Category Archives: Disaster Preparedness

Diaper Dilemma

As mom to a toddler and an eight-month old, the news that global production of disposable diapers could be affected following an explosion and fire at a chemical plant in Japan over the weekend, more than caught my attention.

Nippon Shokubai Co’s plant in Hyogo Prefecture produced acrylic acid, a key ingredient in a resin called SAP that is used in disposable diapers.

According to an NBCnews.com blog post, the plant produces about 20 percent of the world’s SAP and 10 percent of global output of acrylic acid.

NBC cites the Nikkei business daily saying that operations at the plant are likely to be halted for a long time and other manufacturers of SAP resins are operating in full production mode, leaving little room for back-up production.

Over at Chubb’s business blog Industry Exposure, Barry Tarnef, an assistant vice president and a senior loss control specialist for Chubb, observes that the incident serves as another reminder that supply chains are fragile.

Industrial accidents, natural disasters, labor issues (such as strikes and shortages), production problems and political upheaval, and trade disputes are just some of the main causes of supply chain disruption, according to the Insurance Information Institute (I.I.I.).

The I.I.I. notes that it can take two years or more for a company to recover from a supply chain failure and that the purchase of supply chain insurance can help protect businesses. However, insurance is only part of the solution.

As Loretta Worters, vice-president with the I.I.I. says:

Sound loss prevention engineering can best help protect the supply chain from property loss, so that insurance becomes a last resort rather than a first line of defense.†

Check out this I.I.I. presentation on how to protect your global supply chain.

Terrorism Risk 11 Years On

As we mark the 11-year anniversary of September 11, a just-released study from the Insurance Information Institute (I.I.I.) finds that while the risk is changing, terrorism is an evolving and ongoing threat for the foreseeable future.

The paper notes that despite recent counterterrorism successes, including the killing of al-Qaida leader Osama bin Laden, the threat from terrorism risk is far from insignificant.

Cyber-terrorism is one area of growing concern for governments and businesses around the world, according to the I.I.I.

It says recent high profile attacks, such as the sabotaging of Iran’s nuclear program via the Stuxnet computer worm and malicious infiltration attempts by China, underscore the growing threat to both national security and the economy.

It goes on to cite a recent study by the Ponemon Institute in collaboration with Bloomberg Government, that estimated private sector spending on cyber security at roughly $80 billion in 2011, but noted this was not nearly enough.

The Ponemon study found that “utilities, banks and phone carriers would have to spend almost nine times more on cybersecurity to prevent a digital Pearl Harbor from plunging millions into darkness, paralyzing the financial system or cutting communications,† according to a report by Bloomberg News.

The findings were based on interviews with technology managers from 172 U.S. organizations in six industries and government.

More I.I.I. facts and statistics on terrorism risk here.

Isaac and Catastrophe Bonds

As Hurricane Isaac hit the Gulf coast as a Category 1 storm, an interesting tidbit came across the wires regarding state-run property insurer Louisiana Citizens Property Insurance Corp.

In a press release, think tank R Street Institute noted that Pelican Re – a $125 million catastrophe bond issued by Louisiana Citizens – would be triggered if the storm produces more than $200 million in losses for the residual market entity.

If these conditions are met, Isaac would be the first storm ever to trigger a catastrophe bond issued by a state-run insurer.

Over at Artemis blog, there was more discussion:

Pelican Re does not cover pure flood damage so that is in its favour, however we believe storm surge caused by hurricane is covered and wind damage most certainly is. Louisiana Citizens has a great amount of exposure in the coastal areas where hurricane Isaac is currently making the greatest impact. As Pelican Re is an indemnity cat bond it is unlikely we will understand whether there has been an impact for some time as claims come in and losses to Louisiana Citizens are quantified.†

An updated paper on the residual market property plans from the Insurance Information Institute (I.I.I.) notes that a growing number of plans are accessing the capital markets as part of their reinsurance strategy, bolstering their ability to fund losses during hurricane season.

As well as Louisiana Citizens, Florida Citizens also accessed the capital markets in 2012, issuing a $750 million catastrophe bond – making it the largest single peril catastrophe bond in the history of the insurance-linked securities market.

They join a growing list that includes North Carolina’s Beach and Windstorm Plan and the Massachusetts Fair Plan.

For more information on the catastrophe bond market, check out this I.I.I. backgrounder on alternative risk-financing options.

Making Your Home More Disaster Resistant, One App at a Time

You may not be surprised to hear that more than half of American cell phone users now have smartphones, according to a report in the New York Daily News.

As Americans increasingly rely on their phones to do more than just make phone calls, there is a growing market for applications to enable those mobile lifestyles.

While many apps fall into the entertainment category, the Insurance Information Institute (I.I.I.) has just launched a free mobile disaster preparedness app that could protect your home and family.

Whether it’s a hurricane, wildfire, severe winter weather, earthquake, or other disaster, the I.I.I.’s “Know Your Plan† app for iPhone provides check lists and vital safety tips to help users prepare for catastrophe before disaster strikes.

“Know Your Plan† provides consumers with a library of preloaded checklists to learn about important property protection and preparedness steps. Customized lists can also be built from scratch.

Each checklist gives users options to set task completion dates, chart their progress and make additional notes for individual tasks.

One of the cool features of the app is that in the event of a disaster, users will be able to access a geotargeted emergency alert feed guiding them to up-to-the-minute information about local evacuation routes and other details about the disaster.

Also included are resources to help plan for an evacuation—including one for pets.

“Know Your Plan† is available in iTunes, or by searching “Insurance Information Institute† in the App store from any iPhone.

All property mitigation information was developed in partnership with the Insurance Institute for Business & Home Safety (IBHS).

