (compared to those who had consumed alcohol)
    • Respondents age 18 to 34 were more likely to say that they would ride in a car with a driver who has consumed marijuana (37 percent), followed by 34 percent of people between the ages of 35 and 44

We’ll release a report with polling results and our key learnings from the data in the near future. In the meantime, the conversation over safety issues related to legal medical and recreational cannabis will find larger, more mainstream audiences. To keep up with these and other discussions, be sure to follow @III_Research on Twitter.

 

The Insurance Industry’s Value Added to GDP

By Dr. Steven Weisbart, chief economist, I.I.I.

How significant a role does the insurance industry play in the U.S. economy? There are many ways to quantify the answer to this question, and even then the answers do not capture all of the valuable ways insurance contributes to economic growth. Still, it might be instructive to consider briefly one indicator.

The U.S. Commerce Department’s Bureau of Economic Analysis calculates and reports quarterly industry-by-industry contribution to the U.S. $19.25 trillion GDP. In the latest report, for the second quarter of 2017, the insurance industry’s value added contribution was $596.5 billion (seasonally-adjusted at an annual rate). This is 3.5 percent higher than for the same quarter in 2016.

The nearly $600 billion value-added puts the insurance industry ahead of both the information industry (if broadcasting and telecommunications are excluded) at roughly $500 billion, and the transportation industry, at roughly $525 billion. Within the broad field of financial services, the value added by “Federal Reserve banks, credit intermediation, and related activities” was $543.6 billion.

It might be surprising that the insurance industry’s contribution to the GDP exceeds that of banks, but this has been true every quarter since the fourth quarter of 2014—11 quarters and counting. So, relative to banks, the insurance industry’s contribution to the economy has been growing faster.

The historical record for the past five and a half years, expressed as value added as a percent of GDP for banks and insurance is shown in the accompanying graph.

Cyber Monday online safety tips

Identity theft is the biggest threat consumers face when shopping online, according to security expert Dr. Yair Levy. Before venturing online for Cyber Monday deals, here are some tips from Dr. Levy which appeared in a recent Sun Sentinel article:

  • Use a dedicated credit card for online purchases and a separate card for to pay bills, buy gas, groceries, etc. If the card is compromised, it’s easy to cancel the account.
  • When making purchases, verify a secured connection by looking for a little padlock or by making sure the Web address starts with “https://” (the “s” stands for secured).
  • Don’t use free wi-fi on your mobile device.

Phishing scams are becoming more frequent and more sophisticated, so be wary of emails or texts claiming to be from your favorite retailer. The best defense is not to click on links in a message or give out any personal information. If the message is legitimate, you can always go directly to the retailer’s website.

For more on identity theft and cybercrime, visit our Facts & Stats page.

Ergonomics in the office

The dangers of inactivity have been well publicized. You may have seen the fear-inducing headlines that too much sitting is killing you. So it’s not surprising that office workers are turning to standing desks and exercise balls as alternatives to the office chair. However, these alternatives come with injury risks of their own, which could trigger a workers compensation claim. Exercise balls offer no back support and prolonged standing is linked to reduced circulation and discomfort in the feet and the lower back.

For the people who have eschewed chair alternatives, a recent article in the Workplace Safety section of the Travelers website lists what to look for in an office chair according to Travelers risk control ergonomics professionals:

  • A pneumatic height adjustment.
  • A height adjustable lumbar support.
  • A seat back which can either be locked in an upright position or inclined up to 110 degrees.
  • Adjustable padded armrests with rounded edges.
  • An adjustable seat pan.
  • A five caster base with appropriate casters for the flooring surface.

Swiss Re forecasts growth in insurance markets

This in from Swiss Re Institute’s Global Insurance Review 2017 and Outlook 2018/2019 report:

The cyclical upswing in the global economy is set to continue in 2018 and 2019, supporting insurance premium volume growth.

Global non-life premiums are forecast to grow by at least 3 percent annually in real terms in the next two years and life premiums by 4 percent.

Emerging markets, particularly in Asia, will remain the driver of global non-life and life premium growth, according to Swiss Re.

THE WEEK IN A MINUTE, 11/16/17

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

The U.S. House of Representatives approved on Tuesday, November 14, the 21st Century Flood Reform Act. It calls for a five-year extension of FEMA’s National Flood Insurance Program (NFIP).  The NFIP is due to expire on Friday, December 8, 2017.

Hurricane Irma has to date generated an estimated $5.87 billion in insured claim payouts in Florida, according to the state’s Office of Insurance Regulation (OIR).

The American Heart Association’s new blood-pressure guidelines could impact how life insurers underwrite their policies, the I.I.I.’s chief economist, Dr. Steven Weisbart, told PolicyGenius.com.

 

Americans view cyberattacks, climate change as major threats

Cyberattacks from other countries are now seen as a major threat to the U.S. by 72 percent of Americans, according to a national survey from the Pew Research Center.

This view has changed little in recent years, apparently. But what has changed is public opinions about other global threats.

Take climate change—now viewed as a major threat by 58 percent of Americans, up 7 points since January, and the highest share since 2009.

The survey was conducted October 25-30 among 1,504 adults.

NAIC’s life insurance policy locator finds $92.5 million in lost life insurance policies in its first year

The National Association of Insurance Commissioners (NAIC) announced on Monday that its Life Insurance Policy Locator has matched 8,210 beneficiaries with lost or misplaced life insurance policies or annuities – totaling $92.5 million returned to consumers – since the launch of the consumer tool last November. More than 40,000 consumers have conducted searches since the policy locator was launched.

“State insurance regulators identified the scattershot, intensely manual process of helping consumers search for lost life insurance policies,” said Ted Nickel, NAIC President and Wisconsin Insurance Commissioner. “.. we leveraged innovation and technology to develop a bespoke solution providing an easy way for consumers to access nearly all life insurers and search for lost life insurance policies.”