Wildfires in California and across the West are starting earlier and ending later each year. The ongoing drought worsened last week, with every part of the state in moderate drought or worse.
After a 2020 fire season that Janet Ruiz, Triple-I’s California-based director of strategic communications, called “anything but normal,” this year’s season may be even worse.
Warmer spring and summer temperatures, reduced snowpack, and earlier spring snowmelt create longer, more intense dry seasons that make forests more susceptible to wildfire. The fire season’s length is estimated to have increased by 75 days across the Sierras and seems to correspond with an increase in the extent of forest fires across the state.
“Hots are getting hotter”
California Gov. Gavin Newsom recently expanded a drought emergency declaration while seeking more than $6 billion in multiyear water spending.
“The hots are getting a lot hotter in this state, the dries are getting a lot drier,” he said. “We have a conveyance system, a water system, that was designed for a world that no longer exists.”
California Insurance Commissioner Ricardo Lara has called for property insurers across the state to play a larger role in boosting wildfire preparedness among homeowners and businesses by providing more wildfire mitigation incentives. He spotlighted eight insurance companies in the state and the California FAIR Plan, which offer discounts to policyholders that have taken adequate steps to harden homes and mitigate wildfire risk.
This group represents only 13 percent of the state market, and Lara hopes the figure will rise significantly this year.
“Insurance companies support and echo Commissioner Lara’s call for mitigation,” Mark Sektnan, vice president of American Property Casualty Insurance Association (APCIA), said in a statement on behalf of APCIA, the Personal Insurance Federation of California (PIFC), and the National Association of Mutual Insurance Companies (NAMIC).“Insurers are working with scientists and modelers to further the science of understanding how to better mitigate wildfire risk and understanding the value of various mitigation programs and efforts. While we cannot stop wildfires, we are learning how to mitigate the risks and are moving towards understanding and quantifying the value of individual and community mitigation. Insurers encourage homeowners, renters and businesses to get their property and finances ready for wildfires, as we are facing another dry, hot summer.”
Mostly caused by people
As much as 90 percent of wildland fires in the United States are caused by people, according to the U.S. Department of Interior. Some human-caused fires result from campfires left unattended, the burning of debris, downed power lines, negligently discarded cigarettes and intentional acts of arson. The remaining 10 percent are started by lightning or lava.
The Insurance Institute for Business and Home Safety provides recommendations for reducing the likelihood of your home catching fire, including noncombustible siding, decking and roofing materials; covered vents; and fences not connected directly to the house. In addition, combustible structures in the yard such as playground equipment should be at least 30 feet away from the house and vegetation 100 feet away.
But given weather, climate, and population trends, more than individual planning and risk transfer through insurance will be required to head off wildfire risk and bounce back from events. Innovation and a resilience mindset on the part of governments, businesses, homeowners, and communities will need to take hold.
Want to learn more about wildfire mitigation and resilience? Register for “Wildfire Ready: How Do You Prepare Your Home and Finances for Wildfires?” on May 20 at 10 a.m. (PT)
By Loretta Worters, Vice President, Media Relations, Triple-I
Property/casualty insurers are projected to continue to post slight underwriting profits in 2021, according to a forecast released today by the Insurance Information Institute (Triple-I) and Milliman.
The forecast projects a 2021 combined ratio of 99, virtually the same as last year. The forecast was revealed during an exclusive, members-only virtual webinar, “Triple-I /Milliman Underwriting Projections: A Look Ahead,” moderated by Triple-I CEO Sean Kevelighan. Early projections for 2022 and 2023 look similar. The combined ratio is the percentage of each premium dollar an insurer spends on claims and expenses.
Premiums are expected to surge 7.1 percent this year, according to the forecast, up from 2.5 percent in 2020, as the combination of an economic recovery and a hard market increase both exposures and rates. A hard market, also known as a seller’s market, occurs when insurance is expensive and in short supply. Premium growth is projected to slow in 2022 and 2023 but remain above 5 percent in both years.
