From the WSJ, see: Florence Is a Tragedy for Homeowners, Not Insurers. The tropical storm has brought more water than wind, an important distinction for the insurance industry
Major report regarding wildfires. See: A REPORT BY THE CALIFORNIA DEPARTMENT OF INSURANCE; TRIAL BY FIRE. Managing Climate Risks Facing Insurers in the Golden. Report is 110 pages, but includes an executive summary.
Thanks for David Calkin for the citation.
From a business insurance source: Harvey damage illustrates need for disaster preparedness: Study. Excerpts:
Hurricane Harvey served as a stark wake-up call about the need to enhance flood resilience, including limiting or preventing federal insurance coverage of new properties in flood zones, according to a study released Thursday.
Harvey made landfall near Rockport, Texas, on Aug. 25, 2017, as a Category 4 storm and dropped more than 40 inches of rain over the next four days, causing catastrophic flooding. Total economic damage from the hurricane is estimated at $125 billion, according to the National Oceanic and Atmospheric Administration Office for Coastal Management, making it the second-costliest tropical cyclone on record after Hurricane Katrina.
But only a small fraction of these Harvey losses, about $19.4 billion, were insured, including $8.4 billion in flood losses insured by the National Flood Insurance Program, $2.7 billion in insured vehicle losses, $4.9 billion in insured commercial losses and $3.4 billion in other losses, according to a Post-Event Review Capability study on the Houston floods resulting from Harvey conducted by Zurich Insurance Group Ltd., ISET-International — a nonprofit organization committed to building resilience — and the American Red Cross Global Disaster Preparedness Center.
From Bloomberg News: Disasters Are Costing Us More. Why Aren’t We Insuring More? Climate change and our insistence on building in high-risk areas may force us to reconsider whether our losses are natural or man-made.
Last year was the second-costliest year for disasters since 1970, according to a new analysis from reinsurance firm Swiss Re AG. Global economic losses from these events reached $337 billion in 2017, behind only 2011’s total losses, and less than 40 percent were insured. A close look at Swiss Re’s data reveals several worrying trends. Losses from natural and man-made disasters are increasing, markets are not getting better at insuring them, and our own choices aren’t helping.
From Governing: How the New Tax Law Could Slow Disaster Recovery in Small Towns. A lesser-known provision in the GOP tax overhaul ends the benefits for victims of small-scale disasters.
2017 Saw A Record High Of Insurance Claims Due To Natural Disasters; They amount to about $135 billion.
Insurers face new challenges after long series of natural disasters. Following a season of hurricanes, flooding, and earthquakes around the world, customers and governments are facing rising insurance rates. Experts suggest that insurance companies should re-evaluate their repricing strategies as disasters become more common.
The insurance issues in FL are quite different from those in TX. See this article from the NYTimes: Irma May Force Florida Insurers to Turn to Deeper Pockets
When the storm is over and the streets are safe again, Floridians will be checking what has become of their homes. They may also want to check on their insurers.
The big national carriers like State Farm and Allstate pulled out of Florida’s homeowners’ market years ago, citing catastrophic risks and unhelpful state regulators. Those departures left a vacuum that the state filled, initially, with a state-owned insurer, Citizens Property Insurance. Eventually, the state offered incentives to coax some brave new insurers into the market.
As a result, all that may seem to stand between Florida’s homeowners and potential ruin is one state-owned insurer and dozens of relatively little-known companies that do all or most of their business in the state. They all have the benefit of the Florida Hurricane Catastrophe Fund, which, with no major storms in the past 12 years, has $17 billion at the ready — a sum that may not be nearly enough.
From the White House Office of Management and Budget a new report titled Standards and Finance to Support Community Resilience. This 29 page report is the culmination of collaboration with leaders in re/insurance, catastrophe modeling, and building science to advance community resilience and insurability. The office also announced additional commitments by leaders in the insurance industry to help identify and reduce the risks and costs of disasters.
See this article in the NYT by Jeffrey Sacks: Insuring for Disasters. Some excerpts:
Insurance would reveal how vulnerable certain parts of the world are to rising costs of disasters, including those associated with global warming. But at least we’d be able to begin to account for this. It would provide a powerful way to drive mitigation and adaptation investments, a point emphasized in recent years by Rowan Douglas of the insurer Willis Group.
A global system of disaster insurance would of course not be perfect and would take time to implement, but could save many lives and livelihoods in the years ahead, and help vulnerable low-income countries like Haiti and Nepal chart a path to sustainable development.