Hurricane Delta insured losses estimated at up to $3 billion

Flood waters from Hurricane Delta surround structures destroyed by Hurricane Laura on October 10, 2020 in Creole, Louisiana. Hurricane Delta made landfall near Creole as a Category 2 storm initially leaving some 300,000 customers without power. (Photo by Mario Tama/Getty Images)

Hurricane Delta made landfall in Creole, Louisiana, on October 9 as a Category 2 storm with 101 mph sustained winds and a 9.3-foot storm surge. Landfall in Cameron Parish was within 13 miles of where Category 4 Hurricane Laura made landfall in late August. Delta knocked out power to over 500,000 customers in Louisiana (a quarter of the state’s homes), plus another 300,000 in parts of east Texas and western Mississippi. It was a record-setting 10th continental U.S. landfall of a named storm during a single hurricane season and record-tying fifth hurricane continental U.S. landfall in a season.

Similar paths by Hurricanes Laura and Delta in Louisiana triggered the state law that stipulates that policyholders are not required to pay a hurricane deductible twice in the same storm season. State Insurance Commissioner Jim Donelon said that for people who did not exhaust their deductible during Laura, the remainder would apply to Delta only if the unused amount is larger than the standard all-perils deductible. It is not known yet how many people suffered damage from Delta.

Insured loss estimates for Hurricane Delta range from $1 billion to as high as $3 billion, according to catastrophe risk modelling specialist AIR Worldwide. The company warns of the potential for loss increase due to hurricane Delta’s impacts coming so soon after hurricane Laura’s. Karen Clark & Company’s estimate that onshore insured losses will be about $1.25 billion and CoreLogic estimates that onshore and offshore insurance market losses from Delta will be between $1.5 billion and $2.7 billion.

During a live interview on The Weather Channel’s Weather Underground on Monday, October 12, the Triple-I’s Mark Friedlander discussed property losses for Louisianans who were impacted by hurricanes Delta and Laura. He also provided claims-filing tips.

The Future of American Insurance and Reinsurance Releases a Digital Business Interruption Insurance Explainer

Future of American Insurance and Reinsurance (FAIR) has released a new interactive tool to help showcase the need for a federal solution to pandemic relief. The Business Interruption Insurance “explainer” utilizes digital storytelling techniques to help clarify information about this complex topic.

The digital explainer complements the FAIR campaign’s other recently-released digital assets, including a video overview of BI and pandemics, and a primer deck that provides quantitative backing to the assertion that pandemics cannot be privately insured. 

As trial attorneys attempt to retroactively force uninsurable pandemic coverage in business interruption insurance contracts, this tool is designed to show what business interruption insurance covers, how surplus helps pay for covered perils such as hurricanes and wildfires, how insurers have stepped up to help policyholders, and the need for a federal solution to the pandemic.

ABOUT FAIR
FAIR is an initiative of the Insurance Information Institute and its member companies whose mission is to ensure fairness for all customers and safeguard the industry’s longstanding role as a pillar of economic growth and stability.

Keeping Halloween Safe, Even During a Pandemic

Dan and Ben, ready for a safety-conscious Halloween last year.

My five-year-old nephew, Ben, is a great source of pride to his electrician father, Dan. Last Halloween, Ben refused to trick-or-treat at a particular house because he noticed that the decorations there were a fire hazard.

Halloween is supposed to be fun, but it has always involved risks and potential liabilities. The video below outlines some of the “traditional” hazards and ways to mitigate them, from eliminating trip-and-fall dangers to preventing fire and pet-related perils.  

And while much of the focus of Halloween-risk mitigation is on the home, Donald R. Grady, a Boston personal injury attorney, says the biggest dangers actually involve cars.

“You see an uptick in automobile accidents,” Grady says. “Especially with teenagers, who don’t have adults with them and who rush from house to house.”

The curse of 2020

2020 has aged us all….

Perhaps predictably by now, 2020 has brought the spooky holiday threats of its own. COVID-19 has introduced new Halloween concerns.

The Centers for Disease Control and Prevention (CDC) has published a list of low-, moderate-, and high-risk Halloween activities for a time of pandemic.

Lower-risk activities include:

  • Carving or decorating pumpkins with members of your household and displaying them
  • Carving or decorating pumpkins outside, at a safe distance, with neighbors or friends
  • Decorating your house, apartment, or living space
  • Having a virtual Halloween costume contest
  • Having a Halloween movie night with people you live with.

