Category Archives: Disaster Preparedness

Disaster Preparedness

Zurich North America’s report on California wildfires: Investing in resilience is key

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By Max Dorfman, Research Writer, Insurance Information Institute

A new report by Zurich North America, in collaboration with DuPont and the nonprofit Institute for Social and Environmental Transition (ISET-International), examines the ever-increasing risk of wildfires in California. Based on a study utilizing Zurich’s  Post-Event Review Capability methodology, “California fires: Building resilience from the ashes” draws from research and interviews with those affected by the fires in addition to civic and nonprofit representatives involved in risk reduction, response and recovery. The report seeks answers to why these fires have become so hazardous, and the ways in which communities can become more resilient.

The Deadliest Fires Yet

Fires are becoming more frequent in California, with an increasing number of people living closer to affected areas. The state suffered the largest and most destructive wildfires in state history in 2017 and 2018. The 2018 Camp Fire alone claimed the lives of 86 people and devastated the town of Paradise.

With this danger in the “wildland-urban interface”—essentially where hazardous wildlands meet homes and businesses—residents and business owners need to understand their risk. Education is essential to protect these areas. “Education is one of the first steps to help residents take necessary precautions against wildfires,” said Marcel Milani, Global Strategy Leader, Resilient Construction, DuPont. “Once business and homeowners understand what’s at risk, and that they are in control of building site retrofits that could save their property and their lives, they will invest in change.”

California is Taking Steps to Limit the Next Big Fire

California has developed Fire Hazard Severity Zone Maps to demonstrate the areas that have the greatest probability and intensity of potential wildfires. These maps help show which homes need to meet Chapter 7A of the California Building Code, which requires homes be built to certain fire-safe standards. Paradise which has experienced multiple fires since 2008, provides an important example of why this is so significant. Homes built in compliance with Chapter 7A codes tended to fare better than those built before 2008, when the codes were put in place. Of the 350 homes built to the Chapter 7A code in Paradise, 51 percent survived compared to 18 percent of the 12,100 homes built before 2008.

However, in some cases, the rising cost of homes and increasing population leads to communities that, according to the report, are “disproportionately of lower socioeconomic status, elderly or otherwise more vulnerable.” The costs of fire-resistant structures mean fire-resistant homes likely need to be built alongside retrofitted buildings. Indeed, the report found that perceived cost was one reason 7A codes were not adopted. And for vulnerable populations, there needs to be help. “Reducing the costs of retrofitting homes and buildings to fire-resistant standards would be a step in the right direction,” said Karen MacClune, Ph.D., Executive Director for ISET-International. “Providing funding or low-cost loans for the most vulnerable would support them to take action.”

Pushing the Conversation Forward

Despite California instituting new building codes and statewide fire hazard mapping, the study recommends that further practices need to be undertaken. Other key takeaways from the report include:

  • There needs to be more data on benefits and costs of mitigation that could in turn help set priorities
  • There continues to be development in high-risk areas, further amplifying the risk and danger of these fires
  • Many Californians impacted by fire are slow to take actions to reduce their risk
  • There needs to be more preparation for a fire’s aftermath
  • Mechanisms are required to ensure adequate insurance

All of this leads back to the core concept of resilience.

“With resilience, it’s about minimizing impact, avoiding impact or shortening impact. Our job as an insurance provider is to make someone whole after an event,” said Ben Harper, Head of Corporate Sustainability at Zurich North America. “Proper resiliency planning differs based on the customer and the region, among other variables. But it shares a common thread: action before an event.”

 

Disaster Preparedness, Disaster Resilience

JIF Insights: Changingthe ConversationOn Extreme Weather

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Extreme Weather panel (L to R): Charles Chamness, National Association of Mutual Insurance Companies; Francis Bouchard, Zurich Insurance Group; Stephen Clarke, ISO; Dr. Daniel Kaniewski, FEMA; Dr. Rick Knabb, The Weather Channel; Kenneth Tolson, Crawford & Company

It was like music to my ears to hear risk and resilience experts at Triple-I’s Joint Industry Forum, in a panel on extreme weather, talk so much about communication.

