Category Archives: Coastal Property

After Ida: Stay Safe and Report Damage Quickly

“Stay informed, stay safe, and contact your insurance professional as soon as possible.”

The Insurance Information Institute is working with insurers in the aftermath of Hurricane Ida to monitor property damages and assist consumers as they recover. In this video, Triple-I CEO Sean Kevelighan provides guidance for homeowners to help them ensure a smooth claims experience and avoid being taken advantage of by unethical contractors and other scammers who tend to emerge after disasters.

“Right now, the most important thing those impacted by Ida can do is remain safe and stay out of the way out of recovery workers,” Kevelighan says. “The storm may have passed, but remember that new dangers may be lurking.”

In particular, he points to threats from downed electrical wires and washed-out roads and bridges. Kevelighan also emphasizes the importance of quickly reporting property damage to your insurer.  

Other resources:

Hurricanes: Insurance and recovery resources

After a hurricane, beware of the dangers that remain

When disaster strikes: Preparation, response and recovery

Health safety following a flood

Recovering from a flood

Catastrophe-related fraud

Long-Term Considerations
From Condo Collapse

The insurer for the Champlain Towers South condo association has said it will make an up-front payment to resolve damage claims related to the 12-story beachfront property in the Miami  suburb of  Surfside, Fla., that collapsed on June 24, 2021.

“We want to make it known that James River Insurance Company has made the decision to voluntarily tender its entire limit from the enclosed policy towards attempting to resolve all the claims in this matter,” the insurer’s attorney wrote to the judge handling a class-action lawsuit seeking millions of dollars in damages from the association.

Since the collapse last week, four residents or their families have filed lawsuits against the association. Many more suits are expected in the coming months, and litigation could take years as investigators work to determine what caused the collapse. The first court hearing was held yesterday, and a Miami-Dade Circuit judge acknowledged that the building’s $48 million in total insurance coverage likely won’t be enough.

In all, the court heard, the condo association’s master policy has $30 million in property coverage and $18 million in liability coverage. The condo association has agreed to hand over financial decision making to a court-appointed “receiver.”

Seeking survivors as storm nears

With investigators still working to find and rescue survivors and Hurricane Elsa – the first of the 2021 Atlantic hurricane season and earliest “E-named” storm on record – heading toward Florida, the situation remains fluid. This week, dozens of units at a Central Florida condominium complex near Disney World were deemed unsafe after an inspection found the walkways leading to the units were at risk of collapsing, according to an Osceola County spokesperson.  Residents were advised to enter the buildings containing the units at their own risk, the spokesperson said, adding that county staff were offering residents assistance with temporary housing.

Increased attention to the condition of older high-rise buildings in South Florida and across the U.S. in the wake of the Champlain Towers collapse could lead to a rise in claims for loss-of-use coverage. In addition, many businesses in the vicinity of the collapse have been made inaccessible during the rescue operation, which could lead to business interruption claims.

Spotlight on building codes

Furthermore, this event could lead to a review of building codes and inspection practices nationwide. South Florida’s building codes are among the nation’s strongest – designed to keep residents safe from hurricanes. The state implemented mandatory codes after Category 5 Hurricane Andrew ripped homes from their foundations and left 65 dead in Homestead in 1992, and some counties – particularly in South Florida – have added more stringent requirements.

But after last week’s collapse, IBHS chief engineer Anne Cope said, “This is a moment like Katrina and Andrew, where we are going to learn something and make changes.”

Many of the region’s buildings – including  Champlain Towers South – were built before 1992 as part of a South Florida condo boom. Those buildings are subject to codes that were in place at the time of their construction, and are only required to undergo local county inspections every 40 years – such as the 2018 review of the Surfside condo in which an engineer raised red flags that the building was beginning to address but didn’t warn of imminent disaster.

A FEMA study last year said implementation of modern building codes could save states and localities billions of dollars.

IBHS Ranks Building Codes as Above-Average Hurricane Season Approaches

Building codes are critical to disaster mitigation, as well as to enabling families, communities, and businesses to bounce back from natural and man-made catastrophes.  The Insurance Institute for Business and Home Safety (IBHS) “Rating the States” report has become an important resource for comparing the quality of these codes and of states’ enforcement of them.

Published every three years, “Rating the States” evaluates the 18 states along the Atlantic and Gulf coasts, all vulnerable to catastrophic hurricanes, based on building code adoption, enforcement, and contractor licensing.

The 2021 Atlantic hurricane season is expected to be another “above-average” one.