Moderate-risk activities include:

  • Participating in one-way trick-or-treating, where individually wrapped goodie bags are lined up for families to grab and go while continuing to social distance
  • Having a small group, outdoor, open-air costume parade with people distanced more than 6 feet apart
  • Attending a costume party held outdoors, where protective masks are used and people can remain more than 6 feet apart.

The CDC provides caveats and additional guidance for these and other moderate-risk activities, so if you’re even thinking about them, definitely read the relevant guidance. It advises against the following:

  • Traditional trick-or-treating where treats are handed to children who go door to door
  • “Trunk-or-treat,” where treats are handed out from trunks of cars lined up in large parking lots
  • Attending crowded costume parties held indoors
  • Going to an indoor haunted house where people may be crowded together and screaming
  • Going on hayrides or tractor rides with people who are not in your household
  • Using alcohol or drugs, which can cloud judgement and increase risky behaviors
  • Traveling to a rural fall festival that is not in your community if you live in an area with community spread of COVID-19.

Lightning Round Webinar Showcases Cutting Edge Disaster Mitigation Technologies

Four entrepreneurial teams who have developed products to boost societal resilience and to mitigate natural disaster risks will present them during a free Insurance Information Institute (Triple-I) event on Thursday, Oct. 22, at 11 a.m., ET.

Billed as the Lightning Rounds for Resilience and Pre-Disaster Mitigated Innovations, it is the third time this year the Triple-I and its Resilience Accelerator, ResilientH20 Partners and The Cannon, have connected entrepreneurs with leading insurance innovation specialists and investors. Pre-registration is required.

The first of the day’s two panels will feature the web-based apps developed by the prize-winning teams from 2020’s collegiate Hack-for-Resilience III. The Triple-I and the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania honored these two student entrepreneurial teams in September 2020.

  • Air.ly:  The app identifies locales near wildfire zones where individuals afflicted with respiratory issues, or other health complications, can find fresh air. It won the prize this year for the Best Overall Hack-for-Resilience.
  • Insura: The app uses a home’s location and historical loss data to recommend mitigation and maintenance activities which could reduce a homeowner’s insurance premiums.  It won this year’s prize for the Best Application of Insurtech.

“We’re excited to spotlight the outstanding work of talented students who have accepted the challenge to build and empower the resilience movement. Products like Air.ly and Insura are proof today’s brightest young minds are creating the tools that will better allow people to navigate through, and prepare for, natural disasters,” said Michel Leonard, PhD, CBE, Vice President and Senior Economist, Triple-I.

Two established businesses – members of the Resilience Innovation Hub “portfolio of disaster risk-mitigation innovation” -will present their products and services during the event’s second and final panel:  

  • Thermal Gate™ 2.5:  The artificial intelligence (AI) based system screens and detects individuals who have an elevated body temperature before they enter venues which are open to the public.
  • Mesh++ : The just-in-time WiFi community network requires no external power nor wiring to generate broadband access for first-responders, citizens, and preparedness interests.

Click here to register.

Economic Data
in the Age of COVID-19

Dr. Steven N. Weisbart, CLU, Triple-I Senior Vice President and Chief Economist

COVID-19 pandemic has not only disrupted our economy – it has complicated the data we routinely use to understand economic developments. This is a bit like finding out the thermometer you use to tell if you have a fever is unreliable.

Here are two examples of why it’s hard to know what’s happening.

 What is the correct unemployment rate?

The April 2020 Bureau of Labor Statistics (BLS) employment report said the U-3 rate – just one of six unemployment measures BLS reports – was 14.75 percent. This number is derived by dividing the number of people counted as unemployed (23.078 million) by the civilian labor force (156.481 million), which is everyone who is either working or unemployed and looking for work.

But when the virus was recognized as a major public health threat in mid-March and April and many businesses and organizations were shut down, throwing many millions out of work, some who were affected decided to retire. This means they were no longer counted as part of the civilian labor force. This is most vividly seen by comparing the civilian labor force in February (164.6 million) with its count in April (156.5 million)—a drop of 8.1 million.

The large number of retirees affected the unemployment rate: if they had not retired, most would likely have been counted as unemployed. To keep the math in our example simple, let’s say 7 million of the retirees had remained in the labor force and been counted as unemployed (maybe the other 1 million would have retired then anyway—virus or no virus). The unemployment count would have been 30 million (23 million counted plus 7 million un-retirees) and the civilian labor force would have been 163.5 million (156.5 counted plus 7 million un-retirees).

The unemployment rate would have been announced as 30 million divided by 163.5 million, or 18.35 percent, instead of 14.75 percent.

So, which one is correct?

Are seasonal adjustments still correct?

