The workers compensation field is “responding and adapting remarkably well to economic changes,” according to Donna Glenn, chief actuary, National Council on Compensation Insurance (NCCI). “The pandemic brought new occupational illnesses into the system, but it was offset by a reduction of other types of claims back in 2020.”
Glenn made her comments in a new Executive Exchange with Triple-I CEO Sean Kevelighan. She noted that the workers comp industry was in a strong position before the pandemic and, consequently, in its aftermath. This includes seven years of underwriting profitability.
“Strong employment and wages are on the rise, fueling the workers comp system,” Glenn said. “The strength of the labor market is awesome.”
Kevelighan and Glenn noted that changing labor patterns will also affect workers comp claims frequency.
“Frequency declined in 2020 because of the business shutdowns,” Glenn said. “When workers returned, claims activity came back. However, remote work is decreasing overall claim frequency. This is the new normal.”
They also discussed the potential for rising medical costs.
“Medical costs have been fairly stable, but some are talking about medical costs exploding out of control again,” Kevelighan said.
“Medical prices are up,” Glenn agreed, adding that medical inflation “is tame compared to general inflation. The medical industry has benefited from regulation, including medical fee schedules, treatment guidelines and prescription drug formularies, which contribute significantly to the cost-control system in workers comp.”
Further, fewer procedures are happening in hospitals. Instead, they’re happening in an outpatient environment or ambulatory service center.
Glenn observed that physical therapy and the decrease in use of opioids has also helped. However, she signaled that there may be emerging issues with mental health.
“PTSD, particularly with first responders, comes up with workers comp,” she said. “But mental health is much broader than PTSD. We have to be very mindful of how we take care of workers.”
PFAS, which have existed since the 1930s, are creating concern because of how ubiquitous they are, as well as their potential to harm people’s lives. They are used in everything from Teflon coatings to food packaging to firefighting foam, due to their capacity to resist oil and moisture. These qualities are also potentially damaging because they often stay in the human body, never entirely breaking down.
Though studies surrounding PFAS are not conclusive, they have been connected to cancer, pregnancy-induced hypertension, and thyroid disease. Their pervasiveness means everyone likely has some amount of PFAS in their blood stream. There is fear about their presence in water supplies, as well.
“PFAS are water soluble and dissolve readily in soil,” said Cindy Wilk, Global Environmental Liability Expert, Allianz Risk Consulting at AGCS. “An industrial accident or firefighting incident can result in their release into water sources, making local communities vulnerable, but PFAS can also migrate quickly through groundwater pathways to contaminate areas far from their original source.”
PFAS litigation continues to rise
PFAS litigation has seen tremendous growth over the past 20 years, beginning with a lawsuit filed against DuPont, the company that makes Teflon. DuPont was accused of contaminating water from a plant in West Virginia—resulting in a settlement to provide up to $235 million for medical monitoring of over 70,000 people. Several similar lawsuits have followed.
As of 2021, more than 5,000 PFAS-related complaints have been filed in 40 courts, with 193 defendants in 82 industries.
Additionally, in 2021, the PFAS Action Act passed the House and set the Environmental Protection Agency (EPA) on the recent course toward developing new PFAS standards. The act does not include a liability exception for water-wastewater utilities, despite the fact that these entities are not the source of PFAS, thus causing concern that they will be the target of civil litigation
How can insurers respond?
Although the Insurance Services Office (ISO) has not produced a PFAS-specific exclusion for commercial liability policies, work is being done on a draft exclusion, which could be published in late 2022. With that process still underway, several PFAS-related exclusions are circulating, some as a modification to the Total Pollution Exclusion or by establishing a stand-alone PFAS exclusion. Still, insurers must be wary of the potential liabilities, as the Biden Administration’s regulatory focus on PFAS could lead to increased litigation.
Reinsurer Gen Re recommends that insurers:
Take inventory of previously underwritten risks;
Carefully consider new risks at submissions; and
Keep abreast of PFAS, both as to scientific developments and the litigation that it spawns.
By Max Dorfman, Research Writer, Triple-I (06/08/2022)
Nearly three-quarters of property and casualty policyholders consider climate change a “primary concern,” and more than 80 percent of individual and small-commercial clients say they’ve taken at least one key sustainability action in the past year, according to a report by Capgemini, a technology services and consulting company, and EFMA, a global nonprofit established by banks and insurers.
