All posts by Jeff Dunsavage

I.I.I. Media Tour: What You Need to Know and Do as Hurricane Season Peaks

The Insurance Information Institute (Triple-I), along with Colorado State University’s atmospheric research scientist Dr. Phil Klotzbach, will be conducting a satellite media tour on Tuesday, August 11, to talk about what may lie ahead for the remainder of the hurricane season.

Dr. Phil Klotzbach, Colorado State University

We will be talking with news organizations throughout the U.S. about the steps individuals and businesses in hurricane-prone states need to take to protect their property and possessions with the right type—and amount—of insurance.

The following subject-matter experts will be available for interviews:

  • Sean Kevelighan, CEO, Insurance Information Institute (Triple-I)
  • Dr. Phil Klotzbach, Research Scientist, Colorado State University and a Triple-I Non-Resident Scholar
  • Laura L. Favinger, Chief Administrative Officer, Triple-I
  • Mark Friedlander, Director, Corporate Communications, Triple-I

Damage caused by tropical storms and hurricanes can upend lives for months, and sometimes years. Even in the country’s most vulnerable coastal states, individuals and businesses may underestimate their risk or have insufficient insurance coverage, operating without either an evacuation or a business continuity plan.

As the peak of 2020’s already busy Atlantic hurricane season approaches, it’s time to make sure you’re ready.

Nearly 20 media outlets have signed up to participate, and the following stations will be broadcasting live interviews (times are Eastern Standard):

08-11-2020 08:35 am – 08:45 am ET: WRAZ-FOX TV Raleigh-Durham (27) “WRAL’s 8am News on Fox50” Live
08-11-2020 09:20 am – 09:30 am ET: WPBF-ABC TV West Palm Beach-Ft. Pierce (36) “WPBF 9AM NEWS” Live
08-11-2020 09:40 am – 09:50 am ET: WBRC-FOX TV Birmingham (Ann and Tusc) (44) “Good Day Alabama” Live
08-11-2020 10:20 am – 10:30 am ET: WTKR-CBS TV Norfolk-Portsmth-Newpt Nws (42) “Coast Live ” Live

If you’d like to arrange an interview with our experts, please contact MultiVu Media Relations, 800.653.5313 x3

Legislatures AdvanceCOVID-19-related Bills

As states struggle to identify the best ways to reopen their economies, agencies, and schools from the coronavirus-related lockdown, legislatures have been moving forward legislation to protect them and the people they employ.

Virginia Approves Worker Health & Safety Standard

The Virginia Occupational Safety and Health (VOSH) – the state’s version of the federal Occupational Safety and Health Administration (OSHA) – will enforce a standard that mandates and, in some instances, exceeds guidance issued by the U.S. Centers for Disease Control and Prevention (CDC) and OSHA, PropertyCasualty360.com reports.

The standard protects employees who raise reasonable concerns about infection control to print, online, social, or other media. It covers most private employers in Virginia, as well as all state and local employees.

The standard also requires building and facility owners to report positive COVID-19 tests to employer tenants. It exempts private and public institutions of higher education with reopening plans certified by the State Council of Higher Education in Virginia (SCHEV) and public-school divisions that submit reopening plans to the Virginia Department of Education. No such exemptions are provided to private elementary and secondary schools.

In addition to CDC and OSHA guidelines, the standard requires employers to:

  • Provide flexible sick-leave policies, telework, and staggered shifts when feasible;
  • Provide handwashing stations and hand sanitizer when feasible;
  • Assess risk levels of employers and suppliers before entry;
  • Notify the Virginia Department of Health of positive COVID-19 tests;
  • Notify VOSH of three or more positive COVID-19 tests within a two-week period;
  • Assess hazard levels of all job tasks;
  • Provide COVID-19 training of all employees within 30 days (except for low-hazard places of employment);
  • Prepare infectious disease preparedness and response plans within 60 days;
  • Post or present agency-prepared COVID-19 information to all employees; and
  • Maintain air handling systems in accordance with manufacturers’ instructions and the American National Standards Institute (ANSI) and American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standards.

Special Legislative Session for Tennessee Liability Bill

Weeks after Tennessee’s two legislative chambers failed to come to an agreement on legislation surrounding civil liability for coronavirus, Gov. Bill Lee called the state’s General Assembly to return next week for a special session, The Tennessean reports.

