All posts by Maria Sassian

Disaster Preparedness, Webinars

Webinar: Wildfires are here—be CA wildfire ready with tips to protect property and finances

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With another catastrophic wildfire season again underway in California, join this press conference to hear from fire science and insurance experts on practical steps homeowners and renters can take to reduce their risk from wildfires. Learn where to start and what actions communities need to take first to continue to adapt to wildfire and stay protected.

Register now to join experts from the American Property Casualty Insurance Association, the Triple-I, the Insurance Institute for Business Home and Safety and the National Fire Protection association on September 3, 2020, 10:00 a.m.-11:00 a.m. PT. Register now

Homeowners Insurance

If the power goes out, can you get reimbursed for spoiled food?

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Following a major disaster like Hurricane Laura extended power outages are common. Nearly 800,000 customers in Louisiana and Texas were without power after the storm hit. However, most electric utility companies do not offer their customers reimbursement for food spoilage caused by long-term power outages.

In the areas of Louisiana and Texas affected by Hurricane Laura, none of the power companies serving those areas provide such reimbursements, according to Bill Davis of Triple-I .

Insurance companies will usually cover up to $500 of food that spoils from a power outage caused by a covered peril under standard homeowners insurance policies. Homeowners insurance deductibles will apply to food spoilage coverage, however, so a $500 deductible, which most policyholders carry, would mean that the policy would only pay if the policyholder suffered more than $500 in food spoilage losses. Some insurers offer food spoilage coverage with a separate deductible for an additional premium.

Catastrophes, Disaster Preparedness

Hurricane Laura set to develop into Cat 4 storm

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The National Hurricane Center forecasts Hurricane Laura to reach Category 4 intensity later today.  A ‘life-threatening’ storm surge of 10 to 15 feet is predicted, one of the worst in years, along with destructive winds. The storm is poised to strike the upper Texas coast and western Louisiana.  Hurricane and storm surge warnings have been issued for much of this zone.

If you live in an area ordered to evacuate, leave now. Do not attempt to ride out the storm.  Take your insurance contact information and home inventory with you.

In an analysis based on the assumption that Hurricane Laura would come ashore on the Louisiana coast as a Category 3 storm, CoreLogic, a catastrophe modeling firm, warns that nearly 432,000 single-family and multi-family homes along the coasts of Texas and Louisiana could be damaged from storm surge. According to the analysis, Laura threatens approximately 431,810 homes with a combined reconstruction value of approximately $88.63 billion.

Said Tom Larsen, principal, insurance solutions at CoreLogic, “The coincidence of two catastrophes—a damaging hurricane season and the ongoing global pandemic—underscores the importance of the correct valuation of reconstruction cost, one of the core tenets of property insurance.”

Disaster Preparedness

Hurricane Watch: 8/25/2020

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Tropical Storm Laura has been upgraded to a hurricane and is tracking northwest across the Gulf of Mexico.  The system is likely to make landfall Wednesday evening or Thursday morning, possibly in eastern Texas or western Louisiana. High winds, heavy rain and storm surge are expected.

If you live along the northern Gulf Coast you are encouraged to prepare now, as conditions will deteriorate during the day on Wednesday.

Please click here for preparedness tips.

Auto Insurance, Homeowners Insurance

Getting the right insurance for moving

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For a variety of reasons, many people have moved during the pandemic. One in five U.S. adults either changed residence due to the pandemic or know someone who did, according to a Pew Research survey. There are many safety factors to consider if you are moving, and it’s also important to understand how insurance protects your possessions before, during, and after a move.

Loretta Worters, Vice President Media Relations, Triple-I, has put together this comprehensive explanation of how insurance covers you when you move.

What’s Covered/What’s Not

Homeowners and renters policies provide coverage for belongings while they are at a residence, in transit, and in storage facilities — but they will not pay for any damage done to personal property while being handled by movers when packing or moving the items. 

Types of Coverage to Consider When Moving:

  1. Trip transit insurance covers personal property for perils including theft, disappearance, or fire (the same perils covered by homeowners or renters policy) while in transit or storage. Trip transit insurance can be written for the full value of the property or as excess coverage over and above that provided by the moving company. It does not, however, cover breakage or flooding at, say, a storage facility.
  2. Special perils contents coverage will cover breakage of all but fragile items.
  3. A floater will fully protect high-value items, such as jewelry, collectibles, fine art, etc. 
  4. Storage insurance is also important should someone need to temporarily or permanently store items before or after a move.