Still, the report found not enough action is being taken to combat these issues, with a mere 8 percent of insurers surveyed considered “resilience champions,” which the report defined as possessing “strong governance, advanced data analysis capabilities, a strong focus on risk prevention, and promote resilience through their underwriting and investment strategies.”
The report emphasizes the economic losses associated with climate, which it says have grown by 250 percent in the last 30 years. With this in mind, 73 percent of policyholders said they consider climate change one of their primary concerns, compared with 40 percent of insurers.
The report recommended three policies that could assist in creating climate resiliency among insurers:
Making climate resilience part of corporate sustainability, with C-suite executives assigned clear roles for accountability;
Closing the gap between long-term and short-term goals across a company’s value chain; and
Redesigning technology strategies with product innovation, customer experience, and corporate citizenship, utilizing advancements like machine learning and quantum computing
“The impact of climate change is forcing insurers to step up and play a greater role in mitigating risks,” said Seth Rachlin, global insurance industry leader for Capgemini. “Insurers who prioritize focus on sustainability will be making smart long-term business decisions that will positively impact their future relevance and growth. The key is to match innovative risk transfers with risk prevention and assign accountability within an executive team to ensure goals are top of mind.”
A global problem
Recent floods in South Africa, scorching heat in India and Pakistan, and increasingly dangerous hurricanes in the United States all exemplify the dangers of changing climate patterns. As Efma CEO John Berry said, “While most insurers acknowledge climate change’s impact, there is more to be done in terms of demonstrative actions to develop climate resiliency strategies. As customers continue to pay closer attention to the impact of climate change on their lives, insurers need to highlight their own commitment by evolving their offerings to both recognize the fundamental role sustainability plays in our industry and to stay competitive in an ever-changing market.”
Data is key
The report says embedding climate strategies into their operating and business models is essential for “future-focused insurers,” but it adds that that requires “fundamental changes, such as revising data strategy, focusing on risk prevention, and moving beyond exclusions in underwriting and investments.”
The report finds that only 35 percent of insurers have adopted advanced data analysis tools, such as machine-learning-based pricing and risk models, which it called “critical to unlocking new data potential and enabling more accurate risk assessments.”
Two recent developments – one the result of litigation, the other imposed by statute – warrant insurers’ attention, as they reflect shifts in legal thinking on potential firearms-related liability.
Nearly 10 years after the Sandy Hook Elementary School massacre in Connecticut, during which 20 first graders and six staff members were killed, a federal bankruptcy court in Alabama agreed to insurance payments totaling $73 million from gun manufacturer Remington Arms. The payment will be dispersed to the victims’ families who participated in the lawsuit.
This is the first time a gunmaker has been held accountable for a mass shooting in the United States. The ruling could force insurers to become more prudent in how they cover these companies. The risks of such settlements must be considered, particularly as the political and legal landscape continues to evolve.
The case revolved around the notion that Remington negligently sold civilian consumers assault-style rifles, which the plaintiffs argued are only suitable for use by military and law enforcement personnel. This, they argued, breached the Connecticut Unfair Trade Practices Act by the sale or wrongful marketing of the rifle.
Remington, which filed for bankruptcy protection in July 2020, contested that the plaintiffs’ legal arguments don’t apply under Connecticut law and invoked a federal statute, called the Protection of Lawful Commerce in Arms Act, which generally immunizes firearms manufacturers, distributors, and dealers from civil liability for crimes committed by third parties using their weapons.
The plaintiffs were able to demonstrate that the Remington used an “aggressive, multi-media campaign that pushed sales of AR-15s through product placement in first-person shooter video games and by touting the AR-15’s effectiveness as a killing machine,” according Josh Koskoff, lead counsel and partner at the Connecticut law firm Koskoff, Koskoff & Bieder, which represented the Sandy Hook families.
San Jose takes notice
San Jose, Calif., recently approved the nation’s first mandatory gun liability insurance requirement. The news comes four months after a mass shooting on a light rail in the city, which resulted in nine deaths.
