Pandemic-related lockdowns have led many people to bring new furry friends into their homes.
A survey from the Insurance Research Council (IRC), found that 21 percent of homeowners reported adopting a dog in 2020.
Despite the increase in the number of dogs in American homes, homeowners dog bite (and related injury), claims fell overall by 4.6 percent in 2020 from the previous year, to 16,990 from 17,800 nationally, according to Triple-I and State Farm analysis.
March had the most dog-related injury claims last year, when people first went into lockdown at the start of the COVID-19 pandemic, according to State Farm. Dog bites were up 21.6 percent from the previous March, likely due to dogs dealing with owner stress, disruption in routines and more people around the house throughout the day. Experts fear another disruption—this time cause by the easing of restrictions for activities outside the home—could lead to another spike in bites.
Though the overall number of claims decreased, the total cost of claims increased by 7.1 percent to $853.7 million, up from $796.8 million in 2019. And the average cost per claim increased 12.3 percent to $50,245, up from $44,760 in 2019.
Dog bite related claims costs have been climbing for years. The average cost per claim nationally has risen 162 percent from 2003 to 2020, due to increased medical costs and the upward trend in the size of settlements, judgments, and jury awards.
Claims costs are attributable not only to dog bites but also to dogs knocking down children, cyclists, and the elderly, which can result in costly injuries.
The latest Triple-I dog bite claim figures are released in conjunction with National Dog Bite Prevention Week, an event held each year to help reduce the number of dog bites.
Children are particularly at risk for dog bites and are more likely to be severely injured, so it’s essential for parents to teach their kids to be safe around strange dogs and their own pets.
Dog training is, of course, key to preventing dog bites and related injuries for everyone, and National Dog Bite Prevention Week’s organizers offer many practical tips. This year, dog experts are particularly focused on re-socializing animals that have been isolated along with their humans for the past year.
To provide more tips for pet owners, members of the National Dog Bite Prevention Week Coalition— which includes the American Veterinary Medical Association (AVMA), State Farm, Insurance Information Institute (Triple I), American Humane and Victoria Stilwell Positively— will be hosting a Facebook Live event on Monday, April 12, at 1 p.m. Eastern.
Triple-I recommends that you check your homeowners or renters insurance policy to be sure it covers liability for dog bites and related injuries. Click here for more details about dog bite liability insurance.
Colorado State University (CSU) hurricane researchers predict an above-average Atlantic hurricane season in 2021, citing the likely absence of El Niño as a primary factor. El Niño tends to increase upper-level westerly winds across the Caribbean into the tropical Atlantic, tearing apart hurricanes as they try to form.
The CSU Tropical Meteorology Project team, led by Triple-I non-resident scholar Dr. Phil Klotzbach, predicts 17 named storms during the 2021 Atlantic hurricane season.
Of those, the researchers expect eight to become hurricanes and four to reach major hurricane strength (Saffir/Simpson category 3-4-5) with sustained winds of 111 miles per hour or greater.
An average season has 12 named storms, six hurricanes and three major hurricanes.
The 2021 hurricane season, which runs from June 1 to November 30, follows a record-breaking 2020 season. The team expects the 2021 hurricane activity to be about 140 percent of the average season. By comparison, 2020’s hurricane activity was about 170 percent of the average season. The 2020 hurricane season had six landfalling continental US hurricanes, including Category 4 Hurricane Laura, which battered southwestern Louisiana.
So far, the 2021 hurricane season is exhibiting characteristics similar to 1996, 2001, 2008, 2011 and 2017. “All of our analog seasons had above-average Atlantic hurricane activity, with 1996 and 2017 being extremely active seasons,” said Klotzbach.
The report also includes the probability of major hurricanes making landfall:
• 69 percent for the entire U.S. coastline (average for the last century is 52 percent) • 45 percent for the U.S. East Coast including the Florida peninsula (average for the last century is 31 percent) • 44 percent for the Gulf Coast from the Florida panhandle westward to Brownsville (average for the last century is 30 percent) • 58 percent for the Caribbean (average for the last century is 42 percent)
As always, Dr. Klotzbach caution coastal residents to take proper precautions as “it only takes one storm near you to make it an active season.”