“Damage reduction that results from the adoption and enforcement of building codes helps to keep people in their homes and businesses following a natural or manmade disaster, reduces the need for public and private disaster aid, and preserves the built environment,” IBHS writes in the most recent edition of the report. It cites research following Hurricane Charley in 2004 that found code improvements adopted in 1996 in Florida resulted in a 60 percent reduction in residential property damage claims and a 42 percent reduction in cost of claims.

Benefits of strong, uniform, well-enforced statewide codes are diverse and include:

  • Giving residents a sense of security about the safety and soundness of their buildings,
  • Preserving economic resources of a community and reducing post-disaster government spending,
  • Protecting first responders during and after fires and other disaster events,
  • Incorporating new best practices and cost efficiencies, and
  • Reducing solid waste in landfills from homes that are damaged or destroyed during disasters.

In the 2021 report, no state achieved a perfect rating based on the IBHS 100-point scale, though several states received high scores, including:

  • Florida (95 points)
  • Virginia (94 points)
  • South Carolina (92 points) and
  • New Jersey (90 points).

Other states that performed well were Connecticut (89 points), Rhode Island (89 points), North Carolina (88 points), Louisiana (82 points), Massachusetts (78 points), and Maryland (78 points).

The 2021 edition also includes information from the nonprofit Federal Alliance for Safe Homes (FLASH) to support consumer awareness and response to local building codes in their area.  Inspect2Protect.org offers a free building code look-up tool available to all homeowners.

“With more Americans living in harm’s way, it is even more critical for residents and communities to have the information they need to take action,” said Triple-I CEO Sean Kevelighan. “2021’s Rating the States report is essential reading for anyone who resides in a hurricane-prone state and wants a definitive assessment of its building codes.”

More information from Triple-I

Hurricane Season: More Than Just Wind and Water

Flood: Beyond Risk Transfer

Modern Building Codes Would Prevent Billions in Catastrophe Losses

California Earthquakes: How Modern Building Codes Are Making Safer, More Resilient Communities

Millions Saved in Japan by Good Engineering and Government Building Codes

Flood Pictures Worth More Than 1,000 Words

One of the benefits of social media is the fact that it reminds you what was on your mind several years earlier. Today I was reminded of the horrific flooding in Ellicott City, Md., that occurred three years ago this week.

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Water rushes through Main Street in Ellicott City, MD, 2018

This event resonated for me because I had friends living there, and I lived in a similarly situated flood-prone town. The images from Ellicott City recalled for me the damage much closer to home, in Bound Brook, NJ, when Tropical Storm Floyd dropped over 13 inches of rain and the Raritan River crested at above 42 feet, inundating the downtown and sparking fires as electrical systems shorted out.  

My little town of Dunellen had dodged a major bullet, I realized as I watched on TV as firefighters in boats responded to the devastation next door.  Our basement, turned temporarily into an indoor swimming pool, seemed a minor inconvenience next to the losses in Bound Brook and elsewhere.

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Firefighters battle a fire in flood-ravaged Bound Brook, NJ, 1999

A few years later, my region would be visited by similarly shocking images in the aftermath of Hurricane Irene and Superstorm Sandy.

Rollercoaster at Seaside, NJ, after Superstorm Sandy, 2012

We’ve written a lot about flood risk, the flood protection gap, and the need for a resilience mindset to prevent damages and loss wherever possible and help families, businesses, and communities bounce back from unavoidable disasters. But sometimes a few images can persuade more eloquently and effectively than all the words in the world.

Learn More From the Triple-I Blog

Flood: Beyond Risk Transfer

Partnering to Improve Flood Resilience

FEMA’s New Approach to Flood Risk Will Make Insurance Program Fairer

Floods, Freezing, Other Extreme Weather Highlight Need for Planning And Insurance

Study Quantifies Future Climate Change Impact on Flood Losses

Study Supports Case for Flood Mitigation as World Warms

Expanded Triple-I Flood Risk Maps Provide Richer Perspective

If It Can Rain, It Can Flood: Buy Flood Insurance

Ahead of Hurricane Sally’s Rains, Many Lack Flood Insurance

A ‘Sea Change’ in Florida’s View on Climate Risk?

Florida Governor Ron DeSantis last week signed two bills that lawmakers say will leave Florida better prepared for future flooding and sea level rise.

The legislature’s approval of these measures and the governor putting his signature on them is one of those moments that seem to mark a real change in awareness of and attitude toward this often-minimized risk. As the Tampa Bay Times points out, “Florida’s legislature for most of the last decade has taken little action and entertained hardly any public discussion about sea level rise.”