Moderator Charles Chamness, president and chief executive officer of the National Association of Mutual Insurance Companies (NAMIC), kicked off the session by asking Dr. Rick Knabb – on-air hurricane expert for the Weather Channel (TWC) – about the impact on disaster preparedness of tools like TWC’s “storm surge depth simulator,” which Chamness described as “somewhat terrifying.”

If you haven’t seen it, the simulator uses virtual reality technology to show viewers what different water depths could look like and the kind of damage they could generate (see video below).

“We’ve gotten a lot of feedback,” Knabb replied. “Some people tell us, `Wow, I didn’t know how bad water can be.’  Some people tell us ‘You’re scaring me.’  And on some level, we’re trying to scare people just enough to respond and to prepare.”

Knabb added that he had no data to prove people who watch such simulations take immediate steps to improve their preparedness, “but we’re seeing the conversation change. Social media is one of the best ways I have to see that happening.”

The challenge remains, he said, to overcome “the positive bias” of people saying, “That looks really scary – but I don’t think it will ever happen to me.”

Francis Bouchard, Zurich’s group head of public affairs and sustainability, took the insurance industry to task for talking about risks in language customers don’t necessarily understand.

“We’re all risk elites here,” Bouchard said. “Our vernacular is not what normal people speak. And yet we insist on using our language to describe something that’s totally alien to most of the public.”

FEMA Deputy Administrator for Resilience Dan Kaniewski agreed.

“At FEMA, we no longer speak in these technical terms like `a one in 100-year event’” – a phrase, he said, that “makes a homeowner who’s just purchase their home think they have 99 years before they have to worry.”

Prepare, Mitigate, Insure

“When we at FEMA talk about ‘resilience,’” Kaniewski said, “what do we mean? We mean preparedness. We mean mitigation. We mean insurance.”

Kaniewski cited evidence from FEMA’s annual household surveys indicating that people in disaster-prone states are “more risk aware and better prepared” than elsewhere in the nation.

“But it’s not enough,” he said. “They have to do so much more.”

Beyond physical preparedness, Kaniewski said, “we have to talk to people about being financially prepared. That means having cash on hand. That also means insurance. Insurance is the best resilience tool.”

“Demand flood insurance”

Knabb agreed, calling upon meteorologists around the world to “talk about insurance more.” He also called on insurance agents to discuss flood coverage for their customers who aren’t in flood zones.

“If it can rain where you live,” he said, “it can flood where you live.”

He recounted buying a new home, asking his agent about flood insurance, and being told, “You don’t need it.”

“I told him, ‘Get it for me anyway,’” Knabb said. “And I’ve changed the graphics I use on The Weather Channel – instead of saying, ‘Ask Your Agent If You Need Flood Insurance’ to ‘Demand Flood Insurance.’”

The panel discussion covered a range of topics, including insurers’ need to emphasize risk reduction and resilience  and the “data fluency” of insurance regulators. You can watch the session below.

Disaster Preparedness, Floods

FEMA Report Recommends New Mechanisms to Ward Against Natural Disasters

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By Max Dorfman, Research Writer

The U.S. Federal Emergency Management Agency (FEMA) is being pressed to adopt innovative methods to increase insurance penetration for floods and other natural disasters. In a draft report, FEMA’s National Advisory Council suggests that in order to increase financial preparedness for householders and local governments, novel financial models must be considered. The report notably mentions parametric triggers as a way to grow the insurance markets and protect against future disasters. Blockchain is also recommended as a means to create a land and property registry stored off-site in a secure platform.

What are parametric triggers, and how can they help?

Parametric insurance is a type of insurance that agrees—before the triggering event—to make a certain payment, instead of compensating for the pure loss. Parametric insurance pays out immediately when a certain threshold, such as water depth or wind speed, is reached; thus, expediting funding and reducing overall administrative costs.

What does the future hold for this new model?

“When added to the ubiquitous nature of smartphones and other levels of connectivity, the opportunity for expanding parametric insurance protection to individual households may merely be a matter of connecting the dots, for which FEMA is uniquely placed to lead this effort,” the Council’s report states.