Lee issued an order asking members of the legislature to return to Nashville at 4 p.m. on Aug. 10 to take up the matter, which would extend broad immunity to businesses, schools, and other entities against COVID-19-related lawsuits.

The General Assembly also is expected to take up two other bills it failed to pass before adjourning in June. One would expand medical professionals’ ability to offer telehealth services and encourage insurers to cover those costs. The other would increase penalties for protesters camping and engaging in vandalism at the Capitol. A group of protesters has remained across the street from the Capitol for more than 50 days, resulting in the arrest of some for trespassing and writing messages in chalk.

Nevada Senators Advance Liability Shield Measure

State senators in Nevada, by an overwhelming majority, advanced legislation that would extend COVID-19 liability protections to businesses, nonprofits, schools, and governmental agencies and outlining several measures intended to protect hospitality workers, The Las Vegas Sun reports.

The legislation would extend COVID-19 liability protections to many entities that have “substantially complied with controlling health standards.” Provisions of the bill would sunset either upon the termination of the current state of emergency or in July 2023.

The measure wouldn’t extend to most private health care providers.

“Unease with the bill’s focus on the tourism and gaming industry crossed party lines,” the Sun writes. “Sen. Marcia Washington, D-North Las Vegas, said she was concerned why the bill singled out hospitality workers: ‘I’m here to represent, as far as I’m concerned, everybody, all the workers in the state of Nevada,’ Washington said.”

Marie Neisess, president of the Clark County Education Association, said the bill did nothing to help teachers going back into the classroom this year.

“Even with the best safety measures in place, educators and students will still be at risk,” Neisses said. Putting a bill in place that protects the employer rather than the employee is unacceptable.”

The bill now advances to the Senate floor for final action as lawmakers continue to meet in special session.

“Rebuttable Presumption” for Essential Workers Goes to N.J. Governor

New Jersey may become the next state to enact a law presuming that essential workers who acquire COVID-19 did so on the job, Business Insurance reports.

Lawmakers in the New Jersey Assembly and Senate on Thursday passed S.B. 2380 with a 42-27 vote in the Assembly and a 27-12 vote in the Senate. The bill, introduced in early May, would create a rebuttable presumption for essential workers seeking workers compensation for acquiring COVID-19 on the job during a declared state of emergency.

The bill identifies essential employees as those whose duties are considered essential during an emergency response and recovery operation; public or private sector employees whose duties are essential to the public’s health, safety, and welfare; emergency responders and workers at health-care facilities and those performing jobs that support a health-care facility, such as laundry, research, and hospital food service.

The bill moves to Gov. Phil Murphy’s desk. If signed into law, the legislation would take effect immediately and be retroactive to March 9. According to Business Insurance, a spokeswoman for Gov. Murphy declined to comment on whether he intended to sign the legislation.

Isaias Expected to ApproachFlorida This Weekend

Hurricane Isaias is expected to strengthen somewhat, to a strong Category 1 hurricane, as it crosses over the Bahamas Friday and Saturday. The National Hurricane Center (NHC) now forecasts Isaias will come extremely close to the east coast of Florida later this weekend. 

According to the National Weather Service (NWS), the strongest winds in Florida will be felt from Pompano Beach to Palm Bay, where there’s potential for winds from 58 mph to 73 mph. Miami-Dade and most of Broward are predicted to see winds from 39 mph to 57 mph.

The NHC recently posted hurricane watches from north of Deerfield Beach to the Volusia-Brevard County line and forecasts two to four inches of rainfall from south-central to southeastern Florida, with potential totals of six inches. There is also the potential for some storm surge, with exact levels dependent on the future track and intensity of Isaias.

Residents are strongly encouraged to prepare for Isaias and other storms during this above-average hurricane season – particularly with the additional challenge of COVID-19.

Broward County Sheriff Gregory Tony said South Floridians should “start to examine what other opportunities or options they may have to be out of South Florida.”

Florida has recently experienced a surge in COVID-19 cases. In preparation for the storm, the Florida Department of Emergency Management has closed all state-run COVID-19 testing sites.