2021 got off to a bumpy start for natural catastrophes. “The industry took a big hit with the Texas freeze in Q1, with overall cat loss estimates in the $15 billion range,” said James Lynch, FCAS, MAAA, senior vice president and chief actuary at the Triple-I. “Most of that was the Texas storm. Q1 losses that big are atypical.” He added that the drought in the West is a continued concern as wildfire season approaches.
Jason B. Kurtz, FCAS, MAAA, a principal and consulting actuary at Milliman, an independent risk management, benefits, and technology firm, said that underwriting results would gradually improve starting next year. And as more people are vaccinated and back to work, the economy should keep humming. “Last year’s recession was unusual in that there really wasn’t anything wrong with the economy until COVID hit. So now, with COVID (hopefully) on the run, the American Rescue Plan well underway, and the possibility of another stimulus at some point later this year, growth should be strong.”
“We anticipate a jump in premium growth this year, thanks to the economic recovery and a hard market,” said Kurtz.
Dr Phil Klotzbach, research scientist in the Department of Atmospheric Science at Colorado State University and a Triple-I non-resident scholar, has already given his initial forecast for the 2021 Atlantic hurricane season. He noted at the time that 2021 is expected to have above-normal activity, with 17 named storms, eight of which will become hurricanes – and of those eight, four are predicted to become major hurricanes (Category 3, 4, or 5, with winds of at least 111 miles per hour). That compares with the long-term average of 14 named storms, seven hurricanes and three major hurricanes.
“There are a couple of reasons why we’re forecasting above-normal Atlantic hurricane activity,” said Dr. Klotzbach. “We do not anticipate El Niño conditions this summer and fall,” he said, explaining that El Niño occurs when there is warmer than normal waters in the central and eastern tropical Pacific.
“When those El Niño conditions occur, it tends to increase upper-level winds, so winds at 20,000-30,000 feet in the atmosphere tear apart hurricanes in the Caribbean and into the tropical Atlantic. We’ll have a lot more to say when we put out our 2021 hurricane projections on June 3,” Klotzbach stated.
Looking at the Directors & Officers (D&O) market, Dave Moore, FCAS, MAAA, of Moore Actuarial Consulting, LLC, said that security class actions continue to exert upward pressure on both the number and size of claims in the public company D&O market and are expected to continue. “Prior to 2017, there were less than 200 security class actions filed per year, on average. In the last four years, that annual average has doubled to around 400 security class actions. Last year frequency fell, which might have been due to the pandemic. Even so, 2020 activity is still well above average.”
Donna Glenn, FCAS, MAAA, chief actuary, National Council on Compensation Insurance (NCCI),provided a high-level overview of the latest workers compensation insurance industry results and critical data points that demonstrate the health and resiliency of the system.
“The pandemic has demonstrated that the U.S. workers compensation system is resilient and strong,” she said. “Despite experiencing a 10 percent drop in net written premium amidst the pandemic recession, NCCI reports a calendar year combined ratio of 87, indicating a sign of profitability for carriers. Workers compensation reserves remain robust, with the redundancy growing to $14 billion in 2020.”
Dr. Sam Madden, co-founder and chief scientist from Cambridge Mobile Telematics, a telematics and analytics provider for insurers, rideshares, and fleets, discussed exposure and risk trends in mobility from the onset of the COVID-19 pandemic. He noted that in early March 2020 there was a precipitous drop in driving – nearly 60 percent – as the pandemic hit and the country shut down.
“During the summer of 2020, people began driving more, but overall, miles [driven] still remained depressed. As restrictions loosened and more people became vaccinated, driving returned to near pre-pandemic levels,” he said.
However, while the number of miles driven dropped during the pandemic, speeding spiked 45 percent. “Reduced traffic meant that many drivers could speed, and they did!” Dr. Madden continued. “Speeding remained elevated throughout the pandemic, and remains somewhat elevated today, with levels about 10 percent higher on average than pre-pandemic.”
