Category Archives: Disaster Resilience

Triple-I’s Internal Response to COVID-19 Had Its Origins in 2012’s Superstorm Sandy

To help arrest the spread (“flattening the curve”) of Corona Virus Disease (COVID-19), businesses and schools everywhere are supporting social distancing by expanding remote workspace opportunities. At the Triple-I’s main offices in New York City and Arlington, Va., we encouraged our team members effective Thursday, March 12, to avoid unnecessary business travel and select the workspace arrangements that best support social distancing.

Laura Favinger, Triple-I’s Chief Administrative Officer explained in a Q&A session with James Ballot, the Triple-I’s Senior Advisor, Strategic Communications, the organization’s Human Resources policies concerning COVID-19, as well as some potential consequences of widespread remote work during the crisis.

Q: How prepared is Triple-I to ramp up to extended duration remote work?

LF: The Triple-I is very prepared to conduct its business away from its two main offices for an extended period of time, if need be.

We talk a lot about resilience because we’ve experienced first-hand why resilience works. During Superstorm Sandy in 2012, the Triple-I’s main office in New York’s Financial District was forced to close for nearly two weeks because 110 William Street was inaccessible due to the flooding in lower Manhattan. The situation left most Triple-I team members without access to vital equipment and information. Times like this, unfortunately, are also when people need the Triple-I most. With this in mind, we’ve built out capabilities to ensure that we’re able to fulfill our mission to be the “trusted source of unique, data-driven insights on insurance.” We’re here to educate and inform the media, consumers, regulators, educators and others with as little disruption as possible. Since Sandy we’ve prepared for a wide range of contingencies by migrating to a decentralized information backbone (cloud-based file sharing and storage), accessible to the entire Triple-I team by laptop and tablet computers and mobile devices.

Since I arrived at the Triple-I just over two years ago, we’ve made significant strides toward creating even more robust, user-friendly and, yes, resilient standardized IT platforms. One collateral benefit of this effort is that we’ve brought on staff full-time subject matter experts and researchers who are based throughout the U.S., which has increased our ability to deliver fact-based information and answers to our many audiences. We had no idea a pandemic was coming, but I guess that’s the essence of resilience: assessing and mitigating your potential risks.

Q: What factored into the decision to encourage your team members to choose the workplace situation that best supports preventing the spread of Corona Virus Disease?

LF: For starters, we were prepared to do this, which made the decision easier. As mentioned, our team is geographically and demographically diverse. COVID-19 poses a greater threat to persons over the age of 60 and those with existing health complications. We’re encouraging them to decide for themselves what’s best. To simplify things, we’re making full-time remote work available to everyone at the Triple-I’s NYC and Arlington, Va. offices for the foreseeable future. We’ve set Friday, March 20 as our first milestone for review.

Q: Any potential “curveballs” that you’re becoming aware of?

LF: Well, the closing of schools is a bit of a disrupter because it gets crowded at home when parents and their school-aged children spend all day under the same roof. But supporting remote work in general has allowed us to balance professional and personal concerns. One thing we all need to monitor, however, will be the prospect of millions of people working and studying from remote locations at the same time—and this includes increased load from streaming media (which already accounts for more than two-thirds of all Internet traffic).  We’ll need to monitor the possibility of overloaded information networks and other infrastructure-related consequences and explore ways to mitigate the effect on the Triple-I’s productivity.

But the main goal—the only goal, actually at least for the foreseeable future—is for us to do our part to stop the spread of COVID-19.

Triple-I’s insurance for resilience project

In this video, Sean Kevelighan, CEO of the Insurance Information Institute (Triple-I), talks about the Triple-I’s Resilience Hub that the organization began developing in 2019 in partnership with Aon and the Colorado State University Department of Atmospheric Science.

The Hub’s goal is to use data in a way that helps people visualize and understand the risk of natural catastrophes with which they are living as catastrophes become more severe and more people move into high-risk areas.

“We’re tracking hurricane paths all the way back to 1990 so that when we forecast with those relative years, people can better understand what the impact might be in today’s economy,” said Kevelighan.

The project also tracks public flood insurance take-up rates through the National Flood Insurance Program. The average take-up rate for flood insurance is only 12 percent for the nation.