The Federal Emergency Management Agency (FEMA) last week unveiled details of Risk Rating 2.0 – its plan to modernize the National Flood Insurance Program (NFIP) to make it fairer and more sustainable.
The changes measuring flood danger differently – gauging properties’ specific risks and replacement costs, rather than simply whether they sit in a FEMA-designated “flood zone.” FEMA officials said this would end a system in which low-value homes effectively subsidize insurance for high-value homes.
Despite concerns that Risk Rating 2.0 would lead to huge premium increases, NFIP Senior Executive David Maurstad said 23 percent of policyholders will see “immediate decreases,” 66 percent will see an “average of zero to $10 a month” in additional premiums, and 11% will pay higher bills, some more than $20 a month.
NFIP owes the U.S. Treasury $20.5 billion after a series of hurricanes that resulted in claims costs greater than the premiums FEMA received.
“Our current system is just fundamentally not working for us anymore,” Maurstad said, adding that the new approach would result in a “more equitable, accurate and individualized NFIP.”
Lawmakers in coastal states like Florida worried about the sudden impact of higher rates – more accurately reflecting the greater flood risk in those areas – on their constituents. FEMA has ameliorated those concerns by making new rates apply only to new policies when the program takes effect in October 2021. Homeowners and businesses with existing flood policies won’t see a rate change until April 2022.
FEMA said high-value homes in high-risk areas would experience seeing the largest increases. FEMA expects their rate increases would take effect over a 10-15 year “glide path” as they continue to be protected by an 18 percent annual cap on premium increases that is written into law.
The Union of Concerned Scientists (UCS) quickly weighed in on the plan.
“The system we’ve used to calculate flood risk, and in turn insurance policy premiums, no longer holds water,” said Shana Udvardy, a UCS climate resilience analyst. “Outdated maps have left homeowners ill-prepared for possible disasters. Risk Rating 2.0 could go a long way in helping homeowners better understand their risk, ensuring they can make informed decisions to protect themselves and their property.”
“It is great to see that FEMA is moving forward with Risk Rating 2.0, which is so badly needed,” said Matthew Eby, executive director of the First Street Foundation, a climate and technology non-profit that has done its own extensive flood-mapping. A recent First Street analysis found the United States to be woefully underprepared for damaging floods.
It identified “around 1.7 times the number of properties as having substantial risk,” compared with FEMA’s flood zone designation. “This equates to a total of 14.6 million properties across the country at substantial risk, of which 5.9 million property owners are currently unaware of or underestimating the risk they face.”
What’s in a name? If you live in “Tornado Alley,” there might be a lot – or less than you might imagine.
The designation refers to a stretch of geography running from Texas and Oklahoma through Nebraska and Kansas (think Dorothy and Toto, their house wrenched from the parched, flat earth and spinning toward Oz). It first came into use almost 70 years ago, when two atmospheric scientists used it as the title for a research project on tornadoes.
But, as the Washington Postrecently reported, some experts believe the name is misleading and should be retired.
“To be honest, I hate the term,” said Stephen Strader, an atmospheric scientist at Villanova University specializing in severe weather risk mitigation. “What people need to understand is that if you live east of the continental divide, tornadoes can affect you.”
Research has shown tornadoes are just as common in the Deep South as they are on the Plains, and there is no real drop in tornadoes as one exits Tornado Alley to the east.
“Tornadoes on the Plains are often elegant and foreboding,” the Post says, “some reliably appearing as high-contrast funnels that pose over vacant farmland for hordes of storm chasers and photographers. The Plains are like a giant meteorological classroom, an open laboratory; its students flock to it every year.”
Which explains why tornadoes we see on TV have that “classic” funnel look – and what we are shown most often comes to be thought of as most “typical.”
In the Deep South, most tornadoes are, as the Post puts it, “rain-wrapped and shrouded in low clouds, impossible to see.” More than a third of all tornadoes in Alabama and Mississippi occur at night, making them twice as likely to be deadly.
But, because they don’t match the popular perception of what a tornado is like and are hard to capture, they seldom appear on TV.
Why does it matter?
Because how we name things influences how we think about them, and how we think about them influences policymaking and individual behavior.