Dr. Michel Léonard, CBE, vice president and senior economist, Triple-I, noted that the most important issue right now in terms of economics and insurance is the wide range of Gross Domestic Product (GDP) and inflation forecasts.
“We’ve never seen GDP forecasts from the Fed and financial institutions ranging from 4 percent to as much as 10 percent. What we can be sure is that the economy has been recovering in Q1 and so far in Q2, but such discrepancies in major economic indicators should be cause for caution, especially as COVID-19 is still an issue here in the U.S. and abroad,” he said.
Amid such wider economic uncertainty, Dr. Léonard said, what may be more helpful for insurance practitioners “is to focus on the insurance sector’s own growth, which outperformed the wider economy by nearly 6 percent in 2020 and is well positioned to do so again in 2021. Another insight is the growing consensus around the upward direction of interest rates which should help lift up net income from last year’s minus 3.8 percent.”
Three little letters – ESG – can strike business decision makers with anxiety as they strive to incorporate nonfinancial factors into their strategic analysis and planning.
Shorthand for “environmental, social, and governance” these factors, which seek to capture the environmental and social impacts of operations and investment practices, have become more pressing in recent years due to:
Globalization,
Concerns about climate and extreme weather, and
Inequity and injustice becoming more visible in real time, thanks to social media.
This visibility can affect purchasing choices, spur consumer and shareholder activism, and even spark civil unrest, leading to physical injuries, property damage, and business disruptions.
Fortunately, the insurance industry has ESG hardwired into its DNA. While ESG priorities may seem new to many industries, insurers have long been involved in understanding and addressing these and other risk factors as a fundamental part of doing business. As a result, they are well prepared to meet ESG-related demands and are ideal partners for businesses, communities, and nonprofits seeking to navigate this “new” area of risk and opportunity.
And, far from being an impediment to profitable performance, research increasingly demonstrates an ROI advantage for companies that include ESG in their business strategies and operational practices.
Click here to learn more about the role ESG plays in insurance and that insurance plays in ESG.
Two narratives about how recovery from the COVID-19-driven economic downturn will play out are competing in the business press – the Federal Reserve’s and that of the financial markets.
Market economists typically forecast wider changes in quarter-over-quarter gross domestic product (GDP) than their counterparts at the Fed. But the current discrepancy is wider than it has been in decades. This is creating so much confusion in financial news that a recent edition of Squawk Box discussed the extent to which “markets seem reluctant to believe the Fed’s policy goals.”
The markets see recent GDP growth as closely aligned to stock market performance: a dramatic drop in the second quarter of 2020 and an equally dramatic recovery from third-quarter 2020 to third-quarter 2021.
The Fed sees GDP as driven by structural economic considerations that move only gradually from quarter to quarter. As a result, the Fed estimated a smaller drop in GDP for second-quarter 2020 and a slower recovery ever since.
Over the last year, the Fed view was proven right multiple times.
“Triple-I’s forecasts fall within the consensus central banks view, as represented by the Fed for the U.S. and the International Monetary Fund (IMF) for the large insurance markets we follow,” said Dr. Michel Léonard, Triple-I vice president and senior economist. He said the expectations gap comes down to three economic considerations:
Fiscal stimulus and GDP growth: Fed and market economists disagree about the extent of the relationship between fiscal stimulus and growth. When generating GDP forecasts, all economists assign a “multiplier” to quantify the impact of government spending on GDP growth. Market economists tend to assign larger multipliers than central bank economists. Given the historically high fiscal stimulus of the last 12 months, market economists expect historically high GDP growth.
Shifts in economic output: They also tend to weight quarterly data differently. Fed economists focus more heavily on quarter-to-quarter trends, and market economists on changes within quarters. The COVID-19 economy upended how certain activities are carried out and reduced the comprehensiveness of quarterly data. For market economists, this led to overestimating the decrease in activity in the second quarter of 2020 and now overestimating the increase in first and second quarter 2021.