Indeed, the Council believes that FEMA should “look towards a new model of insurance” in an age when natural disasters increasingly threaten both public and private interests.

The draft report also includes many suggestions to improve disaster preparedness, such as better building codes and code compliance, better preparedness for Indian tribes and rural communities, building resilient infrastructure and increasing funding for mitigation.

To close the insurance gap the report recommends:

  • Educating the public about the benefits of flood renter’s insurance and hidden hazards in real estate, rental properties and communities.
  • Stress testing state insurance guaranty funds to determine if they can withstand large-scale disasters and insurer insolvencies.
  • Creating more offerings for state and local governments to reduce rates of self-insurance of infrastructure.

 

Catastrophes, Disaster Preparedness

Wildfire evacuation: What to take?

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Two wildfires in California are spreading today (Oct. 27), fanned by high winds overnight, forcing tens of thousands to evacuate.

If you are forced to evacuate, here is a list of what to take, culled from a III article on evacuation planning:

  • Prescriptions and other medicines
  • First aid kit
  • Bottled water
  • Flashlight, battery-powered radio and extra batteries
  • Clothing and bedding (sleeping bags, pillows)
  • Special equipment for infants or elderly or disabled family members
  • “Comfort items,” such as special toys for children
  • Computer hard drive and laptop
  • Cherished photographs
  • Pet food and other items for pets (litter boxes, leashes)

From the same article, here is a list of key documents:

  • Prescriptions
  • Birth and marriage certificates
  • Passports
  • Drivers license or personal identification
  • Social Security cards
  • Insurance policies — homeowners, auto, life and any others
  • Recent tax returns
  • Employment information
  • Wills and deeds
  • Stocks, bonds and other negotiable certificates
  • Financial information such as bank, savings and retirement account numbers and recent tax returns
  • Home inventory

Unfortunately, though, if you are told to evacuate it will be too late to search the house for all this stuff. When authorities tell you to leave you must leave immediately. The fire could be on you in moments.

Disaster Preparedness, Technology

University of Pennsylvania PennApps XX Hackathon Recap

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By Brent Carris, Research Assistant, Insurance Information Institute

Left to right: Brett Lingle, Zoë Linder-Baptie, James Ballot and Brent Carris

The Wharton Risk Center  and the Insurance Information Institute  co-sponsored the second annual Hack-for-Resilience at PennApps XX, the nation’s oldest and largest student-run college hackathon. Presentations were given by Carolyn Kousky and Brett Lingle of the Wharton Risk Center School; and the I.I.I.’s James Ballot.

From September 6 – 8, 18 student teams used software and hardware technologies to “hack”—conceive and build new apps and devices—ways to combat the risks posed by natural disasters, such as hurricanes, wildfires, and floods. The students also vied to create either a product or service that provided insurance in a customer-friendly manner, a category generally known as Insurtech.

A panel of judges from the I.I.I. and the University of Pennsylvania’s Wharton Risk Management and Decision Processes Center selected the winners.

First place in the Insurtech category was Wildfire Protect– a parametric wildfire insurance product designed to provide immediate payouts to insureds that experience property damage from wildfire.

Second place was a tie between Prophet Profit and Navig8. Prophet Profit is an app designed to help households save money by allocating funds in all sectors of the stock market. The Navig8 team created an app to assist the visually impaired communicate during a disaster.

First place in the resilience category was awarded to a hack called Phoenix. This team created an autonomous drone which detects and extinguishes fires.

You can see all other entries and winners here.

Disaster Preparedness

Hurricane Dorian Update: September 4, 2019

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As of early afternoon on September 4 Hurricane Dorian was approximately 100 miles off the east coast of Florida. The National Hurricane Center reported that Hurricane Dorian would likely move slowly up the Florida coast to Georgia and the Carolinas. While the storm’s intensity has declined since it struck the Bahamas as a Category 5 hurricane, Dorian is now classified as a Category 2 hurricane with sustained winds of 105 mph.

Federal emergency declarations are in effect for Florida, Georgia, South Carolina and North Carolina, and the governor of Virginia also declared a state of emergency. Dorian is expected to maintain its current intensity for the next few days, and forecasters said that those in Northeast Florida to the Carolinas should be on alert for the possibility of destructive winds and flooding from heavy rains or storm surges.