The Hub is part of the Triple-I’s overall insurance for resilience project, which aims to build a coalition that includes government agencies such as FEMA, private sector stakeholders such as Aon, and academic institutions such as the Wharton Risk Center to maximize impact. The Hub’s goal is to provide in one location easy-to-use content to empower consumers to make data-driven decisions when it comes to managing their exposure to extreme weather events.  “What we want to drive in the long run is behavioral change. We want people to think twice about where they are living and how they’re living so that they can be more resilient.”

JIF Insights: Changing
the Conversation
On Extreme Weather

Extreme Weather panel (L to R): Charles Chamness, National Association of Mutual Insurance Companies; Francis Bouchard, Zurich Insurance Group; Stephen Clarke, ISO; Dr. Daniel Kaniewski, FEMA; Dr. Rick Knabb, The Weather Channel; Kenneth Tolson, Crawford & Company

It was like music to my ears to hear risk and resilience experts at Triple-I’s Joint Industry Forum, in a panel on extreme weather, talk so much about communication.

Moderator Charles Chamness, president and chief executive officer of the National Association of Mutual Insurance Companies (NAMIC), kicked off the session by asking Dr. Rick Knabb – on-air hurricane expert for the Weather Channel (TWC) – about the impact on disaster preparedness of tools like TWC’s “storm surge depth simulator,” which Chamness described as “somewhat terrifying.”

If you haven’t seen it, the simulator uses virtual reality technology to show viewers what different water depths could look like and the kind of damage they could generate (see video below).

“We’ve gotten a lot of feedback,” Knabb replied. “Some people tell us, `Wow, I didn’t know how bad water can be.’  Some people tell us ‘You’re scaring me.’  And on some level, we’re trying to scare people just enough to respond and to prepare.”

Knabb added that he had no data to prove people who watch such simulations take immediate steps to improve their preparedness, “but we’re seeing the conversation change. Social media is one of the best ways I have to see that happening.”

The challenge remains, he said, to overcome “the positive bias” of people saying, “That looks really scary – but I don’t think it will ever happen to me.”

Francis Bouchard, Zurich’s group head of public affairs and sustainability, took the insurance industry to task for talking about risks in language customers don’t necessarily understand.

“We’re all risk elites here,” Bouchard said. “Our vernacular is not what normal people speak. And yet we insist on using our language to describe something that’s totally alien to most of the public.”

FEMA Deputy Administrator for Resilience Dan Kaniewski agreed.

“At FEMA, we no longer speak in these technical terms like `a one in 100-year event’” – a phrase, he said, that “makes a homeowner who’s just purchase their home think they have 99 years before they have to worry.”

Prepare, Mitigate, Insure

“When we at FEMA talk about ‘resilience,’” Kaniewski said, “what do we mean? We mean preparedness. We mean mitigation. We mean insurance.”

Kaniewski cited evidence from FEMA’s annual household surveys indicating that people in disaster-prone states are “more risk aware and better prepared” than elsewhere in the nation.

“But it’s not enough,” he said. “They have to do so much more.”

Beyond physical preparedness, Kaniewski said, “we have to talk to people about being financially prepared. That means having cash on hand. That also means insurance. Insurance is the best resilience tool.”

“Demand flood insurance”

Knabb agreed, calling upon meteorologists around the world to “talk about insurance more.” He also called on insurance agents to discuss flood coverage for their customers who aren’t in flood zones.

“If it can rain where you live,” he said, “it can flood where you live.”

He recounted buying a new home, asking his agent about flood insurance, and being told, “You don’t need it.”

“I told him, ‘Get it for me anyway,’” Knabb said. “And I’ve changed the graphics I use on The Weather Channel – instead of saying, ‘Ask Your Agent If You Need Flood Insurance’ to ‘Demand Flood Insurance.’”

The panel discussion covered a range of topics, including insurers’ need to emphasize risk reduction and resilience  and the “data fluency” of insurance regulators. You can watch the session below.

Tapping the insurance ecosystem for insights

I had the pleasure last week of attending “Data in the New: Transforming Insurance” – the third annual insurtech-related thought leadership event held by St. John’s University’s Tobin Center for Executive Education and School of Risk Management.

To distill the insights I collected would take far more than one blog post.  Speakers, panelists, and attendees spanned the insurance “ecosystem” (a word that came up a lot!) – from CEOs, consultants, and data scientists to academics, actuaries, and even a regulator or two to keep things real. I’m sure the presentations and conversations I participated in will feed several posts in weeks to come.