San Jose Mayor Sam Liccardo said gun liability insurance will be similar to car insurance, promoting responsible gun ownership, storage, and use, with the fees for possession of firearms potentially hovering between $25 and $30 a year.
Though this insurance cannot legally cover deliberate harm caused by a gun owner, it nonetheless marks a novel way to confront potential mass shootings. Second Amendment activists in San Jose contest the mandatory insurance, stating that this will primarily affect lawful gun owners and not criminals.
While the San Jose measure might remain an anomaly, it reflects a shift in thinking on firearms-related liability. Most insurers do not offer stand-alone gun liability coverage, and no other municipalities appear to be in the process of requiring it. But shifting public sentiment could lead to other ways to address gun violence through the courts and by statute.
While property crime (except for car theft) has been on the decline, the United States has been experiencing a worrying surge in violent crime since the start of the pandemic.
Murder and non-negligent manslaughter rose 29.4 percent in 2020 from 2019, the biggest rise since recordkeeping began in 1960, according to F.B.I. data. The trend continued in the first half of 2021, when the number of homicides increased 16 percent from the same period in 2020 and 42 percent compared to the same period in 2019. Aggravated assault increased 9 percent, and gun assaults were up 5 percent, according to the Council on Criminal Justice.
Crime analysts have suggested several possible contributing factors, including the many strains brought on by the pandemic; a pullback in enforcement by the police; and a spike in firearm purchases.
When a violent crime occurs on a business or residential property, the victims often can hold the owners liable for damages stemming from “negligent security.” Negligent security cases are based on the obligation (“duty of care”) of a property owner or tenant to provide a safe environment for their customers, residents, or visitors. According to PropertyCasualty 360, such cases are a “significant and growing subset of premises liability.”
Examples of negligent security include:
Lack of security guards or guards who fail to do their job properly, and
Insufficient locks or other security devices.
The duty of care borne by property owners can vary based on the types of businesses they operate. A shopping mall with limited hours may have a lower duty of care than an assisted living facility charged with caring for vulnerable residents 24/7.
Negligent security cases incur significant investigation and settlement costs, though few make it to trial. Cases that do go to trial can get widespread media coverage, and juries, sympathetic to violent-crime victims, can hand down massive awards. In Georgia, for example, lawsuits stemming from criminal attacks in CVS and Kroger parking lots ended in verdicts of $43 million in Fulton County and $69.6 million in DeKalb County, respectively, in 2019. CVS and Kroger were held liable on the basis that they should have had more security.
Property and business owners can prepare to demonstrate that they have taken reasonable precautions by making sure crime prevention practices are in place. Steps that can be taken include:
Have on-site security staff and make sure they follow up-to-date policies and procedures,
Make sure security equipment is up-to-date and working,
Make sure all staff is trained in security and in how to handle potentially dangerous situations,
Perform regular inspections on lighting, stairs, windows, and doors,
Maintain landscaping properly, and
Investigate all threats of criminal activity.
The role of insurance
Negligent security is part of the broader coverage of premises liability. Whether you are covered or not depends on your individual policy. If negligent security is excluded, it should plainly say so in the policy. If the policy language is ambiguous, courts may favor the policyholder in a coverage dispute.
When you’re covered, your insurance underwriting professional will work with you to make sure recognized crime prevention practices are being followed on the property. That way you will be prepared to prove that you followed reasonable precautions if a violent crime occurs.
If a violent crime does happen and a negligent security insurance claim is filed, the insurer will want to respond quickly to investigate the security measures that were in place, retain legal counsel, and engage a premises security expert. Delays in developing a defense plan can adversely affect the outcome and cost of the case. It’s important for the policyholder to have an emergency call list in the event of a crime and to have someone from the claims group on that list.
An insurance adjuster can help to resolve complex claims quickly, as well as help property owners prevent future incidents. The adjuster might dig into a property’s history to illuminate what’s considered “normal” and what activities owners should reasonably have anticipated. A history of break-ins or muggings, for example, could establish that the owner knew about the risk and, therefore, should have strengthened security measures in response, according to Engle Martin & Associates, a loss-adjustment and claims-management provider.
The adjuster may also look at the property owners’ social media and online reviews for previous complaints about security. If the owners issued warnings about criminal activity and shared their attempts to improve security, for example, that can bolster their defense, said Natalie Prescott, casualty claims manager at Engle Martin.