Timing: The Fed and markets agree broadly about GDP growth but disagree on timing. Both expect a comparable amount of growth between now and 2023 but, for the reasons above, allocate it differently across 2021, 2022, and 2023. Market economists allocate most of the growth to 2021, while Fed economists spread it over the 2021-2023 period. This has led to the Fed forecasting higher growth in 2022 than some markets economists.
By James Lynch, Chief Actuary, Senior Vice President of Research and Education, Triple-I
You’ve probably been reading news stories about rising inflation, and auto insurance has been pulled into the picture. But that is a little misleading.
Auto insurance rates aren’t soaring. They are returning to normal, pre-pandemic levels.
Consumer prices in April were 4.2 percent higher than a year ago, the Bureau of Labor Statistics reported Wednesday, and its report picked out auto insurance as one of the areas that had “a large impact on the overall increase.”
Auto insurance rates were 2.5 percent higher in April than in March and 6.1 percent higher than a year ago.
That doesn’t mean, though, that the cost of auto insurance is skyrocketing. Remember that a year ago – April 2020 – insurers were busy returning billions of dollars to consumers because of the drastic change in driving patterns the pandemic brought on.
Those givebacks – which eventually totaled $14 billion – drove down the price of insurance, and the official inflation numbers reflected that.
Now driving patterns are returning to pre-pandemic norms – more or less. People are driving somewhat less than before, but they are driving faster and are much more likely to tinker with their smartphones or practice other distracting behaviors.
Premiums are reflecting the new normal, and in terms of the cost of insurance, that looks a lot like the old normal. The price of insurance, using BLS indices, is virtually unchanged from pre-pandemic levels – 0.01 percent higher than it was in March 2020, when the pandemic/recession began.
Currently residing in Chicago, Leong shares her insights on how technology and big data are changing the actuarial career path and insurance landscape. She speaks about her team’s work at Zurich and how data science and analysis have helped to improve claims models. In addition, Leong shares the CAS’s initiatives to actively support diversity, equity and inclusion in the insurance industry.
Triple-I CEO Sean Kevelighan currently serves on the CAS board of directors.
You’ve been able to live around the world: Australia, the UK and now the US. What moves in your career did you make for that to happen? What piqued your interest in actuarial studies and the path that led you to data science lead at Zurich?
I decided to become an actuary very early on in my career. I grew up in Australia, and when I was in high school, I knew I was good at math and I was looking at what professions that would lead to. Actuarial naturally sprung up as it does for a lot of people who are good at math, but it looked like a really rewarding career and a rewarding profession.
A lot of Australians like to take a year off university and do backpacking around the world. I took a year off, went to London and got my first actuarial job, working six months at St. Paul. With that money I backpacked around Europe for a year. Then I went back to Australia, finished my degree, and my first job out of school was in London. I just had the itch to go back, and the actuarial profession is a good one if you enjoy traveling.
Then my boyfriend-now-husband got a job in New York, so that’s why I moved to the States. I never actually thought I would live in America, and it’s been more than a decade.
Would you be able to share a project that you’re currently working on at Zurich?
I have a team of data scientists at Zurich, and we build models for three different groups: For underwriting, to help us with risk selection and pricing; for claims, to work on better claims triage and finding claims fraud; and then lastly for our customers to help them better manage and understand their risks.
We have done a lot of work in claims. For example, we have built a claims model that alerts us if a workers’ comp claim is going to become complex, and if it would benefit from having a nurse to review that case and manage it much more proactively. That has really benefited Zurich in terms of outcomes. It has also benefitted our customers and their employees in terms of getting back to work and regaining their health. It’s been a win-win all around.
What are some challenges you’ve experienced in using data in relation to privacy, regulations or bias?
