property insurance trends - catastrophic weather events

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Large Property Loss Survey Volatile weather patterns have presented new challenges to insurers around the world…

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During the last few years, catastrophic events, demographic trends and economic conditions have merged to present new challenges for insurers, impacting their profitability and the manner in which they handle claims. Read the full blog post here: http://www.genre.com/knowledge/blog/large-property-loss-survey-presentation.html

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Page 1: Property Insurance Trends - Catastrophic Weather Events

Large Property Loss Survey Vol atile w ea ther p a tterns ha ve p resented new cha l lenges

to i nsurers a round the w orld…

Page 2: Property Insurance Trends - Catastrophic Weather Events

Sources: 1. PCS, iso.com 2. PCS – Top 20 List, iso.com

making it the 14th most costly disaster in U.S. history.2

There were costly weather events in the United States between the years 2010 to 2012

Flooding from Hurricane Irene led to much of its

$4.3 billion insured loss,1

Page 3: Property Insurance Trends - Catastrophic Weather Events

There were costly weather events in the United States between the years 2010 to 2012

Total insured losses from Superstorm Sandy

were estimated between

$26 billion and

$35 billion.*

Sources: RMS & Reuters | "Hurricane_Sandy_New_Jersey_Pier.jpg" by Master Sgt. Mark C. Olsen/U.S. Air Force/New Jersey National Guard / CC BY 2.0.

Page 4: Property Insurance Trends - Catastrophic Weather Events

$1 billion each event.

Over 11 thunderstorm and tornado events occurred with

insured values in excess of

There were costly weather events in the United States between the years 2010 to 2012

Page 5: Property Insurance Trends - Catastrophic Weather Events

Sandy led to significant policy and Underwriting issues:

FEMA maps were out of date and did not accurately mark flood zones.

Underinsurance driven by a poor economy had a significant impact on economic consequences.

Less coverage for damage was due to inadequate flood sublimits and flood exclusions in homeowner’s policies.

Many Business Interruption policies did not cover losses caused by denial of access or loss of power.

Insurers were prohibited from applying Hurricane Deductibles due to storm not being defined as a hurricane.

Page 6: Property Insurance Trends - Catastrophic Weather Events

Sandy also created overwhelming claims, causing legislative proposals that could change the way claims are handled.

Sources: "Sandy Poweroutage 1.jpg" by Hybirdd / CC BY-SA 2.0.

Page 7: Property Insurance Trends - Catastrophic Weather Events

These proposals include:

Sources: "Sandy Poweroutage 1.jpg" by Hybirdd / CC BY-SA 2.0.

Time restrictions for insurers investigating claims

Curbing anti-concurrent causation language in policies

Allowing lawsuits against insurers for unfair claim settlement

Page 8: Property Insurance Trends - Catastrophic Weather Events

Earthquake models failed to predict damage resulting from aftershocks and liquefaction.*

Sources: "2010_Chile_earthquake_-_Building_destroyed_in_Concepción.jpg“ by Claudio Núñez / CC BY-SA 2.0.

Global Perspective on Catastrophic Events: Earthquakes in Chile and New Zealand

*Liquefaction: The process where saturated soils lose their strength, causing it to behave like liquid.

Page 9: Property Insurance Trends - Catastrophic Weather Events

In the case of Christchurch, New Zealand, liquefaction* caused significant additional damage to buildings.

Sources: "Liquefaction_on_roads_-_North_New_Brighton_centre_in_Christchurch_Feb_2011_quake.jpg“ by Martin Luff / CC BY-SA 2.0.

Global Perspective on Catastrophic Events: Earthquakes in Chile and New Zealand

*Liquefaction: The process where saturated soils lose their strength, causing it to behave like liquid.

Page 10: Property Insurance Trends - Catastrophic Weather Events

The February 2011 aftershock in Christchurch caused an insured loss more than double the size of the original earthquake.

Sources: "Christchurch_Earthquake_Sevicke_Jones_Building1.jpg“ by Lee Hanner / CC BY-SA 2.0.

Global Perspective on Catastrophic Events: Earthquakes in Chile and New Zealand

Page 11: Property Insurance Trends - Catastrophic Weather Events

Global Perspective on Catastrophic Events: Thailand flood and Japan Earthquake

Sources: RMS, PropertyCasualty360.

Extensive damage was done to businesses due to inadequate protection and preparation for flooding

along the Chao Phraya River in Bangkok, Thailand.

Page 12: Property Insurance Trends - Catastrophic Weather Events

Global Perspective on Catastrophic Events: Thailand flood and Japan Earthquake

Large manufacturing risks named suppliers in their policy, causing insured loss to be higher than anticipated.

These claims were difficult to adjust and determine insured amounts.

Page 13: Property Insurance Trends - Catastrophic Weather Events

Global Perspective on Catastrophic Events: Thailand flood and Japan Earthquake

Access to insured buildings was a problem, delaying assessment and business interruption

time and scope.

Page 14: Property Insurance Trends - Catastrophic Weather Events

Global Perspective on Catastrophic Events: Thailand flood and Japan Earthquake

Sources: RMS, PropertyCasualty360.

The estimated loss was between $10 billion and $20 billion, making it the largest fresh water flood event in history.*

Page 15: Property Insurance Trends - Catastrophic Weather Events

Summary: Lessons Learned

Insurers’ profitability will continue to be significantly influenced by extreme global

weather patterns.

Page 16: Property Insurance Trends - Catastrophic Weather Events

Summary: Lessons Learned

Preparing, planning and implementing a catastrophe plan is necessary to respond to

a natural disaster.

Page 17: Property Insurance Trends - Catastrophic Weather Events

Summary: Lessons Learned

Timely and effective catastrophe claim handling will aid policyholder retention and minimize the

likelihood of reactionary legislation.

Page 18: Property Insurance Trends - Catastrophic Weather Events

Summary: Lessons Learned

There are issues that can impact claims dollars paid, including: scope of coverage, event facts,

underinsurance, sublimits, policy language and regulatory changes.

Page 19: Property Insurance Trends - Catastrophic Weather Events

If we can help you evaluate the insurance or reinsurance implications of large losses, contact your Gen Re representative or anyone from our Property Claims Unit.

Mike Griffin [email protected] +1 203 328 5526

We welcome the opportunity to help you meet these new challenges.

John Harmonay [email protected] +1 203 328 5498

Sue Stein [email protected] +1 203 328 5495

Geoff Piggot [email protected] +44 20 7426 6166

This presentation is intended to provide background information to our clients and professional staff. It is time sensitive and may need to be revised and updated periodically.

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