Coverages Available Through Moving Companies

The type of liability coverage a moving company offers for damage or breakage is not technically insurance and therefore is not governed by state insurance laws. Under federal law, however, all interstate movers must offer two different liability options—full-value protection and released-value protection. Most movers offer both options for intrastate moves, as well.  It’s important to understand the various types and levels of protection available and the charges for each option.

  • Full-value protection is a plan under which the mover is liable for the replacement value of the belongings in a shipment. If personal property is lost, destroyed, or damaged while in the mover’s custody, the company will repair or replace the item or make a cash settlement for the cost of the repair or the current market value. The cost for full-value protection liability coverage varies by mover; different deductibles are available, which will reduce or increase the price. Note that full value liability is more expensive and is the default.
  • Released-value protection is offered at no additional charge beyond the moving fee. However, it provides only a minimal protection—no more than 60 cents per pound per article. So if the mover loses or damages a 10-pound stereo component valued at $1,000, the homeowner would only receive $6.00 in compensation (60 cents x 10 pounds).
  • Separate liability coverage may be offered by a mover to augment released-value protection for an additional fee. If this extra coverage is purchased, the mover remains liable for the amount up to 60 cents per pound per article, but the rest of the loss is recoverable from the insurance company up to the limit of the policy purchased. The mover is required to issue and provide a written record of the policy at the time of purchase.

Check Professional Mover’s Agreement

Homeowners should review the mover’s contract and ability to:

  • Determine exactly what kind and how much coverage the moving company provides for property loss and/or damage.
  • Review the contract carefully for the estimated value of your possessions and match it to the homeowner’s list. An up-to-date home inventory will make this task easier. 
  • Find out the maximum value of the mover’s insurance should goods be damaged.
  • Check that the moving company’s policy includes coverage for damage done to the homeowner’s premises—both the house they are leaving and the one being moved into.
  • Know what the time limits are for filing claims with the mover and decide whether they are reasonable—take time to unpack and check for potential damage.

Moving Yourself
If you choose to move yourself, you won’t have the benefits of a moving company’s coverage if belongings are damaged or broken. To be protected:

  • Consult with an insurance professional and review the trip transit, special perils, and floater options.
  • Buy the optional collision damage waiver coverage from the rental company if renting a truck.  Collision and comprehensive coverage likely will not transfer to a non-owned moving van, only to a private passenger vehicle.


New Home, New Insurance

If moving to a new state, or even from a city to a suburban area, a new home insurance policy will be needed.  That’s because a new home is a different property with different risks, which means different coverages may be required. The cost of the policy also may vary. For example, a larger home in a coastal area will likely be more expensive than a small apartment in an inland city. 

When buying a new home, consider insurance costs.  Rates are based on many factors, including square footage, geographical area (is the home in a flood, earthquake or hurricane-prone area of the country?); the age and construction of a home (is it brick or wood shingle?); roof condition; proximity to a fire station; and credit history.  Notify the insurer about a new address and make sure to inquire about possible savings on home and auto premiums for features like a shorter commute, a gated community, or lower-crime area than previously, alarms, or other security systems. 

The same holds true for car insurance. That’s because a new state may have different requirements or factors that result in a different policy cost. Even if moving within the same state, insurance carriers should be notified to ensure policies are up to date.

In-State vs. Out-of-State

An out-of-state move can have big implications, because not all insurance agents or companies are licensed to write policies in every state. Insurance requirements may also vary across state lines Call your agent to see if the current company can write policies in the state they are moving to. If not, consider it an opportunity to shop and compare new policies.

When to Make the Switch

In most cases, the new owner will need to have proof of insurance at closing when buying the new home. An insurance agent should be notified well in advance of closing and providing a timeline for the move so coverage is in place at the appropriate time.  Depending on the insurer, coverage on the former home will generally remain in effect until the sale of the property is complete, as long as premiums are paid, which should be confirmed with the insurance agent.

Vacant Homes

If the homeowner relocates before the existing home is sold and it remains vacant or unoccupied, there may not be coverage under the existing homeowners policy. Insurers typically discontinue coverage on a home if it has been unoccupied for more than 30 days, so prospective homeowners should explore other options with their insurer.

Careers and Employment, Insurance Industry

Insurance Careers Corner: A Few Minutes with Anisha Navendra, Insurance Industry Charitable Foundation (IICF) intern

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

It’s an understatement to say that the COVID-19 pandemic has affected all areas of our personal and professional lives. Amid widespread disruption, however, people are stepping up with innovative ways to overcome the distance of “social distancing.”