The bills, SB 1954 and SB 2514, will — among other things — set aside hundreds of millions of state dollars for flooding infrastructure projects. It requires the Department of Environmental Protection to prepare a flooding and resiliency plan and provides up to $100 million a year to communities that identify areas along the coast and other waterways that are at risk from sea level rise.

“This is a really significant amount of resources,” DeSantis said at a bill signing ceremony in Tarpon Springs. “We’re really putting our money where our mouth is when it comes to protecting the state of Florida, particularly our coastal communities, from the risks of flooding.”

On the leading edge of sea level rise

Florida’s 1,350 miles of coastline is the lifeblood of its tourism industry. Given the fact that much of the state sits at or near sea level on a foundation largely composed of porous limestone, it is particularly vulnerable to the threat of rising seas. Some areas of the state are already seeing flooding on clear days during particularly high tides, according to the Associated Press.

The magnitude of the threat is illustrated by the fact that three Florida-based insurers recently announced that they will not be renewing more than 53,000 property policies as of June – just as the 2021 Atlantic hurricane season begins. The first named storm of the season — Subtropical Storm Ana — formed early on May 22, northeast of Bermuda.

Florida statute Chapter 224 Part III allows insurers to cancel policies when the company would be placed in a hazardous financial situation due to an uptick in claims after hurricane damage or attorney’s fees to defend itself over fraudulent adjuster claims.

Dulce Suarez-Resnick, past president of the Latin American Association of Insurance Agencies, said this kind of widespread cancellation is common after subsequent years of heightened hurricane activity.

“It’s not the end of the world or that they’re bad companies,” Suarez-Resnick said. “It’s that these companies were weakened by prior storms and the bill for the reinsurance got heftier. That’s where we are today.”

As we’ve previously written, many experts consider the current system for managing and mitigating flood risk to be generally unsustainable. Insurers increasingly recognize that risk transfer is not enough and that a resilience mindset is required that demands more than new insurance products. Innovation and technology, along with public-private partnerships, are key components of any resilience strategy that is going to be effective.

Thanks to the insurance industry’s longtime focus on assessing and quantifying catastrophe risk and the rise of sophisticated modeling capabilities, insurers are ideal partners for addressing these evolving risks.

Learn More on the Triple-I Blog:

ESG Is in Insurers’ DNA

Man-Made and Natural Hazards Both Demand a Resilience Mindset

White House, FEMA Resilience Officials Speak at Triple-I Event

Flood: Beyond Risk Transfer

Partnering to Improve Flood Resilience

Climate Risk Is Not a New Priority for Insurers

Above-Average 2021 Atlantic Hurricane Season Predicted

FEMA’s New Approach to Flood Risk Will Make Insurance Program Fairer

Floods, Freezing, Other Extreme Weather Highlight Need for Planning And Insurance

Study Quantifies Future Climate Change Impact on Flood Losses

Why Do Disasters Keep “Surprising” Us? A Resilience Culture Would Aid Preparation

Community Catastrophe Insurance: Four Models to Boost Resilience

Insurers Are Addressing Climate Risks

Study Supports Case for Flood Mitigation as World Warms

Flood: Beyond Risk Transfer

Half a billion people worldwide are affected by floods annually, and about 90 percent of all U.S. natural disasters involve flooding. The human and economic tolls are massive, and until recently insuring these risks and helping communities recover fell almost entirely on government programs. 

Improved data, analysis, and modeling have helped drive private-sector interest in flood-risk transfer and mitigation. But despite growing private involvement, many experts consider the current system unsustainable. A resilience mindset is required, and that demands more than insurance products.

A new Triple-I paper analyzes the current state of flood risk and resilience and discusses how governments, corporations, academia, and others are rising to the challenges and seizing the opportunities.

“New products alone will not close the protection gap,” says Triple-I CEO Sean Kevelighan. “Risk transfer is just one tool in the resilience toolkit. Our understanding of loss trends and expertise in assessing and quantifying risk must be joined at the hip to technology, public policy and finance, and science. We need to partner with communities and businesses at every level to promote a broad resilience mindset focused on pre-emptive mitigation and rapid recovery.”

The Triple-I paper describes how this is happening. Tapping its own resources and the expertise of its insurance and risk-management network, Triple-I is pleased to bring you this analysis of the current state of flood risk and resilience.

Partnering to Improve Flood Resilience

Improved access to data, analytical tools, and sophisticated modeling capabilities has turned flood insurance from a virtually untouchable risk for insurers to an area of increasing business opportunity. These developments also have put the pieces in place for powerful collaborations between corporations, governments, and nonprofits to drive flood resilience for communities and businesses.