Taking appropriate security measures and understanding your insurance coverage will go a long way toward helping you be prepared if a violent crime happens on your property. Of course, you should seek guidance from your insurance or legal professionals about your specific circumstances.
By Loretta Worters, Vice President – Media Relations, Triple-I
When you think about domestic violence, insurance typically isn’t top of mind. But financial security and access to resources can make all the difference to victims when deciding to leave an abusive relationship. And insurance is an important component of financial planning that can help survivors move forward.
Financial abuse is a common tactic used by abusers to gain power and control in a relationship. The forms of financial abuse may be subtle or explicit but, in general, include tactics to conceal information, limit the victim’s access to assets, or reduce accessibility to the family finances.
Growing evidence shows the pandemic has made intimate partner violence more common—and often more severe. Layoffs, loss of income, and living in isolation with abusers due to working remotely have dramatically increased the incidence of domestic violence, further hampering a victim from leaving an abusive situation.
Survivors struggling to get back on their feet may also be forced to return to their abuser. That’s why it’s so important that survivors understand how insurance works and what a critical role it can play in gaining financial freedom and economic self-sufficiency.
In support of Domestic Violence Awareness Month, Triple-I offers financial strategies to protect victims before and after leaving an abusive relationship. They include securing financial records, knowing where the victim stands financially, building a financial safety net, making necessary changes to their insurance policies and maintaining good credit.
The National Coalition Against Domestic Violence (NCADV) reports that 10 million people are physically abused by an intimate partner each year, and 20,000 calls are placed to domestic violence hotlines each day. In addition, 85 percent of women who leave an abusive relationship return because of their economic dependence on their abusers.
“Home is often times a dangerous place for survivors of domestic violence, and COVID-19 exacerbates the circumstances, due to the abusers’ ability to further control,” said Ruth Glenn, president and CEO of the NCADV. “Tactics abusers use include ruining the credit of their victim as well as financial and digital abuse, such as stimulus funds being co-opted by abusers to an increase in domestic online harassment,” she said.
Experts agree that domestic online harassment can come in many forms, from impersonating a victim by email to sabotage her work to controlling information about the pandemic to make her more fearful and dependent.
Since 2005, The Allstate Foundation has been committed to ending domestic violence through financial empowerment by helping to provide survivors with the education and resources needed to achieve their potential and equip young people with the information and confidence they need to help prevent unhealthy relationships before they start. The Allstate Foundation offers a Moving Ahead Curriculum, a five-module program that helps prepare survivors as they move from short-term safety to long-term security. Modules of the curriculum include: Understanding Financial Abuse; Learning Financial Fundamentals; Mastering Credit Basics; Building Financial Foundations and Long-Term Planning.
“One of the most powerful methods of keeping a survivor trapped in an abusive relationship is not being able to support themselves financially,” Glenn explained. “That’s why insurance and financial education are so important,” she said. “Education can save a life.”
As cyberattacks have increased in recent years, one area of particular concern has been those that target hospitals and health systems. These attacks have affected not only private information but also threatened the lives and well-being of patients.
A major shift
Hospitals rely more than ever on computerized systems to manage their information and systems. With the added complications related to the COVID-19 pandemic, the dangers associated with cyberattacks have only worsened.
“It’s part of a trend we’ve seen building over the last couple years, even before the pandemic,” said Scott Shackelford, chairman of the IU Cybersecurity Risk Management Program. Unfortunately, health-care providers are very much in the crosshairs. Not only do they often have insurance and deep pockets, but doctors need access to patient information to perform procedures and provide required services.
Because of this vulnerability and urgency, Shackelford said, “They are more likely to pay up.”
“If you look at the surveys that have been done, about one-in-three health providers have been hit by ransomware attacks just since 2020, and there’s been a 45 percent uptick in that rate since last December,” Shackelford added.
One recent attack, on Johnson Memorial Health in Franklin, Indiana, disabled its computer system. Although the hospital said it could still manage its patient intake, the loss of computer capabilities slowed operations down dramatically.