Macroeconomists have long recognized that many economic data have seasonal patterns. For example, retail sales often spike in the last quarter of the year because of the holidays. Sales for some items, such as those bought for “back to school,” spike at other times. So, to see what’s really happening, economic data are often adjusted to account for the seasonal effects and reported after these adjustments are made.

To see the effect of seasonal adjustments, look at the following two graphs. The first is employment in the construction industry that is not seasonally adjusted. The second is the same industry and time; the only difference is that its data are seasonally adjusted.

Construction employment obviously dips in the cold months, and the drop shown in the first graph doesn’t represent any significant economic change, so the seasonal adjustment in the lower graph lets us see only changes beyond the seasonal adjustment, such as what happened in 2020.

The problem, from an economic analysis viewpoint, is that the amount of seasonal adjusting to apply is a judgment call, and it is often based on a historical period in which conditions were much as they are now. But what’s happening now has no satisfactory historical precedent.

So should we keep using the seasonal adjustment factors from before, or do they not apply to the current economic situation?

These are just two examples of datasets or analytical approaches whose relevance can be called into question in light of COVID-19 – further complicating the already complex and nuanced endeavor of attempting to understand and anticipate economic developments.   

Insurance kicks it old school: Virtual campus event series to showcase alumni in insurance

By James Ballot,  Senior Advisor, Strategic Communications, Triple-I

Is insurance the ultimate high return/low-risk career option?

Many career experts and insurance professionals agree that few fields offer as many outstanding career paths and opportunities. To spread the word to college students, Gamma Iota Sigma (GIS) is teaming with Triple-I to host virtual sessions at three academic institutions this fall.

GIS’s Security in Risk Tour brings insurance industry executives back to their alma maters to share career stories and advice with students who are pursuing degrees in majors other than risk management or actuarial science (the two fields most often associated with insurance). 

The first stop on the 2020 Security in Risk Tour is the “Insurance Career Showcase and Alumni Panel” on Wednesday, Oct. 14, at 5:30 p.m. EDT at Syracuse University, which will be hosted by the upstate New York institution’s Martin J. Whitman School of Management.

“For hundreds of years, insurance has been a key driver of innovation and economic growth worldwide,” said Sean Kevelighan, CEO, Triple-I. “Thanks to Gamma Iota Sigma and programs like the Security in Risk Tour, the U.S.’s insurance industry is able to engage with, and recruit, some of the nation’s most promising college students.  Insurers are making homes, businesses and communities safer by recruiting and hiring well-educated and ambitious young men and women as they embark on their professional careers.”

Other 2020 Security in Risk events scheduled for the fall include:

  • Wednesday, Nov. 4: “STEM [Science, Technology, Engineering, and Mathematics] Careers in Risk Management and Insurance,” at Stevens Institute of Technology, Hoboken, NJ
  • Thursday, Nov. 5: “Security in Risk: Careers in Cyber Risk Management and Insurance,” at Baruch College, New York City.

“The insurance industry has a great story to share,” notes Alyssa Bouchard, CPCU, ASLI, ARM, Director of Education & Programming, Gamma Iota Sigma. “We’re excited to team up with the Triple-I to expand our reach by engaging with students at colleges and universities without GIS chapters. The Security in Risk Tour helps to educate students of all majors and backgrounds about the insurance industry’s positive societal impact and limitless career opportunities.”

The Gamma Iota Sigma Security in Risk Tour is presented in partnership with Triple-I. Funding is provided by the program’s lead supporters, Chubb and the Spencer Educational Foundation.

Deaths Resulting from Louisiana Hurricanes Underscore Need for Personal Power Generator Safety Awareness

(Photo by Rob Foldy/Getty Images)

By James Ballot,  Senior Advisor, Strategic Communications, Triple-I

On October 1, Hurricane Delta hit Louisiana as a Cat. 2 storm, cutting power to almost 700,000 residents and causing further setbacks to people in that region who were still recovering from Hurricane Laura, the Cat. 4 storm that ravaged the region in late August.

Residents in hurricane-prone regions commonly rely on emergency power generators to aid in recovery from storms and other catastrophes. Nevertheless, many home and businessowners lack knowledge and training to safely run these devices: of the more than 30 lives lost to Laura and Delta nearly one-third  were caused by fires or carbon monoxide (CO) poisoning due to improper use of emergency power generators.

If you own a generator or are considering purchasing one as part of your emergency preparedness planning, the Triple-I encourages you to follow guidance put forth by the Center for Disease Control, State Farm, Travelers and other reliable sources, including:

William Davis, the Triple-I’s Georgia Media Relations Director adds, “Before a storm knocks out electricity, generator owners need to learn how to use them safely. Generators can be life savers in time of need, but they can also be killers!”