As we reported last year, tornado reports are on the rise – but is that because of changes in weather and climate? Or improved reporting related to technology and the growing popularity of “storm chasing”? Damage from tornadoes and other types of natural disasters is becoming more costly – is that because storms are becoming more frequent and severe? Or because more people are moving into disaster-prone areas?
If you’re not located in Tornado Alley, does it make sense to invest in mitigating tornado-related risks? Probably as much as it does to have flood insurance, even if you’re not in a FEMA-designated flood zone, or anticipate and prepare for winter storms in Texas.
By Loretta Worters, Vice President, Media Relations, Triple-I
When mega containership Ever Given wedged herself across a one-way section of the Suez Canal during a sandstorm last month, it brought 10 percent of global trade to a halt for a week. The ship – owned by Taiwanese container transportation and shipping company Evergreen Marine Corp. – was finally refloated and traffic in the canal was able to resume.
A Risk & Insurance cover story, published by Triple-I sister organization Risk & Insurance Group (RIG), describes how – in the context of a trend toward larger container vessels and a global supply chain already disrupted by COVID-19 – this incident should serve as a wake-up call for insurers.
Looking at the Ever Given grounding and disruption of canal traffic from a marine insurance perspective, RIG author Gregory DL Morris highlights the impact on cargo insurance claims and the potential for cargo spoilage. He also discusses compromised maneuverability of these massive vessels in high winds and references an increasing number of on-board fires, challenges surrounding salvage, and lack of suitable repair facilities, noting, “Underwriters need to be aware of this.”
Despite the likelihood that immediate property loss in this case will be minimal, megaships pose serious challenges to marine insurance and risk management. According to MDS Transmodal, a transport and logistics research firm, average vessels capacity grew 25 percent between 2014 and 2018, with ultra-large containerships accounting for 31 percent of the total capacity deployed in the second quarter of 2018. Transmodal attributes this trend to industry consolidation through mergers and acquisitions, as well as growing trade lane co-operation through alliances, slot sharing, and vessel-sharing agreements.
Even as traffic through the canal resumes, terminals will experience congestion. In addition, the severe drop in vessel arrival and container discharge in major terminals will aggravate existing shortages of empty containers available for exports. Delays in shipments, increased costs, and product shortages are therefore likely.
“The fact is that an already heavily disrupted maritime supply chain has taken another hit that will further affect its fluidity, with long-term consequences related to congestions, lead times and predictability,” said Jens Roemer, chair of the Sea Transport Working Group of the International Federation of Freight Forwarders.
While traffic through the canal is now moving, the global supply chain’s vulnerabilities may only now be beginning to become clear.
“Whether a blizzard in Texas or a sandstorm in Egypt,” Morris writes, “the narrow focus on minimal inventories that rely upon just-in-time delivery leaves little allowance for weather or accident.”
A captive insurance company is a type of risk-management arrangement that essentially works like self-insurance. While “single-parent” captives are financially possible only for large, well-capitalized companies, associations or groups of companies may band together to form a captive to provide insurance coverage. Professionals such as doctors, lawyers and accountants have formed many captives.
A new paper, written by Dr. Patricia Born, Midyette Eminent Scholar of Insurance at Florida State University and Triple-I Non-Resident Scholar, discusses the considerations for these companies from a financial cost and benefit perspective.
The paper outlines the numerous benefits of group captive membership, including greater control over risk management concerns and lower costs of insurance. It includes information on the types of companies that use member-owned group captives; the various types of captive arrangements; how they are currently used; where they are located; and legal and regulatory compliance concerns. It also offers several case studies.
“While captives can allow companies a means for managing risks that cannot be placed with commercial insurers, the risks that are reasonably retained by companies in captives have some distinctive characteristics,” the paper notes. For example, the frequency and severity of losses for risks transferred to the captive should be well understood by the company. Also, a company should have adequate experience with the risk to fully appreciate the actuarially estimated expected losses associated with the exposure. The expected losses should also not be catastrophic in nature. Since these losses are infrequent, they can be more effectively pooled by an insurer who has more capacity and more opportunities to diversify its risks.