For insurance businesses, summer internships have long provided a vital path for educating students about the industry, and for insurance businesses to evaluate promising recruits. However, with lockdowns and other measures to contain the spread of Coronavirus extending through and beyond the summer months, many businesses were forced re-evaluate internship programs, with some considering suspension of 2020 summer internships. 

Several organizations have stepped in to fill this gap, including insurance businesses, industry trade groups, and in particular, Gamma Iota Sigma (GIS), a student society with 77 chapters serving more than 5,000 members across North America that’s recognized by many as “the insurance industry’s premier collegiate talent pipeline.”  Earlier this year GIS launched their Virtual Internships program. Despite getting a somewhat late start, the program placed more than 65 students on 30 projects at 14 insurance businesses.

As part of the Triple-I Blog’s “Insurance Careers Corner” features series, we spoke with student interns about their experiences during summer 2020 and their insurance career journey so far. We also reached out to internship program directors to get a fuller sense of how their organizations benefit from expanding outreach to students even in the midst of a pandemic.

First up is Anisha Navendra, who is a rising sophomore at University of Texas, Austin. Anisha spent part of the summer of 2020 interning at the Insurance Industry Charitable Foundation’s (IICF) Southeast Division. She’s double majoring in Mathematics with a concentration in Actuarial Science and Finance—and has “a keen interest in the insurance industry.”

Name: Anisha Navendra

Current Status: Rising Sophomore, The University of Texas at Austin

Internship: IICF

Triple-I: Tell us a bit about your experience as an intern. Did you have an internship lined up before schools and offices went into COVID-19 isolation?

Anisha: I was looking into internships earlier this year, but by the time classes went remote many programs were either suspended or cancelled. Gamma Iota Sigma stepped in to find ways to connect students with insurers and insurance businesses. My internship with IICF is an opportunity to learn more about the unique philanthropic side of the insurance industry by allowing me to spend time working closely with industry professionals.

How long is your internship with IICF and what sort of work are you doing there? 

My internship runs through August. I’m assisting with a wide variety of projects, including pulling and researching financial reports for insights into how a charitable foundation works.  

What skills and knowledge are you picking up along the way?

I’m learning more about teamwork, communications, doing due-diligence, time management and research skills, as well as how to use tools of the trade, like Microsoft Office. Also, I’m meeting and networking (virtually) with a lot of insurance professionals from different backgrounds and getting exposure to a wide range of business areas–marketing, finance, operations.

I plan to use these skills and the knowledge gained about insurance and the insurance industry to help me in my future endeavors as an actuary, or financial consultant.

When did you first consider insurance as a career path?

I became more aware of insurance as a member of my high school debate club (the topic was health insurance). Entering college, I discovered how actuarial sciences aligned with my other interests.

Any “surprises”; things you did not expect to learn or do?

Working with IICF has shown me a unique and more creative side of the business and how the industry’s charitable activities are helping to redefine the narrative about insurance. I’m also learning how companies are reacting to the pandemic—and that insurance is nimble and responsive.  It’s exciting to be behind the scenes at a non-profit.

How will this experience affect you going forward—both in your studies and in preparation for life after college?

Working with IICF has encouraged me to be more innovative and team oriented. The experience has made me want to learn more about non-profits and has gotten me interested in marketing and brand strategies. I plan take more classes in business law and ethics to round out my knowledge.

Disaster Resilience, Flood Insurance, Insurance Industry

Swiss Re: A Katrina-like hurricane could cause up to $200 billion in damage today

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A memorial cross for the victims of Hurricane Katrina stands in the water near the bank of the Mississippi River Gulf Outlet on August 22, 2019 in Shell Beach, Louisiana. According to researchers at the National Oceanic and Atmospheric Administration (NOAA), Louisiana’s combination of rising waters and sinking land give it one of the highest rates of relative sea level rise on the planet. (Photo by Drew Angerer/Getty Images)

Hurricane Katrina, which struck the United States in August 2005, remains the costliest insured North Atlantic hurricane on record and the most expensive natural catastrophe for the global re/insurance industry.  In 2020 dollars, according to a Swiss Re  report released today, total economic damage from Katrina totaled more than $160 billion.

An identical storm today “could easily reach” $200 billion, Swiss Re says.