This is a very big topic for not just the insurance industry, but also more broadly, as big data gets bigger and artificial intelligence continues to advance. Something that we do for all of our models is talk to legal, compliance and privacy. They do a thorough review of the models before we actually put them into production, to make sure that from the data and the algorithm viewpoints, we stay true to our principles within Zurich. A few years ago, Zurich released a data commitment to the general public and to our customers about the kind of data we will and will not use so we take that seriously.
Are there any implications that you’re seeing that the pandemic has had on data analysis?
Yes, definitely. A lot of the analysis that’s done in insurance relies on the history being somewhat predictive of the future, and frankly, all data analysis relies on that because data is by definition, historical. So anytime you try to make a prediction from data it is relying on historical fact, and obviously the pandemic really upended that. How do I look at this data and use it to make predictions of the future? It is less clear, and we’ve had to rely much more on judgment, and we’ve had to really think outside the box about the different types of data we should use now to try to make predictions of the future.
Congratulations on your presidency of the CAS. Why did you join CAS and what led you to being elected as president?
When I initially joined the CAS in 2005/2006, I volunteered for the organization. About a third of our members volunteer in some capacity, which is tremendous for any society – that’s a very high rate. I find that the actuarial community is just a great community.
One of the benefits of volunteering for the CAS is having the chance to grow your leadership skills. Before long, I was chair of one of the seminar-organizing committees. That was a really good experience in terms of leadership for me, early in my career.
I was given the suggestion by my boss, about seven/eight years ago now, that I should be on the board of the CAS. It had never crossed my mind, honestly, that I would be even eligible for a job like that. The CAS has a nominating committee, who called me and asked me to run. Then I got a call, maybe two/three years later, asking if I would consider running for president. I’m so honored to have this role.
There’s a three-year plan to create unicorns. Are you seeing any impact so far? Is this resonating a lot within CAS and the industry?
Last November at our annual meeting, we released a new Envisioned Future and a three-year plan. Our new Envisioned Future says “CAS members are sought after globally for their insights and ability to apply analytics to solve insurance and risk management problems.”
Now that might not sound like much, but if you think about what it used to say, something like “the CAS advances the practice and application of actuarial science,” we made the change to be more evergreen and more actionable. We will do whatever analytics needs to be done, and we will do it to solve business problems in insurance, and this will evolve over time.
What this means is that the actuary of the future needs to have three key skill sets. First, they need to be great at analytics, the kind of analytics you need to solve the important insurance problems of today. Second, they need to be great at problem-solving. Actuaries are good at solving the core problems in insurance, pricing, reserving, capital modeling. But more and more with big data, there are new problems you can solve. The example I gave before – is this claim going to become complex, would it benefit from having a nurse? Those are new problems you can now solve with data and analytics that you probably couldn’t have done before. The third area is the domain knowledge in terms of P&C insurance.
That is the unicorn. That is the actuary of the future, having all three key skill sets.
How are you attracting a more diverse body of students to pursue actuarial or related studies? How are you trying to attract different types of people and different ways of thinking to the CAS and to the insurance industry in general?
One of the pillars in our strategy that we released with our Envisioned Future is to diversify our pipeline. We have various initiatives to look to do that. One thing is we are pushing forward in terms of diversity, equity and inclusion, and we recently put out some metrics on our website. Right now, for example, 23% of our members are Asian, under 2% are Black and under 2% are Hispanic. The diversity from the Black and Hispanic point of view is not where we want it to be, and we have a goal of increasing that to about 5% to 8% of our new members in the next five to 10 years. We put a stake in the sand in terms of how we want our racial diversity to improve.
A few years ago, we engaged a consulting firm to figure out what is holding us back in terms of having more diversity. One of the things they identified is just finding out about the profession early in your life is going to be key, because a lot of people in various racial and ethnic groups are not really finding out about the actuarial profession when they need to. So we’ve been doing actuarial high school days, visiting diverse high schools to talk to them about the actuarial profession.