Herbert Chain, executive director of the Center for Executive Education of the Tobin College of Business, welcomes speakers and attendees.

Just getting started

Keynote speaker James Bramblet, Accenture’s North American insurance practice lead, “set the table” by discussing where the industry has been and where some of the greatest opportunities for success lie. He described an evolution from functional silos (data hiding in different formats and databases) through the emergence of function-specific platforms (more efficient, better organized silos) to today’s environment, characterized by “business intelligence and reporting overload”.

Accenture’s James Bramblet discusses the history and future of data in insurance.

“Investment in big data is just getting started,” Jim said, adding that he expects the next wave of competitive advantage to be “at the intersection of customization and real time” – facilitating service delivery in the manner and with the speed customers have come to expect from other industries.

Jim pointed to several areas in which insurers are making progress and flagged one – workforce effectiveness – that he considers a “largely untapped” area of opportunity. Panelists and audience members seemed to agree that, while insurers are getting better at aggregating and analyzing vast amounts of data, their operations still look much as they have forever: paper based and labor intensive. While technology and process improvement methodologies that could address this exist, several attendees said they found organizational culture to be the biggest obstacle, with one citing Peter Drucker’s observation that “culture eats strategy for breakfast.”

Lake or pond? Raw or cooked?

Paul Bailo, global head of digital strategy and innovation for Infosys Digital, threw some shade on big data and the currently popular idea of “data lakes” stocked with raw, unstructured data. Paul said he prefers “to fish in data ponds, where I have some idea what I can catch.”

Data lakes, he said, lack the context to deliver real business insights. Data ponds, by contrast, “contain critical data points that drive 80-90 percent of decisions.”

Stephen Mildenhall, assistant professor of risk management and insurance and director of insurance data analytics at the School of Risk Management, went as far as to say the term “raw data” is flawed.

“Deciding to collect a piece of data is part of a structuring process,” he said, adding that, to be useful, “all data should be thoroughly cooked.”

Innovation advice

Practical advice was available in abundance for the 80-plus attendees, as was recognition of technical and regulatory challenges to implementation. James Regalbuto, deputy superintendent for insurance with the New York State Department of Financial Services, explained – thoroughly and with good humor – that regulators really aren’t out to stifle innovation. He provided several examples of privacy and bias concerns inherent in some solutions intended to streamline underwriting and other functions.

Perhaps the most broadly applicable advice came from Accenture’s Jim Bramblet, who cautioned against overthinking the features and attributes of the many solutions available to insurers.

“Pick your platform and go,” Jim said. “Create a runway for your business and ‘use case’ your way to greatness.”

New York City’s Disaster Resiliency

Istock.com, J. Lazarin, New York City, USA – October 31, 2012: In the aftermath of Hurricane Sandy

It was a balmy 67-degree day in New York on March 15, which prompted the inevitable joke that since it’s warm outside, then climate change must be real. The wry comment was made by one of the speakers at the New York Academy of Science’s symposium Science for decision making in a warmer word: 10 years of the NPCC.

The NPCC is the New York City Panel on Climate Change, an independent body of scientists that advises the city on climate risks and resiliency. The symposium coincided with the release of the NPCC’s 2019 report, which found that in the New York City area extreme weather events are becoming more pronounced, high temperatures in summer are rising, and heavy downpours are increasing.

“The report tracks increasing risks for the city and region due to climate change,” says Cynthia Rosenzweig, co-chair of the NPCC and senior research scientist at Columbia University’s Earth Institute. “It continues to lay the science foundation for development of flexible adaptation pathways for changing climate conditions.”

“What you can’t measure, you can’t manage,” said Columbia University’s Klaus Jacob, paraphrasing Peter Drucker and making a concise case for the importance of the work the NPCC is doing.

The changes in temperature and precipitation that New Yorkers are experiencing are broadly tracking the climate change projections made by the NPCC in 2015. However, the 2019 report notes that such comparisons should be viewed with caution because of the role that natural variation plays in the short term.

William Solecki, co-chair of the NPCC said “Recent scientific advances have…helped the panel craft new sets of tools and methods, such as a prototype system for tracking these risks and the effectiveness of corresponding climate strategies.”

One such tool is the Antarctic Rapid Ice Melt Scenario, which the NPCC created to model the effects of melting ice sheets on sea level rise around NYC. The model predicts that under a high-end scenario, monthly tidal flooding will begin to affect many neighborhoods around Jamaica Bay by the 2050s and other coastal areas throughout the city by the 2080s.

