Hurricane Harvey, 8/26 Evening Update

Weather Underground put it in boldface (scroll down a bit), so I think it is worth a pull-quote:

There is very little doubt that Texas is in for one of the worst rainfall and flood events in its history. The resulting rainfall is very likely to produce widespread, devastating, and potentially catastrophic flooding.

Most dire is the outlook for Houston, “given that city’s vast size and population and its well-known vulnerability to flooding.”

Good luck to all there and throughout Coastal Texas, and pardon the near-cliche, but don’t drive into water – most flood victims, I hear, are found in their vehicles.

To follow developments real-time, WU recommends:

After Harvey, if you are filing a claim . . . .

If your home was damaged by Hurricane Harvey and you have insurance, you will likely be filing a claim. We at I.I.I. have some tips to help the process go more smoothly:

  1.  Contact your insurer as soon as possible to begin the process.
  2.  Document your loss. The insurance adjuster most likely will inspect the damage, but it is a good idea to take photographs and document the damage as thoroughly as possible.
  3. Check with your insurer before discarding damaged stuff. Adjusters usually want to see proof of loss. If, however, you are required to discard them for safety, take photographs .
  4. Many insurers use text messages to notify you about the status of your claim. If so, sign up for the alerts. You’ll find out faster when your estimate is available and when a payment has been sent.
  5. Know what emergency services are available. Many companies will dispatch an approved emergency services company to protect your home from further damage. If the damage has left your home unlivable, your homeowners insurer will provide you with a check for additional living expenses.
  6. Keep a claim diary. Note everyone you speak to about your claim —  name, title and contact information. Also, keep track of the date, time and issues discussed. The better organized you are, the simpler and easier the claims process will be.

We told the media about this via a press release, which is a bit more detailed.  You can find that here. It also has information on hurricane deductibles, which I will write about in a separate post.

Texas’ Property Insurer of Last Resort Serves Many in Harvey’s Path

Many of the homeowners and businesses in the path of Hurricane Harvey get hurricane protection for their properties from the Texas Windstorm Insurance Association (TWIA) instead of from either a traditional homeowners or business policy.

Created by the state Legislature in the 1970s, TWIA is a privately funded property insurer that provides windstorm and hail coverage to Texas homeowners and businesses in numerous coastal counties.

Homeowners and businesses purchase TWIA policies from their insurance professionals separate and apart from their homeowners and business policies so as to be covered for two specific events—either wind or hail-caused damage to their property.

Flood coverage for homeowners and businesses must be acquired separately from either FEMA’s National Flood Insurance Program (NFIP) or a private flood insurer.

TWIA policies have hurricane deductibles, which are usually equal to anywhere from 1 to 5 percent of a property’s insured value.  For instance, a TWIA policyholder who has a home with an insured value of $150,000, and a hurricane deductible of 5 percent, would have a $7,500 deductible. ($7,500 is 5 percent of $150,000.)  In this instance, the TWIA policy would cover wind-caused property damages above and beyond the $7,500 deductible. So if wind damage was $20,000, TWIA coverage would be $12,000 less $7,500, or $12,500.

TWIA claims are paid primarily from two revenue sources: the premiums TWIA collects from its policyholders and the money TWIA can access from its Catastrophe Reserve Trust Fund (CRTF).  The CRTF consists of funds TWIA has accumulated over time.  If TWIA needs additional money to pay claims, it is also authorized to use the money every Texas-licensed property insurer pays to TWIA in the form of annual assessments. It has a variety of other funding mechanisms that give it the ability to handle up to $4.9 billion in claims, which right now seems to be plenty for this particular storm.

TWIA issues policies in 14  coastal counties as well as portions of Harris County. TWIA writes the wind/hail for about 60% of the policies in that region, the rest being covered by private companies.

If you are insured by TWIA, you’d know it. It is an insurer of “last resort.” At least two traditional insurers would have to have refused to cover your property for wind risk, and your agent would have notified you of that fact and sent you to TWIA to seek coverage.

If you are a TWIA policyholder, you can learn more about filing a claim at the organization’s website or by calling (24 hours a day, seven days a week) (800) 788-8247.

Updated at 3:50 p.m. Eastern 8/26 to show the percentage of policies held by TWIA in the coastal region.

Updated at 5 p.m. Eastern 8/26 to give more detail on TWIA’s funding mechanisms and how people can know whether TWIA is their insurer.