“We’re used to sending lab orders via computer, sending prescriptions to pharmacies via computer, so we’re going back to a real reliance on paper again,” Johnson Memorial President and CEO David Dunkle said. “We’re using more human runners, people taking lab recs between the ER and the lab.”
This has given hackers the ability to disable medical imaging devices like MRIs. They can then shut down or interfere with machines. A recent study by McAfeeEnterprise’s Advanced Threat Research Team uncovered that an IV pump created by German medical manufacturer B. Braun possessed a susceptibility that would allow hackers to change medicine doses remotely.
And while traditional phishing attacks require a user to open a corrupted file — a trend that is now on the decline — new attacks can use so-called Zero Click malware, which can infect a system merely through receiving a text or email.
Additionally, sensitive data that health systems possess gives hackers the opportunity to sell this information online — or threaten to — with demands rising into the millions of dollars. After a 2009 U.S. law was passed that required Medicare and Medicaid providers to implement electronic health records, these risks have only accelerated.
Life and death circumstances
Hospitals are now not only seeing the financial risks with cyberattacks, but the threat to their patients’ lives.
In July 2019, Springhill Medical Center faced a massive ransomware attack that disabled its electronic devices. This failure created dire circumstances for one infant, causing doctors to be unable to monitor the child’s condition during delivery. The infant died, and the hospital is being sued by the mother for malpractice—a charge Springhill denies.
Another attack in Düsseldorf, Germany in 2020 saw the death of a 78-year-old woman from an aortic aneurysm. What was supposed to be a routine pick-up turned into a nightmare, when the local hospital’s system was disabled by a ransomware attack, forcing the emergency department to turn away the woman and causing the ambulance to travel much farther. During this time, the patient’s condition worsened, and she eventually died.
With the vast amount of data and equipment at each of these health facilities—as well as the linked networks of many systems—the threat of cyberattacks in health care will only continue to grow unless more action is taken.
The COVID-19 pandemic contributed to a decrease in life expectancy in the United States for the first time in decades, according to the Centers for Disease Control and Prevention (CDC). After climbing steadily for many years, life expectancy fell by 1.5 years from 2019 to 2020 – the largest one-year dip since World War II, when it declined by 2.9 years between 1942 and 1943.
Life expectancy at birth for the total population declined from 78.8 years in 2019 to 77.3 years in 2020. The grim prospect of mortality, as well as the financial havoc wrought by the pandemic, has led many people to consider protecting their loved ones with life insurance.
A survey by Life Happens and LIMRA published in April 2021 found that about 31 percent of consumers said they are more likely to buy life insurance because of the pandemic. And the latest data show they followed through on that intention. Total U.S. life insurance premium increased 21 percent in the second quarter 2021, the largest year-over-year increase since third quarter 1987. For the first half of 2021, total premium increased 18 percent, compared with the first six months of 2020, LIMRA reports.
Life insurance is now attracting younger customers. LIMRA’s survey shows that 45 percent of millennials said they are more likely to buy life insurance because of COVID-19. This increased interest could be explained by the fact that younger people are more likely to have children who are minors and higher amounts of outstanding mortgage debt to cover if they died. Younger workers also faced higher unemployment rates throughout the pandemic compared to older workers, so they may have purchased individual coverage to make up for the loss of employer-sponsored policies.
Decisions about buying a policy or increasing coverage also vary by race. Deloitte research found that underinsured Hispanic/Latino buyers were most interested in increasing life insurance coverage as a response to the pandemic, followed most closely by Black buyers. Deloitte speculates that this is due to the higher unemployment rates among Black and Hispanic/Latino people during the pandemic, which resulted in the loss of employer-sponsored life coverage. Overall, Black and Hispanic/Latino people were disproportionately affected by COVID-19.
September is Life Insurance Awareness month, and now turns out to be a good time to get the coverage. Insurers have made it easier to buy policies during the pandemic. Many companies are temporarily waving in-person medical exams and streamlining the buying process with simplified underwriting.
Companies with the strongest digital capabilities are benefitting from a 30 percent to 50 percent increase in online life insurance sales since January 2020, according to Deloitte. Consumers like shopping online, and interest in agent-driven sales is decreasing, with just 41 percent of consumers saying they prefer to buy in-person in 2020 – down from 64 percent in 2011.