We also have a scholarship program for these underrepresented groups, where we will pay for exams given a few qualifying criteria, because we know that the cost of the exams can also be a hindrance, especially when you’re still in school and you’re not earning any money. To get an internship, you need to have three exams under your belt, but they cost money. It can be tough, so we’re seeing what we can do to help.
What challenges have you had to overcome, as a woman and a person of color in the insurance industry?
I’m very big on self-improvement, and I have tried to develop myself in a way to be successful in this environment.
If I think about my upbringing, it was different as an Asian person growing up in Australia. When I was in high school, I was on the track team and I had wanted to be in the relay. There were only four people in the relay, and I wasn’t picked as one of the four, even though I was probably the third fastest person in the school. I thought that this was just unfair and favoritism. I told my mom, “This is really unfair; you’ve got to do something about this,” and she told me, “Don’t complain; just do what you’re told. Don’t stick out.”
That really jarred with me then and still now, thinking back on it. That highlighted the difference in culture. As I’ve been navigating my way through predominantly Western work culture, I have worked pretty deliberately to think differently and to acquire skills that would help me in this kind of work environment.
This weekend’s ransomware attack that forced the closure of the largest U.S. fuel pipeline provides another powerful illustration of the need for a resilience mindset that applies to more than just natural catastrophes.
Colonial Pipeline Co. operates a 5,500-mile system that transports fuel from refineries in the Gulf of Mexico to the New York metropolitan area. It said it learned Friday that it was the victim of the attack and “took certain systems offline to contain the threat, which has temporarily halted all pipeline operations.”
Individually, the event demonstrates the threat cybercriminals pose to the aging energy infrastructure that keeps the nation moving. More frighteningly, though, it is yet another example of how vulnerable the complex, interconnected global supply chain is to disruptions of all kinds – a message that isn’t lost on risk managers and insurers.
The DHS described the attack on an unnamed pipeline operator that halted operations for two days. Although staff didn’t lose control of operations, the alert said the company didn’t have a plan in place for responding to a cyberattack.
“This incident is just the latest example of the risk ransomware and other cyber threats can pose to industrial control systems, and of the importance of implementing cybersecurity measures to guard against this risk,” a CISA spokesperson said at the time.
Not just energy companies
It isn’t only energy and industrial companies that need to be paying attention. According to cyber security firm VMware, attacks against the global financial sector increased 238 percent from the beginning of February 2020 to the end of April, with some 80 percent of institutions reporting an increase in attacks.
“Cyber is an existential issue for financial institutions, which is why they invest heavily in cyber security,” says Thomas Kang, Head of Cyber, Tech and Media, North America at Allianz Global Corporate & Specialty (AGCS). “However, with such potentially high rewards, cybercriminals will also invest time and money into attacking them.”
He pointed to two malware campaigns – known as Carbanak and Cobalt – that targeted over 100 financial institutions in more than 40 countries over five years, stealing over $1 billion.
An ACGS report shows technical failures and human error are the most frequent generators of cyber claims, but the financial impact of these is limited:
“Losses resulting from the external manipulation of computers, such as distributed denial of service attacks (DDoS) or phishing and malware/ ransomware campaigns, account for the significant majority of the value of claims analyzed across all industry sectors (not just involving financial services companies).”
According to the report, regulators have turned their attention to cyber resilience and business continuity.
“Following a number of major outages at banks and payment processing companies, regulators have begun drafting business continuity requirements in a bid to bolster resilience.”
Not just cyber
The COVID-19 pandemic has taught the world a lot of lessons, not the least of which is how vulnerable the global supply chain – from toilet paper to semiconductors – is to unexpected disruptions. Demand for chlorine increased during 2020 as more people used their pools while stuck at home under social distancing orders and homeowners also began building pools at a faster rate, adding to the additional demand. Such disruptions can ripple through the economy in different directions.
Business interruption claims and litigation have been a significant feature of the pandemic for property and casualty insurers.