Drop, Cover, and Hold On – Great Shakeout Earthquake Drills Take Place on October 15

About half of all Americans are at risk of ground shaking from earthquakes. That’s why practicing what to do in the event of a quake is so important and why over 11 million people worldwide (and counting) are participating in this year’s Great ShakeOut earthquake safety drill on October 15.

The Great ShakeOut Earthquake Drills is a worldwide earthquake safety movement. Most participate by registering to practice “Drop, Cover, and Hold On.”

ShakeOut organizers recommend people follow the Seven Steps to Earthquake Safety, which starts with Step 1: Secure Your Space. Most earthquake injuries are entirely preventable and are caused by furniture and other objects that move or break when shaking occurs, resulting in trips, bruises, cuts, and more. You can secure your space by moving heavy objects down to lower shelves, relocate tall furniture away from entrances and exits, and secure cabinets with latches.

In California, a state where earthquakes are frequent, Earthquake Warning California is coordinating a statewide drill to coincide with ShakeOut. People who have downloaded the MyShake app to their phone will receive a TEST warning at 10:15am with guidance to Drop, Cover, and Hold On!

Due to the COVID-19 pandemic, some participants are adapting their ShakeOut activities through video-conferencing, choosing staggered or alternative dates, and following local health and safety guidelines.

To register for ShakeOut click here.

Additional Resources:

The Earthquake Country Alliance’s Safer At Home Webinar Series offer many safety tips and advice on how to minimize financial hardship.

Triple-I’s Facts & Statistics: Earthquake Insurance

Video: What’s covered by earthquake insurance

Hurricane Delta Surges Closer to Gulf Coast

Hurricane Delta is surging closer to the U.S. Gulf Coast and is expected to land on the evening of October 9 somewhere on Louisiana’s southwest coast. Dr. Phil Klotzbach, CSU research scientist and Triple-I non-resident scholar gives an update on Delta in the video clip above.

The hurricane has grown in size since yesterday and a large area of the country will see impacts from the storm. Hurricane warnings are in place from High Island, TX to Morgan City, LA, and storm surge warnings extend from High Island, TX to the mouth of the Pearl River.

In addition to strong winds Delta is expected to bring storm surge as high as 7 to 11 feet along the coast of central LA, rainfall totals are forecast to be from 5 to 10 inches from southwest to central LA, with isolated totals of up to 15 inches.

Delta is on track to hit the same area of Louisiana where Hurricane Laura landed only six weeks ago. New Orleans, which will likely miss the storm, was still preparing for the possibility of tornadoes. Louisiana Gov. John Bel Edwards declared a state of emergency.  Mississippi Gov. Tate Reeves also declared a state of emergency, with forecasters saying southern Mississippi could see heavy rain and flash flooding.

Tort Reform Group Promotes “Lawsuit Abuse Awareness”

While ridiculous sounding lawsuits are common in our litigious society, some stand out because they sound so preposterous they could have been the plot of a “Seinfeld” episode.

For example, in 2019 an infamous Long Island attorney nicknamed the “Vanilla Vigilante,” sued Whole Foods for $5 million, claiming the store’s vanilla soy milk is flavored with ingredients in addition to vanilla. The American Tort Reform Association (ATRA) highlights this case and others as part of Lawsuit Abuse Awareness Week (October 5-9).

Food disappointments appear to be a common theme among these suits:

  • A December 2019 complaint filed in federal court alleged a Panera blueberry bagel purchased in Manhattan didn’t contain blueberries but “dyed lumps.”  The complaint argues that the bagel’s advertising breached the New York Deceptive and Unfair Trade Practices law, among others. 
  • A May 2020 lawsuit contends that Haagen-Dasz milk chocolate coated ice cream bars should be labeled as milk chocolate and vegetable oil coated chocolate bars. The company says vegetable oil is used as an ingredient to help overcome the difficulties of applying a coating of chocolate to ice cream; the oil is not otherwise included in milk chocolate.  
  • A June 2020 lawsuit against a snack food manufacturer alleges the “potato skin snacks” do not contain potato skins but potato starch and potato flakes.

Such cases are fun to laugh about, but increasing willingness of plaintiffs to bring suits of all kinds – and of juries to pay out large settlements, known as “nuclear verdicts” – feeds the phenomenon of social inflation, which drives up claims costs for insurers and premiums for policyholders.

ATRA warns that a wave of such lawsuits is expected against businesses as they reopen during the ongoing COVID-19 pandemic.

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