Stormwater management is one example. Triple-I CEO Sean Kevelighan recently participated in a panel at the P3 Water Summit to discuss flooding and water quality challenges and how insurers, municipalities, rating agencies, and other entities are incorporating flood and climate risks into their businesses.

The view from the middle

“Insurance is in the middle of all of this,” Kevelighan said, referring to three major global crises the moderator had mentioned – biodiversity loss, climate change, and the COVID-19 pandemic – “and I might add geopolitical risk and social unrest, as well as disruption due to technology and innovation. Triple-I is here to inform all those discussions.”

Climate risk, he said, “is certainly on the forefront of all the discussions we’re having right now, in terms of the larger disruption continuum.”

For decades, he noted, the industry has been looking for ways not just to help customers recover from natural catastrophes but to get out in front of the risks and promote methods to make them more resilient.

Flooding is a particularly pressing risk, Kevelighan noted, because “every year you’ve got about a half billion people who are impacted by floods. About 90 percent of all U.S. natural catastrophes involve some form of flooding. This is a critical part of the catastrophe cycle – and one that is significantly underinsured.”

Flood insurance and recovery assistance historically have fallen to federal and state government to manage. But even as improved data and other capabilities have made writing the coverage an increasingly attractive opportunity for insurers, Kevelighan said, it also has become clear that risk transfer through insurance isn’t enough to close the “protection gap.”  Public-private partnerships and other approaches are essential.

Bringing it all together

Richard Seline, managing director of Resilient H2O Partners and co-founder of the Resilience Innovation Hub, talked about his companies’ efforts to “introduce emerging technologies, existing equipment, put it together with public and private interests” to promote activities and behaviors supportive of resilience.

“The Innovation Hub is intended to bring together the best ideas, the best experience, the best capital, and network it more efficiently and effectively,” Seline said. “We’re in lots of discussions with engineering firms, architecture firms, a lot of private equity firms. I didn’t know until a year ago that the Nature Conservancy has its own venture fund! Those are the types of folks we’re pulling together.”

Like Kevelighan, Seline pointed to the importance of data in making these collaborations possible: “Unless we have the data available to do the cost-benefit analysis and the return on investment, it’s all theoretical.”

Thanks to partnerships between organizations like Triple-I and Resilient H2O, he said, it’s now possible to marry hydrological data to financial and economic risk models to better inform investment planning and decision making.

Ready to ‘take off’

Stacey Mawson, director at Fitch Ratings, said the environment now seems ripe for stormwater public-private partnerships to “take off.”

“Over the past couple of years we’ve been seeing more projects coming to us for ratings,” she said. These have included water transport, flood mitigation, privatization of utilities because they need additional investment. “We’re seeing an increased focus on water in all its aspects.”

Companies that issue bonds and other forms of debt rely on rating agencies’ assessments of their creditworthiness to keep their borrowing costs low. A bad rating may cause bond buyers to demand a higher interest rate in return for the greater risk such a rating implies.

Rating agencies like Fitch can play a strong role in advancing environmental and social objectives by incorporating climate and social risks into their rating processes. Mawson discussed Fitch’s environmental, social, and governance (ESG) scores and suggested that, over time, if bond-issuing entities aren’t paying sufficient attention to such considerations it could become a rating issue.

For more information and insight on flood risk, check out our new research paper, Flood: Beyond Risk Transfer.

Hurricane Delta Triggered Coral Reef Parametric Insurance

Hurricane Delta last month triggered a 17 million peso (US $800,000) insurance payout to the  Trust for the Integrated Management of the Coastal Zone, Social Development, and Security for the State of Quintana Roo, Mexico. The parametric policy, deployed last year, cost the trust nearly 5 million pesos (US $230,000), covering 150 square kilometers (58 square miles) of coastal ecosystems for the entire 2020 hurricane season.

Recent research illustrates the benefits provided by mangroves, barrier islands, and coral reefs – natural features that frequently fall victim to development – by limiting tropical storm damage, particularly from storm surge. Unlike traditional insurance, which pays for damage if it occurs, parametric insurance pays when specific conditions are met – regardless of whether damage is incurred. Without the need for claims adjustment, policyholders quickly get their benefit and can begin their recovery. In the case of the coral reef coverage, the swift payout will allow for quick damage assessments, debris removal, and initial repairs to be carried out.  

Quintana Roo partnered with hotel owners, the Nature Conservancy, and the National Parks Commission to pilot a conservation strategy involving a parametric policy that pays out if wind speeds greater than 100 knots hit a predefined area.  

Similar approaches could be applied to protecting mangroves, commercial fish stocks that can be harmed by overfishing or habitat loss, or other intrinsically valuable assets that are hard to insure with traditional approaches.