To evaluate what Hurricane Katrina might look like in 2020 in terms of insured and economic losses, Swiss Re ran Katrina’s 2005 wind and surge footprint on its U.S. market portfolio using its probabilistic tropical-cyclone loss model.

“If Hurricane Katrina were to hit the U.S. in 2020 with the same wind and storm surge as 2005, but with current exposure information and updated flood protection and vulnerability assumptions, the privately insured losses in the U.S. alone could rise to $60 billion,” the report says. “This is true, despite the city (New Orleans) currently only having 80% of the population it did in 2005.”

Private insurance and the federal flood insurance program covered about $86 billion of the total loss, highlighting a protection gap largely driven by uninsured flood losses. Standard residential insurance policies exclude coverage for flood damage resulting from surface water, including storm surge caused by hurricanes; separate flood insurance policies are available through FEMA’s National Flood Insurance Program and private insurers.

“With Katrina, and even more recently with Harvey and Sandy and Florence, we’ve seen this profound protection gap where on average only one in six residences in the U.S. have a flood coverage policy,” said Marla Schwartz Pourrabbani, a Swiss Re natural catastrophe specialist and lead author of the report.

Today, a storm like Katrina would cause closer to $175 billion in damage because areas outside New Orleans, especially in other coastal states, have seen both increases in population and increased investments along the coast that add to the financial risk. Rising sea levels also contribute to the potential losses.

Swiss Re says the effects of climate change could drive total costs  higher.

“Considering that sea level in the barrier islands near New Orleans is now rising by over one inch every two years, a six-inch increase in sea level — and an event like this could happen in just over a decade,” the report says.

Insurance Industry, Insurers and the Economy

Recession, Pandemic to Impact P/C Underwriting Results, New Report Shows

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The COVID-19 pandemic and the recession it started will result in no premium growth for 2020 and a deteriorated combined ratio for the property/casualty industry, according to the new report, Insurance Information Institute (Triple-I) / Milliman P/C Underwriting Projections: 2020-2022. 

Sean Kevelighan

Direct and net premium written will be virtually unchanged from 2019, while the industry combined ratio, a measure of underwriting profitability, is projected to rise to 102 at year-end, up from 99 last year, according to the report, a joint venture of the Insurance Information Institute and Milliman, a provider of actuarial and related products and services. The report, to be published quarterly, was unveiled on August 13 at an exclusive members only virtual webinar moderated by Triple-I CEO Sean Kevelighan.

James Lynch

“The pandemic and the recession it induced drove down exposures in personal auto and several commercial lines,” said James Lynch, FCAS, senior vice president and chief actuary with the Insurance Information Institute (Triple-I). “Overall premiums are projected to be flat,” said Lynch, adding, “a hard commercial lines market is driving rates higher, which offsets some of the deterioration in exposure.”

Jason Kurtz

“Though there is tremendous uncertainty as to size, the pandemic creates insurance losses that were not contemplated in either catastrophe or attritional pricing,” said Jason Kurtz, FCAS, a principal and consulting actuary at Milliman. “Not surprisingly, pandemic losses can cause underwriting results to deteriorate.”

The report noted that a number of legislative and regulatory proposals have the potential to affect pandemic exposures and losses.

A major hurricane or cumulatively severe wildfire season could also impact the combined ratio, the report noted. Right now, the report projects a typical year for catastrophe losses, though most hurricane prognosticators predict more storms than average.

Other Areas to Watch

Other areas to consider include the impact of the pandemic on workers compensation, particularly the shift in the burden of proof onto the employer for certain types of claimants (i.e. presumption) and the changing exposure from people working from home.  Workers compensation saw five consecutive years through 2019 where that line of business posted an underwriting gain; that could change with COVID-19. 

Economic trends also play a role. The report assumes that exposures roughly grow and shrink with the economy. If the recovery is slower or faster than projected, premium growth will be affected.

The report is an analysis by Triple-I and Milliman based on an actuarial model that relies on information from a number of publicly available sources as well as input from thought leaders and experts at both organizations. It predicts that premiums will grow 7 percent in 2021 and 6 percent in 2022 as the economy recovers, and the combined ratio will fall to 99 for both years as the industry prices for the effects of the pandemic and the higher rates charged this year earn out.

The complete webinar, available exclusively to Triple-I members, projected underwriting results for several lines of business: personal auto, homeowners, commercial auto, general liability, property, commercial multiperil and workers compensation.