Hurricane Harvey: 8/25 Evening Update

  • CoreLogic (via email blast) pegs insurance losses from Harvey between $1 billion and $2 billion. This excludes flood losses covered by National Flood Insurance Program (NFIP) and business interruption.
  • This increasingly looks like what Weather Underground calls a “colossal” flood event, with more than 20 inches of rain forecast over an area the size of Massachusetts, including Galveston and Houston. The more extreme models “break the map,” meaning there aren’t enough colors to portray visually the amount of rain forecast.
  • The rain plus the storm surge (4+ feet across the 200+ miles from Sargent to Port Mansfield, topping out at 12 feet [Sandy maxed out at 9 feet]) is likely to push flooding into Galveston Bay and Houston’s shipping canal.
  • The flooding is likely to test NFIP’s nascent private reinsurance program: 26 percent of losses in the $4 billion excess $4 billion later. (I blogged about the structure here.)
  • Remember that the standard homeowners’ policy doesn’t cover flooding – you have to have flood insurance from NFIP or a private policy that specifically covers flood.
  • If you are there, follow the advice from I.I.I. CEO Sean Kevelighan in our press release and “listen to local authorities, while also doing what is needed to prepare, such as reinforcing windows with shutters and taking a home inventory, if time permits. If you have to evacuate, bring your financial documents, including your insurance policy, so you can start the claims process once the storm has passed.
    “Keep in mind, the more prepared you are, the greater the potential to be more resilient and withstand damage.”
  • I would just add that if you have the time, photograph areas likely to flood as evidence for a subsequent claim. Be sure to photograph drapes and carpets, which people seem to forget but can be surprisingly expensive to replace.

The Week in a Minute, 8/25/17

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

Hurricane Harvey is expected to bring heavy rainfall and strong winds to Texas and Louisiana over the next few days.

The 25th anniversary of Hurricane Andrew making landfall in Florida on August 24, 1992, generated significant media coverage this week.

The National Transportation Safety Board is convening in D.C. on Tuesday, Sept. 12, at 9:30 a.m., to discuss the fatal Tesla crash which occurred last year in Florida.



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.

The use of credit scores in personal lines insurance in Arkansas

Every year the state of Arkansas surveys insurers to determine the impact of the use of credit scores in the rates that consumers pay. Here are results from last year’s policies.

During 2016 for all personal lines coverages:

  • 3,443,044 policies were written or renewed that involved the use of credit as one of the factors contributing to the final premium.
  • 1,877,353 policies (54.5%) resulted in the premium being decreased.
  • 681,038 policies (19.8%) resulted in the premium being increased.
  • In the remaining 884,653 polices (25.7%), credit was a neutral factor and did not contribute to or change the final premium.
  • For those policies in which credit played some role in determining the final premium, those receiving a decrease outnumbered those who received an increase by 2.76 to 1.
  • 80% of consumers either received a discount for credit or it had no effect on their premium.

More information at the link.

Why a higher percentage of first half CAT losses were insured

Some $23 billion of first-half 2017 global catastrophe losses were covered by insurance, according to preliminary estimates from Swiss Re sigma.

With total economic losses from disasters at $44 billion in the first-half, that means 52 percent was covered.

As Artemis blog reports, this is actually a relatively high percentage insured which makes for a smaller protection gap.

“The 10-year average economic loss of $120 billion and the average insured loss of $33 billion, show that a more typical percentage insured is just 28 percent.”

The reason?

Severe thunderstorms in the U.S. resulted in the largest losses in the first six months of this year—accounting for $16 billion of the $23 billion insured losses.

Kurt Karl, Swiss Re chief economist explains: “Fortunately, in the U.S., most households and businesses are insured against wind risk so they are financially protected when severe storms strike.”

Things to know before your eclipse viewing party

The first total solar eclipse to sweep across the entire country since 1918 will happen on Monday and understandably there are some insurance issues that arise:

Business Insurance, via today’s I.I.I. Daily, explains what a company needs to know about workers compensation issues that may arise if it is hosting a viewing party.

Amy K. Harper, a director at the National Safety Council, said, “An employer should provide ISO 12312-2 compliant viewing glasses if they are encouraging or hosting a viewing party.” Employers should also be familiar with NASA’s safety guidelines that suggest people not look directly at the sun. Employees injured using a camera, binoculars or telescope to look directly at the sun can cause eye injuries in which employees may be covered under workers compensation.

Erie Insurance brings us a solar eclipse safety check: 1. Don’t look directly at the sun; 2. Keep your eyes on the road; 3. Renting out your home? Check your liability coverage.

NASA’s excellent safety information here.

The Week in a Minute, 8/17/17

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

Insurance coverage for riot-caused damage became a media issue this week after a 32-year-old woman was killed, and scores were injured, in Charlottesville amid violent, dueling protests centered on the removal of Confederate General Robert E. Lee’s statue.

Reporters want to know if the number of car accidents might rise on Monday, Aug. 21, when the population soars in 14 U.S. states, from Oregon to South Carolina (see page 4), as tourists flock to witness a total solar eclipse.  It is the first one to be visible in the U.S. in 38 years.

Gert became the second hurricane of 2017 to develop in the Atlantic Basin but it never came near the U.S. before drifting into the middle of the ocean.