Dr. Phil Klotzbach, a meteorologist at Colorado State University and Insurance Information Institute non-resident scholar, is providing regular updates on Dorian via Twitter. He said that the storm has now generated the ninth-most accumulated cyclone energy by an Atlantic hurricane named during August in the satellite era (since 1966).

In a Fox Business interview, Michael Barry, senior vice president and head of media relations and public affairs at the Insurance Information Institute, said,“The industry is very well capitalized and has the financial wherewithal to pay whatever claims comes its way. Of course, right now, we’re looking at the priority of making sure everybody’s customers are safe and sound.”

An Artemis blog post said that even if Dorian remains just offshore, some sources expect a low-single digit billions market loss from the hurricane, just from wind and surge damage along its track. That figure would rise with every mile closer to shore the eye of Hurricane Dorian comes.. Any wobble west onto shore or a full landfall could raise the potential insurance, reinsurance and insurance-linked securities (ILS) market impact significantly.

Recovery from Dorian in the Bahamas and other islands of the Caribbean that were impacted is expected to be slow because most of the damage caused by the storm is not covered by insurance. In a Wall Street Journal article, Steve Bowen, a meteorologist and head of catastrophe insights at Aon plc, said that commercial businesses have the highest levels of insurance penetration in the Bahamas, while many individuals lack coverage.

Jonny Urwin, an analyst with UBS Group AG, said it estimates that insured damage in the Bahamas could be between $500 million and $1 billion. For the storm overall, UBS projects that the total insured losses from Dorian could be between $5 billion and $10 billion, basing its estimate on a comparison with Hurricane Matthew, which followed a similar path in 2016.

 

Disaster Preparedness

I.I.I. satellite media tour: Peak hurricane season is upon us

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By Lynne McChristian, I.I.I. Media Spokesperson and Non-resident Scholar 

 

 

The Insurance Information Institute, along with Colorado State University’s atmospheric research scientist Dr. Phil Klotzbach, will be conducting a satellite media tour on Tuesday, August 13 in Miami to talk about what may lie ahead for the remainder of the hurricane season. Nearly 20 media outlets have signed up to participate. We will be talking with news organizations throughout the U.S. about the rising frequency and severity of natural disasters and about what you can do to understand your risks and be ready to face them – both physically and financially.

Hurricane Season ebbs and flows. And, our collective attention spans mostly ebb. Granted, it’s hard to remain engaged with an event that lasts half a year. From June 1 to November 30, you hear the “Get Ready” message from multiple sources, and the human tendency to wait until a storm threat is on the doorstep makes preparedness more frenetic than necessary. Being hurricane ready is a smart goal, and now is an excellent time to put hurricane preparedness on the front burner. Peak hurricane season has arrived.

Mid-August through the end of October historically is when most hurricanes form. Remember HIM? Hurricanes Harvey, Irma and Maria made landfall between mid-August and the end of September in 2017. Two Category 4 storms and one Category 5 occurred in a matter of weeks in a season predicted to be slightly above average. Last year’s Hurricane Michael hit in late October. While this year’s latest prediction is for a “near-average season,” hurricane researchers will tell you that it only takes one hurricane making landfall near you to break the law of averages.

Frankly, natural disasters do not ebb and flow; there is no rhythmic pattern to them. Forecasting science is constantly improving, and that means we have a better idea of where hurricanes may be heading. But estimating intensity remains a challenge. You can’t “go with the flow.” Rather, be ready for whatever the wind brings.