“Group captives have become an attractive risk management option for a growing number and type of companies,” the paper concludes. “The current hardening in the traditional insurance market makes captives even more enticing and suggests the captive industry will see more growth in the form of new captive formations and increasing group captive membership.” A hard market, known in the insurance industry as a seller’s market, describes situations when insurance is expensive and in short supply.
Public discussion about re-opening the economy after COVID-19 has mostly revolved around the safety, efficacy, and availability of various vaccines. But in the longer term, other measures and new technologies will be key to getting back to normal and being prepared for future public health emergencies.
Tomer Mann, executive vice president of business development for 22 Miles, discussed his company’s “digital experience platform,” which incorporates temperature-scanning technology, touchless kiosks, virtual concierge, and other applications to provide social distance among customers and employees and early warning of possible infection in business settings.
“In March, when we were seeing a lot of the temperature-scanning solutions coming out of China, we realized we could leverage our software to pivot and create a more secure solution, avoiding some of the sensors that are coming out of China that are blacklisted in the trade market and avoiding some of the data breach implications,” Mann said.
22 Miles’ “workplace workflow” starts at a building’s lobby, using facemask and temperature detection and including badge integration and access control for employees and guests. For companies using shared workspaces, the system tracks what spaces are being used to facilitate sanitization between uses. To minimize physical contact while maximizing interactivity, the system’s components can be activated using voice, gesture, or mobile device.
In addition to facilitating safe, hygienic use of these spaces, the system captures large amounts of data that can provide warnings of possible infections and inform modifications to the workflow.
Scrubbing the air
Santiago Mendoza, senior vice president with Integrated Viral Protection, spoke about his company’s indoor air protection system, which has been shown to capture and destroy coronavirus at a 99-plus percentage rate. The system has shown similar results when tested with anthrax spores and other airborne pathogens.
Heating, ventilation, and air conditioning (HVAC) systems are “super spreaders” of coronavirus and other pathogens, Mendoza said, adding that most filter systems only catch and don’t kill them.
“Our system heats up to almost 400 degrees Fahrenheit and destroys the pathogens,” he said.
The IVP system is available for commercial and residential uses and has been installed in hospitality venues, health facilities, and schools across the United States, Mendoza said. It comes in multiple sizes, including a personal unit for travelers to use in hotel rooms and other closed spaces.
Early warning in water
Jennings Heussner, business development manager for BioBot Analytics, a wastewater epidemiology company, explained how BioBot went from testing for opioids to tracking coronavirus.
“We analyze wastewater coming into treatment plants for human health markers,” Heussner said. The company originally was focused on the opioid epidemic, helping communities better understand the nature of their local opioid problems to better inform their public health response.
When the pandemic hit, BioBot expanded its focus and became the first company in the United States to identify the presence of the virus in wastewater.
Leveraging existing wastewater sampling processes, BioBot analyzes the sample and reports back within one business day after receiving it, providing a quick, inexpensive, comprehensive early warning system.
Ready and resilient
Such technologies will be essential parts of building a pandemic-ready and resilient society. Anticipating and addressing outbreaks early can help alleviate health-related and business-interruption concerns and head off insurance claims.
Just as the insurance industry played a vital role in improving vehicle safety, infrastructure, building codes, and more, insurers and risk managers – partnering with policymakers, businesses, homeowners, and others – will help determine which of these emerging solutions will endure.
By Marielle Rodriguez, Social Media and Brand Design Coordinator, Triple-I
Triple-I’s “Insurance Careers Corner” series was created to highlight trailblazers in insurance and to spread awareness of the career opportunities within the industry.
March is Women’s History Month, and this month we interviewed Susan Holliday, a Senior Advisor at the International Finance Corporation (IFC) and the World Bank where she focuses on insurtech and insurance for SMEs and women. She is also a non-resident scholar at the Triple-I. Holliday sat down with us to discuss developing trends in insurtech, how technology and innovation can help close the protection gap, and the importance of collaboration in tackling climate risk.
Tell us about your current role at the International Finance Corporation (IFC). How did you fall into a career as an advisor and an investor in insurance?
IFC is the private sector arm of the World Bank. We focus on making investments and advisory work in emerging markets in sectors ranging from infrastructure to banking and insurance and healthcare. I’ve had a 33-year career in the financial services industry, particularly focusing on insurance and more recently fintech. I joined IFC to work on insurance and fintech. I’m currently working within different departments at IFC and at the World Bank and building a board portfolio. I’m also a non-resident scholar for the Triple-I.
