Ocean Leadership’s 2013 Policy Forum

March 6, 2013

Frank NutterPresident , Reinsurance Association of America

Coastal Inundation Threats Coastal Inundation Threats to the Economy and to the Economy and National SecurityNational Security   

Coastal Inundation Threats Coastal Inundation Threats to the Economy and to the Economy and National SecurityNational Security   

Coastal Inundation Threats Coastal Inundation Threats to the Economy and to the Economy and National SecurityNational Security   

Coastal Inundation Threats Coastal Inundation Threats to the Economy and to the Economy and National SecurityNational Security   

50

100

150

200

250

300

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Natural Catastrophes in the USA1980 – 2012

Number of eventsNumber

Meteorological events(Storm)

Hydrological events(Flood, mass movement)

Climatological events(Extreme temperature, drought, forest fire)

Geophysical events(Earthquake, tsunami, volcanic eruption)

3

121

19

41

2012 Total: 184 events

Source: Munich Re

US Natural Catastrophe Update

20

40

60

80

100

120

140

160

180

200

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

(bn US$)

Overall losses (in 2012 values) Insured losses (in 2012 values)

Insured losses in the U.S. In 2012 were the second highest on record.Insured losses in the U.S. In 2012 were the second highest on record.

US Natural Catastrophe Update

Natural Catastrophes in the USA1980 – 2012

Overall and insured losses

Source: Munich Re

2012 Losses

Overall : $101.1B

Insured: $57.9B

Number

Meteorological events(Storm)

Hydrological events(Flood, mass movement)

Climatological events(Extreme temperature, drought, forest fire)

Geophysical events(Earthquake, tsunami, volcanic eruption)

200

400

600

800

1 000

1 200

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Global Natural Catastrophe Update

Source: Geo Risks Research, NatCatSERVICE – As at January 2013

Natural Catastrophes Worldwide1980 – 2012

Number of events

12/01/09 - 9pm 5

Top 12 Most Costly Hurricanesin U.S. History

(Insured Losses, 2012 Dollars, $ Billions)

*Estimate as of 12/09/12 based on estimates of catastrophe modeling firms and reported losses as of 1/12/13. Estimates range up to $25B.Sources: PCS; Insurance Information Institute inflation adjustments to 2012 dollars using the CPI.

Hurricane Sandy could become the 3rd costliest

hurricane in US insurance history

Hurricane Irene became the 12th most expensive hurricane in US history in 2011

10 of the 12 most costly hurricanes in insurance history occurred over the past 9 years (2004—2012)

12/01/09 - 9pm 6

Top 16 Most Costly Disastersin U.S. History

(Insured Losses, 2012 Dollars, $ Billions)

Hurricane Sandy could become the 4th or 5th costliest event in US

insurance history

Hurricane Irene became the 12th most expense hurricane

in US history in 2011

Includes Tuscaloosa, AL,

tornado

Includes Joplin, MO, tornado

12 of the 16 Most Expensive Events in US History Have

Occurred Over the Past Decade

*Estimate as of 12/09/12 based on estimates of catastrophe modeling firms and reported losses as of 1/12/13. Estimates range up to $25B.Sources: PCS; Insurance Information Institute inflation adjustments to 2012 dollars using the CPI.

$7.8 $8.7 $9.2 $11.1$13.4

$20.0$23.9 $24.6$25.6

$48.7

$7.5$7.1$6.7$5.6$5.6$4.4

$0

$10

$20

$30

$40

$50

$60

Irene (2011) Jeanne(2004)

Frances(2004)

Rita (2005)

Tornadoes/T-Storms

(2011)

Tornadoes/T-Storms

(2011)

Hugo (1989)

Ivan (2004)

Charley(2004)

Wilma(2005)

Ike (2008)

Sandy*(2012)

Northridge(1994)

9/11 Attack(2001)

Andrew(1992)

Katrina(2005)

Number of Federal Disaster Declarations, 1953-2013*

*Through Feb. 24, 2013.Source: Federal Emergency Management Administration; http://www.fema.gov/disasters; Insurance Information Institute.