The following stations will be broadcasting live interviews (times are Eastern Standard):

8:10 AM: Norfolk, VA, Radio 47  WXGM-FM
8:20 AM: Minneapolis, MN, Radio 15  KWLM-AM
8:40 AM: Raleigh, NC, TV 25 WRAZ FOX
9:10 AM: Albuquerque, NM, Radio 47 KDAZ-FM
9:15 AM: Myrtle Beach, NC, TV 95 WPBF ABC
9:45 AM: Dallas, TX, Radio 5 KKVI-AM/FM
10:25 AM: Norfolk, VA, TV 44 WTKR CBS
12:00 PM: San Diego, CA, Radio 29 KOGO-AM
12:10 PM: Los Angeles, CA, Radio 2 KMET- AM
12:40 PM: St. Louis, MO, TV 21 KTVI FO

These stations are taping segments and should air them over the next few days:

Austin, TX,  TV 40 KEYE CBS
Birmingham, AL,  TV WBRC FOX
Charleston, SC, TV 94  WCIV ABC
Chattanooga, TN, TV 83  WRCB NBC
Chicago, IL, Radio 3  WSRB-FM
Columbus, OH, Radio 34  WSNY-AM
Fort Myers, FL, TV 55  WFTX FOX
Jacksonville, FL, WTLV NBC
Mobile-Pensacola, AL, TV 58  WPMI NBC
Myrtle Beach, SC, TV 95 WPDE ABC
Roanoke, VA, TV 67  WFXR FOX
Roanoke, VA, TV 68  WSET ABC
Savannah, GA, TV 93  WSAV NBC
San Antonio, TX, TV 31  WOAI NBC
Seattle, WA, Radio 12  KORE-FM
Tampa, FL, TV 11 WTSP CBS

The roster of stations is subject to change. If you’re in one of the cities listed, please tune in!

 

Disaster Preparedness

IBHS CEO Impact Report: Do hail Impacted Rated shingles measure up?

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By Roy Wright, President & CEO, Insurance Institute for Business & Home Safety

High-performing impact-resistant shingles can prevent avoidable damage caused by hail attacking roofs. Consumers should have confidence that products labeled as “impact resistant” live up to their expectations. This is the predicate for the Insurance Institute for Business and Home Safety’s (IBHS) groundbreaking work to improve roof performance against hail.

One month ago, IBHS reached an institutional milestone by releasing the IBHS Hail Impact Test Protocol for Asphalt Shingles—a new test method that uses best-available science for predicating performance of asphalt shingles when exposed to hailstorms. This is the first performance scorecard rating of eight asphalt shingle products labeled as impact resistant. By bringing together years of work in the field and in the lab, IBHS continues to be a leader in the hail research space.

IBHS’s new test standard combines the results of lab and field work that advanced industry understanding of hailstone mass, strength, and kinetic energy. Applying those findings allows us to manufacture hailstones in our lab and mimic the way natural hail attacks a roof. We assess damage from the top side of the shingle – the same way a claims adjuster would – and use artificial intelligence along with experts to evaluate the performance range.

 

Hail Cannon Testing. Photo courtesy of IBHS

Yet this milestone is just the beginning. The IBHS Hail Impact Performance program is poised to drive change and innovation across industries for years to come.

With the performance of eight products now rated and released, three new products are already at the IBHS Research Center in Richburg, South Carolina awaiting testing at the specific request of the relevant product manufacturers. These new arrivals demonstrate our commitment to ongoing testing of new products brought to the market. In addition, we are committed to retest products every two years, ensuring performance scorecards remain up to date and offering manufacturers the chance to improve product offerings based on our results.

Exclusively for the member-companies supporting the IBHS mission, we have provided a data set that expands on what is publicly available and provides greater quantitative insights and relative consumer price comparisons. We answered questions live during a Hail Impact Standard Question and Answer webinar for the IBHS Members as we strive to help put this data to work for the insurance industry.

Roofing manufacturers have actively engaged with our research team throughout the development and release processes and continue to be engaged. Some have been excited to share the results while others look forward to the next round of testing. Each manufacturer has been on our research center campus observing testing, asking questions, and striving to put their product at the top. Since the release last month, we have already had manufacturers back at the research center talking with our researchers and continuing to push for improvement.

IBHS research is inspiring conversations to drive shingle performance forward, and that will pay dividends to the Members of IBHS, to the insurance industry, and to consumers. These conversations, initiated by the performance data, are only possible with the commitment IBHS, and IBHS Members, have made to resiliency. And these very same conversations are stimulating awareness of impact-resistant shingle performance in order to improve shingles and to inform consumers of their options.

