Category Archives: Catastrophes

Wildfire Education

California’s Wildfire Awareness Week gets underway Monday with a series of events planned across the state to educate residents on wildfire safety and preparedness. I.I.I. research shows that most of the large fires with significant property damage have occurred in California, where some of the fastest developing counties are in forest areas. Earlier this week the National Interagency Fire Center warned that the West and Southeast face an increased wildfire risk this year, due to ongoing drought conditions and a predicted warmer than average summer. In Florida, where over 90 percent of the state is experiencing drought, some 95 wildfires are reported to be active. Meanwhile, in Georgia, a state of emergency has been declared in 21 southeast counties that are facing extreme drought conditions. I.I.I.’s free home inventory software can help residents better protect their property ahead of disaster. Further information is also available from the Insurance Information Network of California  (IINC).

Terrorism Factor

Policy options for extending the Terrorism Risk Insurance Act (TRIA) beyond the end of 2007 will be the subject of debate at a hearing before the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises scheduled for next Tuesday. We’ve said it before, and we’ll say it again, but a continuing federal role is key to ensuring that terrorism risk insurance remains available to those businesses that want and need the coverage. A study by the American Academy of Actuaries notes that incidents involving chemical, nuclear, biological and radiological (CNBR) incidents in four U.S. cities could result in insured losses in the hundreds of billions of dollars. For example, in New York, a large CNBR event could cost as much as $778.1 billion, with insured losses for commercial property at $158.3 billion and for workers compensation at $483.7 billion. I.I.I. has additional information on terrorism risk online.  

Nor’easter 101

There are 45 days to go until the start of the 2007 hurricane season, but just so we’re clear, nor’easters are not like hurricanes. This is not to say that nor’easters do not have the capacity to cause substantial damage to property and life. In fact, nor’easters get their names from the continuously strong northeasterly winds blowing in from the ocean ahead of the storm and over coastal areas. The National Weather Service defines a nor’easter as a strong low pressure system that affects the Mid Atlantic and New England states and can form over land or over coastal waters. It points out that these winter weather (mid-April?!) events are notorious for producing heavy snow, rain, and tremendous waves that crash onto Atlantic beaches, often causing beach erosion and structural damage. Interestingly, it also notes that wind gusts associated with these storms can exceed hurricane force intensity. After spending the last 24 hours mopping water, I for one, will be asking my agent about flood insurance at this year’s renewal. For more information see the I.I.I.’s flood facts  and catastrophe statistics.

Hill Hearings

Availability, affordability and oversight are the watchwords of two separate hearings on Capitol Hill today. Hearing No. 1. before the Senate Committee on Housing, Banking and Urban Affairs will examine the availability and affordability of property casualty insurance in the Gulf coast and other coastal regions. Dr. Robert Hartwig, I.I.I. president and chief economist, will deliver testimony noting how population growth, rising property values and continued development in vulnerable areas are increasing the cost of property damage inflicted by hurricanes. Current regulatory, legislative and litigation-related obstacles are also raising costs and reducing choices for insurance consumers in hurricane exposed areas. The second hearing before the Senate Committee on Commerce, Science and Transportation will focus on oversight of the property and casualty industry. The industry’s limited federal antitrust exemption under the McCarran Ferguson Act is expected to be the topic du jour.  

Ill Winds

Batten down the hatches! Today marks the official launch of the Insurance Information Institute’s industry blog. An inauspicious start some might say, particularly following the upgraded forecast for the 2007 hurricane season from Colorado State University’s Tropical Meteorology Project. So what do we have to look forward to? In a nutshell: 17 named storms, 9 hurricanes, 5 of which will be intense (Category 3-4-5). The forecasters also put the probability of a major hurricane hitting the U.S. coastline at 74 percent; the probability of a major storm hitting the East Coast, including the Florida Peninsula at 50 percent; and the probability of the same at 49 percent for the Gulf Coast. We may have been spared in 2006, but flashback to April 2005 when the CSU team upped its forecast to 13 named storms, 7 hurricanes, 3 of them intense. Sound familiar? The 2005 season actually saw a record 26 named storms, 14 hurricanes, of which seven were intense. Check out the I.I.I.’s catastrophe facts for more information.  

SC Hurricane Focus

Much has been reported about the vulnerability of the Gulf coast states to hurricane risk, but with the start of the 2007 hurricane season just 62 days away, a new presentation from I.I.I. president and chief economist Dr. Robert Hartwig takes us to the Eastern seaboard, specifically South Carolina. The biggest hurricane to hit the state was Hurricane Hugo back in 1989. Since then, South Carolina has experienced enormous growth in coastal population and property. Latest available figures show the state has some $150 billion in insured coastal exposure, of which  about 56 percent is commercial and 44 percent residential. As Dr. Hartwig notes, a major storm could result in far higher commercial than residential losses,  particularly if business interruption as well as property damage coverage is triggered.  

On the Hill

Industry eyes turn to Capitol Hill today, as a hearing before the House Financial Services Subcommittee on Oversight and Investigations gets underway to discuss the insurance claims payment processes in the Gulf coast after the 2005 hurricanes. Dr. Robert Hartwig, I.I.I. president and chief economist, will deliver testimony noting that insurance companies have settled, without dispute, nearly all of the 1.7 million claims totaling $40.6 billion from Hurricane Katrina, the most expensive disaster in the history of insurance. Insurers have also strengthened their catastrophe response capabilities to more quickly reach their customers following mega-catastrophes.  

Twister Toll

It’s easy to forget that tornadoes, though not generally as destructive as hurricanes, are more frequent and can also cause severe damage. We got a stark reminder of this at the end of last week, when tornadoes and storms in Florida left 20 people dead and hundreds of homes and businesses damaged or destroyed. Each year about 1,000 tornadoes with wind speeds as high as 300 mph touch down in the U.S., according to I.I.I. research. Check out our  tornado statistics.  Ã‚  Ã‚  

  

Rebuilding is good for the Nation

As insurers, legislators and regulators grapple with how to maintain viable insurance markets in the post-Katrina and Rita era; we tip our hat to Illinois Sen. and presidential hopeful Barack Obama who addressed a Senate committee hearing on Gulf Coast rebuilding held in New Orleans Monday. Obama told the committee: “Rebuilding New Orleans is not just good for the Gulf or the state of Louisiana, it’s good for our nation.† Good point. Some 18 months since the most costly disaster in U.S. history and of the billions of dollars of government aid promised for Hurricane Katrina reconstruction, only a fraction has reached the hands of those affected. For our industry’s part, some 95 percent of the 1.2 million homeowners insurance claims in Louisiana and Mississippi had been settled by the storm’s one-year anniversary on August 2006. With an above-average hurricane season forecast for 2007, and landfall probabilities and intensities up across all regions, the importance of the rebuilding effort in the Gulf cannot be underestimated. Indeed,  insurers are  not alone in pushing for stronger building codes across the country. Check out I.I.I.’s Louisiana insurance market overview. for the latest catastrophe info.