When the container ship Ever Given got wedged in the Suez canal – one of the most important arteries in global trade – freight traffic was completely blocked for six days. Even as movement resumed, terminals experienced congestion and the severe drop in vessel arrival and container discharge in major terminals aggravated existing shortages of empty containers available for exports. The ship’s owners and the Egyptian government remain locked in negotiations over compensation for the disruption, and the ship is still impounded.
Spurred in part by this event, the Japanese shipping community is considering alternative freight routes to Europe, both reliant on Russia: the Trans-Siberian Railway and the Northern Sea Route. Neither option is devoid of risks.
In an increasingly interconnected world, there is no bright line distinguishing man-made from natural disasters. After all, the Ever Given grounding was caused, at least in part, by a sandstorm. April’s power and water disruptions that left dozens of Texans dead and could end up being the costliest disaster in state history were initiated by a severe winter storm.
A resilience mindset focused on pre-emptive mitigation and rapid recovery is called for in both cases. There is no “either/or.”
“The U.S. experienced a record-setting hurricane season in 2020 and the early forecasts say 2021 is going to be an active one, too,” said Sean Kevelighan, CEO, Triple-I. “During National Hurricane Preparedness Week, everyone who lives in a hurricane-prone community should take a few moments to ensure you have adequate financial protection for your property and possessions while also taking steps to make your home or business more resilient to the impacts of wind and water. History has proven that virtually every community along the Gulf and East Coasts have faced the wrath of what is a hurricane’s catastrophic damage. And now with even more Americans living in harm’s way, it is even more critical for consumers and communities to take action.”
National Hurricane Preparedness Week starts on Sunday, May 9, and continues through Saturday, May 15. The 2021 Atlantic hurricane season begins on June 1 and ends on Nov. 30.
Review Your Insurance Coverage Make sure you have the right type – and amount – of property insurance. The Triple-I recommends you conduct an annual insurance review of your policy(ies) with your insurance professional.
“You should ask your insurance professional if you have the right amount of insurance coverage to rebuild or repair your home, to replace its contents, and to cover temporary living expenses if your property is uninhabitable,” Kevelighan said. “You should also ask about flood insurance, which is an additional coverage to a standard homeowners and small business insurance policy. Nearly 90 percent of natural disasters involve flooding.”
The best place to start the insurance review process is by reading the declarations page of your policy. This one-page information sheet offers details on how much coverage you have, your deductibles and how a claim will be paid.
Standard homeowners insurance covers the structure of your house for disasters such as hurricanes and windstorms, along with a host of other disasters. It is important to understand the elements that might affect your insurance payout after a hurricane and adjust your policies accordingly.
Protect Your Vehicles Comprehensive auto, which is an optional coverage, protects your vehicle against theft and damage caused by an incident other than a collision, including fire, flood, vandalism, hail, falling rocks or trees, and other hazards. Nearly 80 percent of U.S. drivers opt to purchase comprehensive coverage.
Make Sure Your Possessions are Adequately Protected Imagine the out-of-pocket cost of repurchasing all your furniture, clothing, and other personal possessions after a hurricane. Whether you have homeowners insurance or renters insurance, your policy provides protection against loss or damage due to a hurricane.
Creating an inventory of your belongings and their value will make it easy to see if you are sufficiently insured for either the replacement cost or cash value of the items situated at your residence. When you create a photo or video catalog of your home’s possessions, it will also help expedite the insurance claims process if you sustain damage from a storm.
Make Your Property More Resilient Invest in items that will harden your property against wind damage, such as a wind-rated garage door and storm shutters. The Triple-I also recommends you have your roof inspected annually by a licensed and bonded contractor to make sure it will hold up to high winds and torrential rains.
Preparing a hurricane emergency kit with a minimum two-week supply of essential items such as non-perishable food, drinking water (1 gallon per family per day) and medications for every family member. Also make sure you have adequate supplies and medications for your pets.
Creating an evacuation plan well before the first storm warnings are issued.