The NPCC 2019 report recommends that the city establish a coordinated indicator and monitoring system to enable the city and its communities to better monitor climate change trends, impacts, vulnerability, and adaptation measures.

The report also notes the important role of insurance in support of climate change adaptation and mitigation. “Public–private partnerships are essential for facilitating infrastructure resilience, particularly for publicly owned infrastructure systems that often lack resources for resilience improvements. Coordination of insurance and finance is an important future direction to achieve comprehensive resiliency in infrastructure that reduces negative climate change consequences,” said the report.

The I.I.I.’s primer on climate change and insurance issues can be found here.

FROM THE I.I.I. DAILY: OUR MOST POPULAR CONTENT, FEBRUARY 8 TO FEBRUARY 14

Here are the 5 most clicked on articles from this week’s I.I.I. Daily newsletter.

To subscribe to the I.I.I. Daily email daily@iii.org.

 

Brrr from Chicago

As the Midwest grapples with record-breaking cold, the I.I.I.’s Membership Director, Deena Snell is experiencing the polar vortex firsthand in her hometown near Chicago.

“I know you’re all super jealous of the weather we’re having here so I thought I’d share the joy,” she messaged us this morning.

In case you were ever wondering what -26 looks like on a car thermometer, here it is.

“I ventured out to the gym this morning in my bank robber attire.  Some people are wearing swim goggles to protect their eyes, which is a nice look.”

 

The “Sand Palace”: A Poster-Child for Resilience

You probably remember the “Sand Palace,” the lone house standing after Hurricane Michael made landfall in the Florida panhandle in October.

It’s a powerful story about one man’s stand against nature’s destructive power. But the Sand Palace is also a story about insurance.

There are generally two aspects of insurance. One is to pay out claims to make people whole again after a loss. Another is to incentivize behavior that makes those losses less likely to happen. In insurance-speak, we call that “mitigation.”

Consider the Sand Palace in that context. According to an AIR Worldwide analysis, the house was built to be even more resilient than Florida’s already-stringent building codes: reinforced concrete, limited windows, minimal space below the roof to prevent uplift, a first floor 15 feet above ground, and more.

AIR analyzed how this construction fared during the hurricane. The structure’s features reduced wind losses by about 90 percent compared to other homes. Plus, the height of the building significantly reduced any storm surge damage.

This led AIR to conclude that “the Sand Palace is an excellent case study of the impact of mitigating features for use in risk reduction.” Presumably, the house also made an excellent risk for an insurer to cover.

It’s fair to ask, though: at what cost resilience? These kinds of reinforcements can cost tens of thousands of dollars, which can be out of reach for many homeowners.

But that’s probably where insurance can play a role. For example, is there a potential for insurers to offer economic incentives or discounts to homeowners to make their houses resistant to hurricane-force floods and winds? This incentive could be particularly effective in a world where climate change events might cause insurers to raise their premiums to account for higher risks. (That’s why many argue that insurance can play a crucial role in helping to combat the effects of climate change.)

It’s not always easy to say where the intersection between the costs and benefits of mitigation is. That’ll be up to the individual insurer and their insureds. But if done right, mitigation can be a win-win strategy. Insurers don’t have to pay out as much money for losses. Consumers don’t have to pay as much for their insurance. And the world can be made a safer, more resilient place.

Like Uber, but for lawsuits

As anyone who has rented an apartment in New York City knows, your security deposit is basically a gift to your landlord. Good luck ever seeing it again after you move out.  

There are a few theories for how to avoid this. Mine has been to pray fervently for divine intervention, which worked out…once. An acquaintance tells me to simply never pay the last month’s rent. (The I.I.I. does not in any way endorse this strategy.) 

But one strategy no one suggests is to contest the withholding of your deposit in small claims court. Because you’ll end up spending more money than your original deposit was worth. 

If only there were an app for that… 

Turns out, there is. DoNotPay is an app that uses algorithms to determine whether someone has a case in small claims court – and will help file legal documents. From contesting parking tickets to resolving landlord disputes to filing lawsuits for data breaches (like Equifax), the app apparently has about a 50 percent success rate in court.  Without recourse to a single lawyer. And it’s free. 

This sounds like a dream for individuals who need legal help they can’t currently access. Because lawyers ain’t cheap.  