The Number of Federal Disaster Declarations Is Rising and Set New Records in 2010 and 2011. Hurricane Sandy Produced 13 Declarations in 2012/13.

The number of federal disaster declarations set a

new record in 2011, with 99, shattering 2010’s record 81

declarations.

There have been 2,101 federal disaster

declarations since 1953. The average

number of declarations per year is 35 from

1953-2012, though that few haven’t been

recorded since 1995.

47 federal disasters were declared in 2012

1.Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2009 dollars.2.Excludes snow.3.Does not include NFIP flood losses4.Includes wildland fires5.Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation.Source: ISO’s Property Claim Services Unit.

Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1990–20111

Hurricanes & Tropical Storms, $161.3

Fires (4), $6.0

Tornadoes (2), $130.2

Winter Storms, $28.2

Terrorism, $24.4

Geological Events, $18.2

Wind/Hail/Flood (3), $14.8

Other (5), $1.4

Wind losses are by far cause the most catastrophe losses,

even if hurricanes/TS are excluded.

Tornado share of CAT losses is

rising

Insured cat losses from 1992-2011

totaled $384.3B, an average of $19.2B per year or $1.6B

per month

9

Federal Disasters Declarations by State, 1953 – 2013: Highest 25 States*

Over the past 60 years, Texas has had the highest

number of Federal Disaster

Declarations

12/01/09 - 9pm*Through Feb. 24, 2012. Includes Puerto Rico and the District of Columbia.

Source: FEMA: http://www.fema.gov/news/disaster_totals_annual.fema; Insurance Information Institute.

10

Federal Disasters Declarations by State, 1953 – 2013: Lowest 25 States*

39

39

38

36

36

35

34

30

28

28

26

26

25

24

24

24

23

22

18

17

17

15

15

13

11

10

9

0

10

20

30

40

50

ME SD AK GA WI NJ VT NH OR MA PR HI MI AZ MD NM ID MT CT NV CO DE SC DC UT RI WY

Dis

as

ter

De

cla

rati

on

s

Over the past 60 years, Wyoming and Rhode Island had the fewest

number of Federal Disaster Declarations

12/01/09 - 9pm*Through Feb. 24, 2013. Includes Puerto Rico and the District of Columbia.

Source: FEMA: http://www.fema.gov/news/disaster_totals_annual.fema; Insurance Information Institute.

Federal Aid Requests for States With GreatestSandy Impact & Federal Aid Proposals

*As of Jan. 2, 2013.Source: New York Times, Dec. 6, 2012; Insurance Information Institute research.

Billions

States Requested Enormous Sums in Sandy Aid in the Middle of the “Fiscal Cliff” Debate, Causing Delays

$33.0

$7.4

$29.5

$42.0$9.0

$6.0

$36.9$7.9

$33B to repair subways, hospitals and other facilities;

$9B to upgrade infrastructure against future

storms

$3.2

$60

$29.5B to repair schools roads, bridges,

businesses, homes and other facilities; $7.4B to

for mitigation and prevention against

future storms

$3.2B to bury power lines,

upgrade transmission

systems, build sewage treatment plants and other

mitigation projects

Resiliency Strategies• Assess community resiliency

– Building stock, critical facilities, infrastructure, supply chain

• State/ local Chief Risk Officer• State authority over local safety/health and security actions• Evaluate business interruption financing • Improve building code and enforcement• Develop a private sector emergency response capability• Incorporate extreme weather and climate into state/local federal

decision making• Use nature to mitigate risk (Coastal Barrier Resources Act)• Provide tax credits, disaster financing and/or a revolving loan fund

for mitigation• Reduce the Federal share of disaster assistance to communities or

provide incentives for mitigation

Is the NTSB a prototype for resiliency assessment?

www.reinsurance.org