Hailstorms are among the most destructive weather events, with hailstones ranging in size from a pea to a grapefruit. When these frozen missiles plummet from the sky, damage to cars and buildings can be severe.
Steve Bowen, a meteorologist at Aon and director of the broker’s Impact Forecasting unit, has said hail can contribute as much as 50 percent to 80 percent of severe convective storm losses in any given year, with tornadoes, wind and flooding providing the rest.
An April 28 storm that included apple-size hail in in some parts of the Dallas-Fort Worth region caused close to $400 million in insured losses, according to the Insurance Council of Texas. Spokesperson Camille Garcia says the loss estimate is based on 32,000 car and homeowners claims sent to insurers through May 3. Most came from Tarrant County and the city of Keller. Once roof inspections are completed many more claims are expected.
State Farm alone paid out $474.6 million in hail claims in Texas in 2020, according to the company’s most recent Hail Damage report.
While you can’t prevent hail from failing on your property, you can lessen the possible damage by putting vehicles in the garage and moving patio furniture under cover. Close blinds and curtains to prevent broken glass from blowing inside and possibly causing injuries or damage.
For homes without garages, which is common in the South, I’m told, hail-resistant car covers can be an effective option.
If you do experience hail damage, your auto and home insurance policies will cover it. Take lots of pictures of the damage and submit your claim as soon as you can.
If contractors come knocking on your door, hold off on signing repair contracts. Do your due diligence, deal with reputable contractors, and get references. Consult your insurance adjuster before signing any contracts.
Caitlin Durkovich, special assistant to President Biden and White House National Security Council senior director of resilience and response, discussed the administration’s climate and resilience priorities at Triple-I’s National Town Hall (highlights video below. Click here to view full event).
She and Paul Huang, acting associate administrator of resilience for the Federal Emergency Management Administration (FEMA), met virtually with Triple-I CEO Sean Kevelighan and Michel Léonard, Triple-I vice president and senior economist.
“Resilience is a very important theme of this administration and of the priorities we have,” Durkovich said, elaborating that this includes preparation for and response to both natural and man-made events. The objective is to learn from every incident “so we don’t just bounce back but bounce forward.”
Referring to the administration’s infrastructure and clean-energy goals, she said, “We’re anticipating what the world is going to look like 20 to 30 years from now, given the life span of our built infrastructure.”
Durkovich noted that there are several longstanding hazard-mitigation and hazard-response programs spread across multiple agencies.
“I think we have the opportunity to bring at least the federal community together to look at some of those programs and think about how we can modernize them, just like we’re modernizing infrastructure,” she said.
This will help communities “build back better” after an event.
But it’s going to take more than federal government to bring this about. Communities will have to be very involved, she said, adding, “It’s not just state and local planners, but it’s infrastructure owners and operators, it’s the finance side of the house, who are needed to work through some of these hard challenges before, so after an emergency, when money becomes available, you’re ready to make some significant changes.”
And as we invest in electrified transportation infrastructure, she said, “we have to make sure that infrastructure is resilient to power outages, to storms, and when we’re in the middle of a mass evacuation it can accommodate hundreds of thousands of people.”
Despite having to think about everything that could go wrong (what she described as “healthy paranoia”), Durkovich was upbeat: “It’s amazing to be having these conversations about designing resilience in at the beginning, instead of bolting it on at the end.”
FEMA’s Paul Huang echoed Durkovich’s enthusiasm for a “whole of government” and “whole of community” approach to resilience.
“We’re going to have to rethink how we do things,” he said. “We have programs that have always been around. They’re good programs, but it’s not enough. We have to think bigger and more creatively.”
Huang talked about a new FEMA program, Building Resilient Infrastructure and Communities (BRIC), that support states, local communities, tribes and territories in developing hazard-mitigation projects, reducing the risks they face from natural disasters. “We’re hoping to see new ideas from industry, working with local and state government, to say, ‘This is something we can try together in partnership to get a bigger bang for our buck.’ “