Insurance Industry

Hurricane Isaias follow-up: 8/11/2020

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PSE&G workers work on power lines after Tropical Storm Isaias passed through on August 4, 2020 in Bogota, New Jersey. (Photo by Eduardo Munoz Alvarez/Getty Images)

Thousands of East Coast residents were still without power a week after Tropical Storm Isaias barreled through more than 12 eastern states, including New York and New Jersey, on August 4.

Isaias made landfall in North Carolina on August 3 as a Category 1 hurricane, with maximum sustained winds of 85 miles per hour before weakening to a tropical storm. Damage to Caribbean islands and along the U.S. Atlantic coast stemmed from flooding, power outages, downed trees, and tornadoes.

Isaias was the fifth named storm of the “extremely active” 2020 hurricane season.  Preliminary insured loss estimates from Isaias range from over $1 billion (Aon) to $4 billion (Karen Clark & Co.) Damage is still being tallied, and these estimates are likely to change.

Like every disaster, Isaias will give rise to criminal activity. The National Insurance Crime Bureau (NICB) reminds us that crooks posing as contractors may press homeowners into paying out their insurance claim before repairs are completed. Once they collect the payment, they disappear without completing the promised work. To keep from becoming a victim of these contractor scams, follow these tips from the NICB. The tips include getting more than one estimate and getting everything in writing.

Another post-disaster scam is the sale of flooded vehicles. Dishonest dealers can buy flooded vehicles, clean them up and sell them to unsuspecting buyers. If you are shopping for a used vehicle, NICB recommends checking a few items, such as water stains and mildew that could indicate whether the vehicle is a flood recovery vehicle or not.

NICB also provides a free tool called VINCheck that allows consumers to check a vehicle for a “red flag,” such as theft, accident damage, or salvage titles.

Business Insurance, Business Risk

Additional Insureds: How Policy Language Can Create Dramatic Consequences

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By John Novaria, Managing Director, Amplify

Underwriters routinely receive requests to add additional insureds to policies. But failure to add insureds correctly can open up insurers to potentially huge losses.

Companies typically need to add additional insureds to allow them to fulfill their obligations with their contractual partners. The requests are commonly associated with coverage for the marine and energy business, but construction and other industries often need to add insureds as well. Those requests can involve commercial general liability, excess and umbrella and other liability policies.

Maritime legal expert Harold “Hal” K. Watson recently conducted an interactive educational webinar on the proper addition of insureds for the American Institute of Marine Underwriters (AIMU). Watson, a partner at Chaffe McCall LLP in Houston, is a former president of the Maritime Law Association of the U.S. and an internationally renowned authority in marine and energy insurance.

Using detailed examples from actual cases — including the Deepwater Horizon disaster — Watson illustrated how policy language surrounding additional insureds can cause claims to go wrong. He offered the audience of underwriters, brokers and claims adjusters practical suggestions for writing policy language in specific ways to prevent problems.

Watson explained how arguably ambiguous policy language became a significant factor in Deepwater Horizon, the offshore drilling rig that in April 2010 blew out, resulting in an explosion that killed 11 crew members and caused billions of dollars in pollution and environmental damage in the Gulf of Mexico. Transocean owned the drilling rig, but it was under contract to BP. Watson noted that the contract between the two companies required Transocean to name BP as an additional insured for some purposes. But there was uncertainty whether or not the insurance policy incorporated the limitations of the drilling contract.

The U.S. Court of Appeals for the Fifth Circuit initially held that the insurance policy did not incorporate the limitations in the contract, but then certified the case to the Texas Supreme Court since Texas law applied. The Texas Supreme Court finally ruled that the insurance policy did incorporate the limitations, but if the Fifth Circuit’s original ruling had stood, BP would have been entitled to all of Transocean’s insurance coverage limits.

Watson explained how wording can be used to avoid situations that essentially give away an insured’s coverage. He also discussed other areas involving risks and exposures including:

  • The distinction and nuances between indemnity clauses and insurance policies.
  • The need for caution when providing broad coverage for additional insureds.
  • How additional insureds come into play in umbrella and excess liability policies, including specialized maritime policies.
  • The effect of anti-indemnity statutes pertaining to oil and gas wells in Texas and Louisiana

AIMU has seen growing interest in its educational offerings as it pivots from live to virtual events. According to AIMU President John Miklus, there were nearly 100 attendees at the “Additional Insureds” webinar and a similar number at another recent webinar on yacht insurance fundamentals.

AIMU’s primary focus is on education of its members and the insurance community at large and continues to deliver its programs using innovative methods. Click here for more information on upcoming classes.