Through this new work, we are showing the insurance industry and consumers which products live up to those expectations of resilience.

 

 

Disaster Preparedness, Earthquakes

California Earthquakes: How Modern Building Codes Are Making Safer, More Resilient Communities

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By Sean M. Kevelighan, CEO, The Insurance Information Institute

 

 

The earthquakes that hit southern California on July 4 and 5 gave us all reason to reflect on a natural disaster that infrequently makes headlines here in the U.S.  A major seismic event occurring near several population centers is the sort of thing that many fear—but it’s also something insurers study constantly to make sure quake-impacted affected areas can recover and rebuild.

Earthquakes and other natural disasters are facts of life. The International Code Council (ICC) helps to create resilience through modern building codes that enable households and communities to rebound faster and more completely after an earthquake.

The ICC reports:

 “On the morning of July 4, a 6.4 magnitude earthquake rattled through Southern California, with another 7.1 magnitude quake striking the region the following evening.

“The damage resulting from these events could have been significant. Thanks to the modern, up-to-date building codes in California – based on the International Codes (I-Codes) – the Searles Valley Earthquake resulted in no loss of life and minimal structural damage. The I-Codes are keeping us safe, and this event reminds us of the importance of adopting and effectively implementing current model building codes as a key defense against natural disasters. Building codes save lives.

“According to structural engineers working with the Earthquake Engineering Research Institute, the homes and buildings experiencing the most severe damage date back to the 1930s, ’40s and ’50s. Modern buildings built using model codes experienced damage that was largely limited to nonstructural elements or contents.”

We encourage you to read the entire article to learn more about the essential role of building codes in creating a “resilience culture” to make our communities safer and more productive.

Disaster Preparedness

Have a disaster plan for your small business

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Owning a small business has many rewards, like freedom, independence and the chance to financially benefit from your own hard work.  But there are also major challenges, like long hours, hungry competitors, and cash-flow problems.

One of the challenges that lands squarely on the shoulders of the small business owner is risk management. Whereas larger firms have the funds to hire specialists whose sole concern is identifying and preparing for threats to the business, Arthur the accountant and Mia the mover must take on that role themselves.

Natural disasters are a type of risk that can strike a business at any time. Luckily for Arthur and Mia, business insurance often comes with loss prevention expertise offered by many insurance carriers to their clients. An agent or broker can create a disaster and recovery plan customized for any business.

Here is a list of disaster planning tips State Farm® offers for small businesses, they include:

Safety first

  • Take time to plan evacuation routes and exits from your facility and mark them.
  • Install proper emergency lighting and exit signs to help show the way in case of power failure.
  • Designate staff “safety wardens” to guide and assist any emergency efforts, including regular drills.
  • Businesses should conduct emergency training exercises with all employees as frequently as needed to reinforce proper reaction times and responses.
  • Identify appropriate shelter spaces, such as a basement or storm cellar, in your facility for emergencies that may require them. If there is no basement in your building, go to the center of a small interior room on the lowest level away from windows or outside walls, such as a closet or interior hallway. Make sure spaces are kept clear of items that would limit their capacity or safety.
  • For more information about emergency safety procedures, visit the Federal Emergency Management Agency (FEMA).

Secure your assets

  • Contact a qualified contractor to discuss risk mitigation construction techniques for your building or office.
  • As an added precaution, you may also want to research places where you could temporarily relocate your operations if disaster strikes.
  • Maintain a comprehensive, up-to-date inventory of the items and equipment used in your business. Consider capturing these assets in photographs or video and securing the images and inventory files offsite.
  • Institute regular backup procedures for critical software and data to help ensure your business maintains access to the digital infrastructure it needs.
  • A business natural disaster plan will help get you up and running.

Following a disaster, you’ll want to resume business as quickly as possible:

  • Keep a name and telephone number list of contractors or repair firms who could make emergency temporary repairs or board up windows should some of your buildings be damaged.
  • Maintain a list of key suppliers, creditors, customers, and employees you need to contact about the state of your operation.
  • Construct a financial plan to cover continuing payroll expenses and debt obligations.