“The more that we can do as individuals and focus on the things we can do to reduce the burden on government will be extremely helpful as the mayor, the county administrator are tackling different new challenges and trying to be innovative to the point where we’re not shutting down government completely, but at the same time, we’re not unnecessarily allowing for hazards and exposures to this virus,” Tony said.

Wind-caused property damage is covered under standard homeowners, renters, and business insurance policies. Renters’ insurance covers a renter’s possessions while the landlord insures the structure.

Property damage to a home, a renter’s possessions, and a business – resulting from a flood – is generally covered under FEMA National Flood Insurance Program (NFIP) policies, if the homeowner, renter, or business has purchased one. Several private insurers also offer flood insurance.

Private-passenger vehicles damaged or destroyed by either wind or flooding are covered under the optional comprehensive portion of an auto insurance policy. Nearly 80 percent of U.S. drivers choose to purchase comprehensive coverage.

Isaias Meets COVID-19: South Floridians Advised to Consider Evacuation

South Floridians should “start to examine what other opportunities or options they may have to be out of South Florida,” Broward County Sheriff Gregory Tony said in a virtual press conference as a broad area of low pressure looked increasingly likely to turn into Tropical Storm Isaias.

Tropical storm-force gusts could arrive in Florida as early as Friday night, but Saturday is much more likely, according to the National Weather Service (NWS) Miami.  

Tony said the biggest hurdle officials anticipate during the 2020 hurricane season is the ability to effectively maintain social distance while taking in large numbers of people at county storm shelters. Florida has recently experienced a surge in COVID-19 cases.

“The more that we can do as individuals and focus on the things we can do to reduce the burden on government will be extremely helpful as the mayor, the county administrator are tackling different new challenges and trying to be innovative to the point where we’re not shutting down government completely, but at the same time, we’re not unnecessarily allowing for hazards and exposures to this virus,” Tony said.

In preparation for the storm, the Florida Department of Emergency Management has said it will close all state-run COVID-19 testing sites at the end of business day today.

The storm knocked out power to more than 300,000 clients across Puerto Rico, according to the island’s Electric Power Authority. Minor damage was reported elsewhere in the island, where tens of thousands of people still use tarps as roofs over homes damaged by Hurricane Maria in September 2017.

Triple-I Chief Economist: P/C Industry Strong, Despite Surplus Drop

Despite its largest-ever quarterly decline in policyholder surplus, the property/casualty insurance industry remained profitable in the first quarter of 2020 and remains financially strong, according to a commentary by Triple-I’s senior vice president and chief economist, Dr. Steven Weisbart.

Dr. Steven Weisbart

Policyholder surplus – the amount insurers hold in reserve to ensure that they can keep their promises to pay policyholder claims – dropped by $75.9 billion in the quarter as the stock market suffered a major downturn, according to a report by Verisk, a data and analytics provider, and the American Property Casualty Insurance Association (APCIA).

Since then, the COVID-19 pandemic has continued to affect many insurers and will likely impact underwriting results for the second quarter and the rest of the year.

“Thanks to continued premium growth and positive investment results, the industry turned in a profitable first quarter,” Weisbart says. “Most of its investment income comes from high-quality corporate and municipal bonds, which are not as volatile as investments in stock.”

The industry’s combined ratio – a widely used profitability metric – was 94.9 in the first quarter of 2020, compared with 95.6 for the same period in 2019. A lower ratio indicates better performance.

Combined ratios for insurers writing commercial lines coverage (excluding mortgage and financial guaranty) deteriorated 1.3 percentage points, to 97.7 percent. Personal lines insurers’ ratio improved 2.7 percentage points, to 92.2 percent. Insurers writing balanced books of business posted a combined ratio of 95.8, 1.3 percentage points better than in the prior year’s first quarter.

Insured LossesDue to Civil UnrestSeen Nearing 1992 Levels

Insured losses related to civil disorder in 2020 are on their way toward a level not seen since 1992, according to estimates by insurance industry analysts. 

On May 26, 2020, protests and riots broke out in response to the death of George Floyd while in Minneapolis police custody and spread to another 140 U.S. cities. By June 4, at least 40 cities in 23 states had imposed curfews, and rioting resulted in at least six deaths. National Guard were called in at least 21 states and Washington, D.C. 