A lot of your work is focused on insurance for women and SMEs. What do you hope to achieve in investing in insurance for women?
Before I joined the IFC in 2015, the company completed research in conjunction with Accenture and AXA about the insurance market for women. The study found that the insurance market for women could be USD 1.3 trillion globally by 2030 and half of that would be in emerging markets. The research also indicated that women have a better understanding of risk, are very open to insurance, and can be loyal customers and excellent employees in the industry.
After the She for Shield report was published, IFC started advising insurance companies in emerging markets on how to successfully serve women. IFC already had a program called ‘Banking on Women,’ which provided financing for banks to lend to women and women-led SMEs. Whenever we make investments in emerging markets, we are interested in taking an angle that better supports women.
Can you elaborate on the protection gap between women and men and between people with different financial backgrounds?
If you think about it, the insurance industry has a great history and is hundreds of years old. A lot of products were developed a long time ago when society and family structures were very different from what they’re like now. For example, today there are lots of single women and single parents, and most women work, which was not the case when the products were developed. We also have gig economy workers. The default option has always been to continue to offer products that have been offered for 50-100 years, but they do not necessarily meet the needs of today’s customers, whether they are women or men.
This is the reason why I like technology and innovation. To close the protection gap, we need to protect the things that people care about and that need to be protected. There has been a mismatch between traditional products and the actual risks people are facing.
There’s been a report by the Chartered Insurance Institute called “Insuring Women’s Futures” which looked at different times over a lifetime of one person, and it shows where a woman can be treated differently than a man. For example, having time off for maternity leave, having less pension, and living longer. It pointed out all these things that could accumulate and leave a woman being in a much worse position [than men]. Families are no longer a guy who’s working, a stay-at-home woman, and kids. Insurance needs to catch up to reality, and this not only applies to women but all underserved communities. This will not only be a challenge for the industry but also an opportunity to grow.
As an advisor to insurtech start-ups, what impact do you see these companies making?Are there any recent trends or developments in insurtech and fintech that excite you?
I think insurtech, digital, and innovation are critical. There is no insurance without insurtech. We’re never going to close the protection gap unless we use and utilize new technologies to do it.
One of the trends is bite-size insurance on demand. For example, instead of buying an insurance policy for a year, you would be able to turn it on and off, which is relevant to gig economy workers, and is popular in developing countries. Some people would rather access [insurance] when they need it.
Another trend is using alternative data to close the protection gap and get insurance to more people. If we just rely on the old sources of data, a lot of people get excluded from the market or get priced out. It may have built-in biases, which were not intended, but may disadvantage women or certain racial groups. The combination of alternative data sources and artificial intelligence is exciting.
You’re part of the leadership team for Triple-I’s Resilience Accelerator. Tell us about your work with the initiative and why you chose to join the team.
An area where the protection gap is big in the U.S. is in natural disasters and climate-related risks. We’ve seen so many things happen in recent years, such as Hurricane Harvey, and most recently, the very cold snowstorms in Texas and the wildfires on the U.S. West Coast. I think this is an extremely important area. It’s something that impacts everybody, regardless of gender, income level, or political identity.
I particularly like Accelerator, because I think insurance has a bigger role to play in prevention and mitigation, not just about compensation, and I like the approach of bringing different stakeholders together.
2020 was a historic year for natural catastrophe losses. What is the insurance industry doing to mitigate future losses and to prepare for a world impacted by climate change? What are the industry’s biggest challenges in creating resilience?
First and foremost, making insurance more available and more affordable. For example, there is parametric, index-based insurance, which can be provided at a micro-level and is used in some developing countries.
We need to get involved in longer-term thinking about how we can be more resilient against these risks in the first place. We must think about building towns, cities, and farmland in a way that they will be more resilient against weather losses. It has to do with planning, infrastructure, and it may have to do with changing certain industries.
I would like to see the insurance industry at the table in these discussions with regulators, local and state governments, and with private sectors so that all sides are working together. The industry needs to have a voice and be taken seriously. We need to think about how different parts of society can share the risk of climate-related losses.