People who get life insurance don’t tend to regret it. In fact, LIMRA reports that that almost 40 percent said they wished they had purchased it at a younger age. And while many people believe life insurance is too expensive, most overestimate the cost. LIMRA found that 44 percent of Millennials thought the cost of term life insurance was more than $1,000 a year, when it’s closer to $160 for a healthy 30-year-old to own a $250,000 level term life insurance policy.
Among the many things we’ve missed since the start of the pandemic, travel has been one of the most notable. Whether for business, to visit distant family members, or just get away from our now-too-familiar surroundings, many of us have been keenly anticipating a return to air travel.
Flying is among the safest activities people can engage in (see infographic). But new concerns are being raised about risks emerging in a post-COVID-19 world.
The risks highlighted in a recent report from Allianz Global Corporate & Specialty (AGCS) include “rusty” pilots, “air rage”, new aircraft, and even insect infestations.
The industry is slowly rebounding, and AGCS notes that the airline teams have stepped up to ensure that air travel remained safe, despite layoffs, financial struggles, and the pressures attending an overnight shift to remote working.
“But as more aircraft return to the skies,” the report says, “there has been much discussion about the hazards that may arise from such an unprecedented period, as well as some of the changes the sector will see.”
Earlier this year it was reported that dozens of pilots had notified the Aviation Safety Reporting System about making mistakes after climbing back into the cockpit. Operated by NASA, the Federal Aviation Administration (FAA) watchdog system enables pilots and crew members to anonymously report mechanical glitches and human errors.
“Many of the pilots cited ‘rustiness’ as a reason for the incidents after returning to the skies following months of lockdown,” AGCS reports. “While there have been no reported incidents of out‑of‑practice pilots causing accidents injuring passengers, mistakes reported included: forgetting to disengage the parking brake on takeoff, taking three attempts to land the plane on a windy day, choosing the wrong runway, and forgetting to turn on the anti‑icing mechanism that prevents the altitude and airspeed sensors from freezing.”
Condition of aircraft
At the peak of the first wave of the crisis, airlines parked around two thirds of the total global fleet. More than a year later, many are still mothballed.
“This unprecedented situation has resulted in a host of new challenges,” AGCS writes. “Loss exposures do not just disappear when airplanes are parked.”
Rather, the risks and their costs change. AGCS cites fears of damage among grounded aircraft during thunderstorms in Texas that pelted the region with golf ball‑sized hail.
Aircraft are large and tricky to maneuver on the ground, and ground incidents can result in costly claims. When operators transferred fleets from the runways to storage facilities at the start of the pandemic there were a number of collisions. It would not be surprising, therefore, to see more such incidents as planes are moved in preparation for reuse.
The European Union Aviation Safety Agency has reported “an alarming trend…of unreliable speed and altitude indications” related to accumulations of foreign objects, such as insect nests in areas of aircraft that provide flight-critical air data information.
“This has led to a number of rejected take-off and in-flight turn back events,” the agency reports.
On the other hand, as many airlines have retired larger aircraft earlier than planned due to COVID-19, there will be many newer planes on the runways and in the air, which presents its own challenges from an insurance coverage perspective. As we’ve written previously, more modern planes are more expensive to repair or replace when there is an incident, leading to more expensive claims.
Air rage on the rise
In May 2021, an attendant on a Southwest Airlines flight attendant had two teeth knocked out after an altercation with a passenger over wearing a mask – the latest in a spate of highly publicized incidents that moved the FAA to issue a warning about a spike in unruly or dangerous behavior. More recently, an American Airlines flight to the Bahamas was canceled when some among a group of high school students refused to wear masks.
In a typical year in the United States, there tend to be no more than 150 reports of serious onboard disruption, the AGCS report says – but by June 2021 that number had already reached about 3,000, including about 2,300 involving passengers who refused to comply with the federal mandate to wear a mask while traveling.
Few COVID-19 claims
The aviation industry has seen few claims directly related to the pandemic to date, AGCS says, also noting a decline in slip-and-fall and lost-baggage claims at airports because of the reduced number of passengers during the pandemic. Such claims are expected to return to more typical levels as people resume traveling, and insurers will need to be mindful of new hazards that could affect claims experience.
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.