Property Claim Services (PCS) a unit of a Verisk Analytics, has designated the Minneapolis riots a catastrophe. This was the first time PCS has compiled insured losses for a civil disorder event since the Baltimore riots of April 2015. Insured losses in the Baltimore unrest – following the funeral for Freddie Gray, a 25-year-old who died in police custody – fell short of $25 million when it occurred, PCS’s threshold for a catastrophe.  

The 2020 activity, spanning May 26 through June 8 and including more than 20 states with significant losses, is the first time since 1992 that PCS has declared a civil disorder event a catastrophe. The 1992 riots in Los Angeles, after a jury acquitted Los Angeles Police Department officers for using excessive force in the arrest and beating of Rodney King, caused $775 million in insured losses, according to PCS – or about $1.4 billion in 2020 dollars. 

Insured losses for the most recent event are not yet available from PCS. Preliminary estimates from industry analysts put the losses in the range of $500 million to $900 million.

Those estimates will likely change as insurers are resurveyed and data is refined. 

With protests and clashes with police continuing in Portland, Ore., and elsewhere, and President Trump threatening to send federal troops to quell the disorder in some cities, no end seems to be in sight for this costly string of civil disturbances.  

COVID-19 and Shipping Risk

The shipping industry has largely proved resilient to the coronavirus outbreak, and insurance claims related to risks of the sea could be reduced as fewer vessels venture out, insurer Allianz reports in its Safety and Shipping Review 2020

However, new challenges have emerged that could lead to more claims. 

“One of the biggest issues,” Allianz reports, “has been the inability to change crews easily because of pandemic restrictions.” 

Crew relief is essential to ensuring the safety and health of seafarers. Fatigued crew members make errors that Allianz says contribute to 75 percent to 96 percent of marine incidents. Damaged goods and containers account for more than one in five shipping claims. 

“The pandemic has heightened the risk environment around high-value and temperature-sensitive goods in particular as supply chains have come under pressure, cargo-handling companies have shut down abruptly, and ports operated under restrictions,” Allianz says. 

COVID-19 also has made it hard to obtain parts and materials like lubricants that are essential to maintenance and repair. This could make ships and the equipment on board them less safe, potentially leading to groundings or collisions. 

Such an outcome could impede or reverse the industry’s steadily improving safety record.  

The number of total losses of large ships fell in 2019 to 41, Allianz reported – “the lowest total this century and a close to 70% fall over 10 years.” 

The insurer credits improved ship design, technology, regulation, and risk management as contributing to the long-term reduction in losses. 

But improved technology can be a two-edged sword as vessels become more reliant on computers and software, making them vulnerable to cyber incursions. The coronavirus outbreak has affected this risk, too, Allianz says, reporting that companies have faced a 400% increase in attempted cyber-attacks since the pandemic began.  

Wrap-up: COVID-19 and Workers Comp

Lauded for their service and hailed as heroes, essential workers who become infected with the coronavirus on the job have no guarantee in most states that they’ll qualify for workers compensation to cover lost wages and medical care, Associated Press reports

Fewer than one-third of the states have enacted policies that shift the burden of proof for coverage of job-related COVID-19 so workers like first responders and nurses don’t have to show they got sick by reporting for a risky assignment. 

And for most employees going back to job sites as the economy reopens, there’s even less protection than for essential workers. In nearly all states, they have to prove they got the virus on the job to qualify for workers comp. 

Workers comp is not health insurance, or an unemployment benefit. In exchange for coverage, workers give up the right to sue their employers for job-related harms. Employers pay premiums to support the system. Complex rules differ from state to state. 

Dealing with job-related injuries is fairly straightforward, but diseases have always been trickier for workers’ comp, and COVID-19 seems to be in a class of its own. 

“You don’t know per se where you inhaled that breath whereby you became infected,” said Bill Smith, president of the Workers’ Injury Law & Advocacy Group, a professional association of lawyers representing workers.  