By Loretta Worters, Vice President, Media Relations, Triple-I
Like many people, Karen Clark’s career was influenced by circumstances and serendipity rather than advanced planning. In graduate school she developed a love of building computer models, leading to her first job in the research department of Commercial Union Assurance.
“One of my first assignments was to figure out if the insurer had too much coastal exposure because they had been growing along the coastline,” said Clark. “I started to research hurricanes and how I could potentially build a model to estimate hurricane losses.”
That research ultimately led Clark to write her seminal paper “A Formal Approach to Catastrophe Risk Assessment and Management,” published in the Casualty Actuarial Society Proceedings, in which she argued for probabilistic models rather than the subjective rules of thumb then used in underwriting.
“Catastrophe modeling was a game-changer because it introduced a whole new way of understanding and managing risk,” Clark explained. “We don’t just look at worse-case scenarios, but we develop a probability distribution of potential outcomes. What are the chances of a $1 billion versus a $10 billion hurricane loss? You need probabilities so you can evaluate how likely you are to have a solvency-impairing event and how much reinsurance you want to purchase and for pricing the product. You also need to know what the costs and benefits are of different mitigation strategies. That’s what was missing prior to the catastrophe models.”
Being Taken Seriously as a Woman in the Insurance Industry
When Clark first started out, catastrophe reinsurance was primarily written out of Lloyd’s of London. “Lloyd’s was 100% male,” she laughed. “I gave my first presentation in the Lloyd’s Library to about 100 male underwriters. Not only was I a woman, but I was an American woman, and I was seven months pregnant,” she said. “Along with that, I was carting this portable computer. Many underwriters had never seen a portable computer, much less used one.
“After my presentation, there was silence in the room, and little interest, but that didn’t dissuade me. I was determined to find those innovators and forward thinkers and I did find a few in Lloyd’s and in the U.S., who helped me to develop AIR’s first product, CATMAP.”
Clark said it is important early on to find those forward thinkers who believe in what you’re doing and are willing to make a commitment. She advised women not to take no for an answer and to be good communicators. “You always have to ask for what you want. The worse that can happen is you get a no.”
Clark hasn’t looked back since. As founder of the first catastrophe modeling company, Applied Insurance Research, later AIR Worldwide, she became an internationally recognized expert in the new field of catastrophe risk modeling, revolutionizing the way insurers, reinsurers and financial institutions manage their catastrophe risk.
Clark declined many offers to sell her company over the years, but eventually decided to sell AIR to Insurance Services Office (ISO). Several years later, she co-founded Karen Clark & Company (KCC) with her business partner, Vivek Basrur, never intending to develop catastrophe models again. “But as my partner likes to say, life is what happens when you have other plans.”
Reinventing an industry
“Through numerous consulting engagements with global (re)insurers we discovered the models were not meeting all the needs of the senior level decisions makers. We started hearing several consistent themes and eventually developed what we called the CEO Wish List”, said Clark.
That CEO Wish List informed the KCC vision for a new generation of catastrophe models—models that are more accurate, fully transparent, and provide decision makers with additional risk metrics and insight into large loss potential. “We didn’t change the fundamental structure of the models”, says Clark, “but rather how the models are delivered to (re)insurers and how they can be leveraged in new ways.”
Clark said that KCC is doing a few things differently than other modelers and one of them is their scientific approach. “Rather than extrapolating from historical data, we have implemented advanced physical modeling techniques for the more frequent events, such as severe convective storms, winter storms, and extratropical cyclones. This enables our models to capture all weather-related claims and not just those defined as catastrophes. Our internal systems automatically ingest over 30 gigabytes of data a day from all the satellites, radar stations and global models so our clients have high resolution hazard footprints every morning for monitoring and managing daily claims activity.
“Interestingly, reinventing the catastrophe modeling industry was just as challenging as inventing it”, says Clark, “because most people thought it was impossible.” “We again had to find those industry leaders and early adopters who believed in our vision and then worked with us to make it a reality.”
Clark said she’s very fortunate she discovered her passion at a young age when she first started her career. I just love what I do, and until I can come up with something else that I could enjoy doing daily as much as I enjoy KCC, I’ll be right here.”