But is there a sinister side to this? The U.S. is a notoriously litigious society. The plaintiffs bar has been very creative in winning massive verdicts that many argue are distorting the tort system. It’s been estimated that the costs of torts in 2016 were $429 billion – or about 2.3 percent of the GDP of the U.S. Reformers would argue that there’s an entire cottage industry whose primary purpose is to sue anyone and anything with sufficiently deep pockets to justify the effort.  

Could an app like DoNotPay, which today helps the little guy fight his unjust parking ticket, one day turn into the means to seamlessly litigate every aspect of our lives at the push of a button? Only time will tell.  

In the meantime, I just got a parking ticket in Brooklyn, because of course I did. Alexa, open DoNotPay.  

Updated 2018 Atlantic Hurricane Season Outlook: Cooler Atlantic Temperatures Could Lead to Below-Average to Near-Average Hurricane Season

Special to the Triple-I Blog

by Philip Klotzbach,Ph.D,
Research Scientist, Department of Atmospheric Science, Colorado State University and I.I.I. Nonresident Scholar

Colorado State University (CSU) has just updated their outlook for the 2018 Atlantic hurricane season, and is now calling for a near-average season with a total of 14 named storms, six hurricanes and two major hurricanes (maximum sustained winds of 111 miles per hour or greater; Category 3-5 on the Saffir-Simpson Wind Scale) (Figure 1).  This prediction is a slight lowering from their initial outlook in early April which called for 14 named storms, seven hurricanes and three major hurricanes.  Accumulated Cyclone Energy (ACE) and Net Tropical Cyclone (NTC) activity are integrated metrics that take into account the frequency, intensity and duration of storms.

Figure 1: May 31, 2018 outlook for the upcoming Atlantic hurricane season

CSU’s meteorological team uses a statistical model as one of its primary outlook tools.  This methodology applies historical oceanic and atmospheric data to find predictors that were effective in forecasting previous years’ hurricane activity. Based on data dating back to 1982, this model has shown consistent accuracy. (Figure 2)  Statistical forecast for 2018 is calling for a below-average season.

Figure 2: Accuracy of June statistical forecast model at predicting historical Atlantic hurricane activity (since 1982)

CSU also employs an analog approach, which uses historical data from past years with  conditions that are most similar to those currently observed (as of May 31, 2018).  The team also forecasts projected conditions during 2018 peak hurricane season (August-October) by looking at historical data from years with similar August-October conditions.

This approach yields a similar outlook of below-average to near-average sea surface temperatures (SSTs) in the tropical Atlantic and near-average sea surface temperatures in the eastern and central Pacific.  The average of the four analog seasons calls for a near-average season. (Figure 3)

Figure 3: Analog predictors used in the May 31, 2018 seasonal forecast

CSU does not anticipate a significant El Niño event for the peak of the Atlantic hurricane season.  At this point, the meteorological team believes that the most likely outcome is neutral conditions for the next several months.  El Niños tend to reduce Atlantic hurricane activity through increases in upper-level winds that tear apart hurricanes as they are trying to develop.  Most of the dynamical and statistical model guidance agrees with this assessment and calls for neutral conditions for the next several months. (Figure 4)

Figure 4: Statistical and dynamical model guidance for El Niño

Most models are calling for neutral conditions for August-October, as highlighted by the black arrow. (Figure courtesy of International Research Institute for Climate and Society.)

The primary reason for a reduced seasonal forecast (compared with earlier 2018 outlook), is due to anomalous cooling of the tropical Atlantic over the past couple of months.  As shown in Figure 5. most of the Atlantic right now is quite a bit cooler than usual. In addition to providing less fuel for storms, a cooler tropical Atlantic is also associated with a more stable and drier atmosphere as well as higher pressure—all conditions that tend to suppress Atlantic hurricane activity.

Figure 5: Current SST anomalies in the North Atlantic.  SSTs are much cooler than normal across the entire tropical Atlantic

The most important thing to note with all seasonal forecasts is that they predict basinwide activity and not individual landfall events.  However, regardless of what the seasonal forecast says, it only takes one storm near you to make it an active season.  Therefore, coastal residents are urged to have a plan in place now before the hurricane season ramps up over the next couple of months.

Extra: If you live in a hurricane-prone region, your homeowners insurance policy may have a separate hurricane deductible. This infographic explains what you need to know.