Read more: 

Families of health workers killed by COVID-19 fight for denied workers comp benefits (Philadelphia Inquirer, July 16, 2020) 

Workers comp in the new world of the COVID-19 pandemic (Law.com, July 16, 2020) 

Report: Sharp drop in California workers’ comp premiums expected from COVID-19 (Insurance Journal, July 14, 2020) 

Hurricane Modeling: High-Tech MeetsLocal Insight

Sophisticated computer modeling has led to great advances in forecasting weather-related disasters and their potential human toll and economic impact. The predictive power of these models has given insurers comfort writing coverage for risks – like flood – that were once considered untouchable and enabled them to develop innovative products.  

It can be tempting to think of hurricane forecasting and modeling as being all about high-resolution images, big data, and elaborate algorithms. While these technologies are critical to developing and implementing effective models, they depend heavily on local knowledge and “boots on the ground.” 

“After an event, we quickly send engineers to survey structural damage and look for linkages to the storm’s characteristics,” said Jeff Waters, senior product manager for risk modeler RMS. “Information gathered by our people on the ground is incorporated into our reconstruction of the event to help us identify drivers of the damage and inform our models.” 

Waters recounted how, in the wake of Hurricane Maria in 2017, an RMS team arrived in Puerto Rico on October 3 – 13 days after landfall – to validate a modeled loss estimate. During the week the team spent on the island, they found that damage to insured buildings was less than expected for a storm of Maria’s magnitude. They also observed that most insured buildings featured bunker-style reinforced-concrete construction and flat concrete roofs.  

“These buildings performed very well,” Waters said. “Reinforced concrete prevents significant structural damage, and, with less drywall and tiled flooring, interior damage from water intrusion is limited. Wood and light-metal structures – which tend to be in older neighborhoods where fewer properties are insured – fared far worse.”  

Such ground-level information not only helped validate RMS’s loss estimate – it also contributes to the model’s continuous improvement. You can read a more detailed account on the RMS blog. 

Recent research illustrates how advances in geospatial technologies allow qualitative local knowledge to be incorporated into mathematical models to evaluate potential outcomes of restoration and protection projects and support plans for mitigation and recovery.  Local knowledge mapping is one such approach to marrying modern technology and the advanced analysis it facilitates to the experiences of the individuals, communities, and businesses most affected by natural disasters. 

Mangroves and Reefs: Insurance Can Help Protect Our Protectors

Hurricanes and storm-related flooding are responsible for the bulk of damage from disasters in the United States, accounting for annual economic losses of about $54 billion, according to the Congressional Budget Office (CBO).  

These losses have been on the rise, due, in large part, to increased coastal development. More, bigger homes, more valuables inside them, more cars and infrastructure – these all can contribute to bigger losses. The CBO estimates that a combination of private insurance for wind damage, federal flood insurance, and federal disaster assistance would cover about 50 percent of losses to the residential sector and 40 percent of  commercial sector losses. 

Recent research illustrates the benefits provided by mangroves, barrier islands, and coral reefs – natural features that frequently fall victim to development – in terms of limiting storm damage. In many places, mangroves are the first line of defense, their aerial roots helping to reduce erosion and dissipate storm surge. A healthy coral reef can reduce up to 97 percent of a wave’s energy before it hits the shore. Reefs — especially those that have been weakened by pollution, disease, overfishing, and ocean acidification — can be damaged by severe storms, reducing the protection they offer for coastal communities. 

In Florida, a recent study found, mangroves alone prevented $1.5 billion in direct flood damages and protected over half a million people during Hurricane Irma in 2017, reducing damages by nearly 25% in counties with mangroves. Another study found that mangroves actively prevent more than $65 billion in property damage and protect over 15 million people every year worldwide.  

A separate study quantified the global flood-prevention benefits of coral reefs at $4.3 billion.  

Such estimates invite debate, but even if these endangered systems provided a fraction of the loss prevention estimated, wouldn’t you think coastal communities and the insurance industry would be investing in protecting them? 

Well, they’re beginning to.  

The Mexican state of Quintana Roo has partnered with hotel owners, the Nature Conservancy, and the National Parks Commission to pilot a conservation strategy that involves coral reef insurance. The insurance component – a one-year parametric policy – pays out if wind speeds in excess of 100 knots hit a predefined area. Unlike traditional insurance, which pays for damage if it occurs, parametric insurance pays claims 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.  

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.