“Know Your Plan† is the second in a series of apps created by the I.I.I. It follows Know Your Stuff – Home Inventory app, which is available for both iPhone and Android platforms.

Stormstruck? There’s An App for That

I’ll huff, and I’ll puff, and I’ll blow your house in. No, I’m not talking about the Three Little Pigs.

The Federal Alliance for Safe Homes (FLASH) is launching StormStruck ®, a new 3D animated app from the USA Science and Engineering Festival in Washington, DC today.

This new app allows users to create an intense windstorm with a simple swipe of a finger and see in 3D the kind of damage it can do to an average home.

Users then choose from a variety of upgrades that protect the home and enable it to withstand damage. Everything from garage doors to roof connections can change the fate of the home and increase its chance of survival.

The aptly-named StormStruck app is free and compatible with the iPhone, iPad and iPod touch.

It is available now for download in the  iTunes App Store.

Once you’ve seen how severe weather has the potential to damage your house, you might want to make a home inventory of your personal possessions. The good news is that the Insurance Information Institute (I.I.I.) has a new home inventory app for iPhone to make the process even easier.

The I.I.I.’s Know Your Stuff ® – Home Inventory is Web-based software that can be found at KnowYourStuff.org. If you have an iPhone, you can also download the  free Know Your Stuff ® – Home Inventory app in the iTunes App Store.

Disaster Planning Is Not Just For Humans

Recent events such as the tornadoes in the U.S. and the Japan earthquake and tsunami remind us that our four-legged friends are just as vulnerable as we are when a disaster strikes.

Starting with Hurricane Katrina in 2005, the web has been used to powerful effect to locate not just people, but lost pets and reunite them with their families.

A quick search of Facebook reveals pages created earlier this year for animals lost and found from the April tornadoes in Alabama and the May tornado in Joplin, Missouri as well as the Japan earthquake and tsunami in March.

While these are valuable tools for pet owners, it’s always prudent to plan ahead before a disaster strikes.

This is why the I.I.I. suggests that any disaster plan includes provisions for your pets.

Things to think about include: mapping out a route and knowing where you might be able to shelter your pet in an emergency as not all hotels and shelters are pet-friendly.

Your vet, or the humane society or the local emergency management agency are good places to get information on evacuation plans that include pets.

A grab-and-go disaster kit for your pets is also a must and should include things like food and water, medication and your pet’s vaccination records.

The I.I.I. message is simple: don’t forget your four-legged friends in your disaster-planning.

For more information on disaster planning with pets check out the I.I.I. web video.

Bill Bailey Memorial

A memorial service for Dr. William E. Bailey J.D., CPCU, special counsel to the Insurance Information Institute (I.I.I.) since 1986 and prominent industry spokesperson will be held  September 26, 2009, at 11am at Trinity Church, 730 Main Street, Waltham, MA.

Dr. Bailey died of cancer on Friday, Aug. 21. He was 68 years old and resided in Chelsea, MA, with his wife, Rene.

In lieu of flowers, the family requests that a donation be made to the Scholarship Fund at Belmont Hill School, 350 Prospect Street, Belmont MA, 02478-2662, in memory of Bill Bailey, Class of 1958.

“All of us will greatly miss Bill’s multitude of talents, perceptive intelligence, life-long dedication to learning, quick wit and boundless enthusiasm. We also remember with appreciation Bill’s outstanding work in disaster communications, having served as director of the first Hurricane Insurance Information Center following Hurricane Andrew in 1992 and working at the scene of every major disaster since, including Hurricane Katrina in 2005,” said Dr. Robert Hartwig, president of the I.I.I.
Stories in National Underwriter and Business Insurance pay tribute to Dr. Bailey.

Refusing Evacuation

With the most active period of the Atlantic hurricane season fast approaching, a poll out of the Harvard School of Public Health Project on the Public and Biological Security is a reminder of the continuing need to get the message out on disaster preparedness. According to the survey of people in high-risk hurricane areas, one-third (31 percent) said if government officials said they had to evacuate due to a major hurricane this season, they would not leave. Of more concern, that number has increased from 2006 when 23 percent said they would not evacuate. Top reasons people give for not evacuating involve issues of safety and security. Some 75 percent said their home is well-built and they would be safe there, while over half (56 percent) felt that roads would be too crowded, and 36 percent felt that evacuating would be dangerous. The survey covered eight states: AL, FL, GA, LA, MS, NC, SC and TX – and only included residents of counties within 20 miles of the coast. The poll included a special sample of the New Orleans metropolitan area. Check out I.I.I.’s disaster insurance information site for more info on disaster preparedness.

Boosting Take-Up

A perennial concern of insurers everywhere is why take-up rates for certain insurance coverages remain low, even as the risks increase. How to boost take-up rates among individuals and businesses is an ongoing challenge as insurance competes with any number of products and choices with higher priority on the shopping list. Earthquake, flood, terrorism, and renters insurance are just some examples. Let’s take earthquake. The powerful quake in Japan this week is a reminder of the importance of having adequate coverage. In Japan, as in the U.S., residential earthquake coverage is available in the form of an endorsement. While traditionally the take-up rate of residential earthquake coverage in Japan has been low, recent reports suggest it has been rising and is now at around 37 percent. Meanwhile in California, the U.S. state most commonly associated with earthquakes, it’s estimated that only 13 percent of homeowners buy the coverage. It’s hard to generalize on the reasons why, particularly across countries and different risks, but some contributing factors may be: perceived high cost of insurance, lack of awareness about the risk, and the mindset that expects a government bail-out to follow a disaster. People also may be more likely to buy insurance when the perceived need is greatest (i.e. just after a major disaster has struck). So how can we change the stats and make our products more desirable to the buying public? What are your thoughts? For more on earthquakes and other catastrophes, check out the I.I.I.’s disaster site and facts & stats.