June hailstorms cost insurers more than $3 billion: Aon

Matthew Lerner

7/10/2018 12:17:00 PM

U.S. hailstorms in June could cost insurers more than $3 billion, according to the latest catastrophe report released Tuesday by Aon P.L.C.’s Impact Forecasting unit.

Hail and damaging straight-line winds rocked areas in the Rockies, Plains, Midwest, Southeast, and the Northeast, the report said, with Colorado among the hardest hit as separate major hailstorms struck the metro areas of Denver, Boulder and Colorado Springs.

Combined economic losses from all the events are expected to approach $4 billion, with insurers “poised to cover more than $3 billion of the economic cost,” Impact Forecasting said in its Global Catastrophe Recap June 2018 report.

Globally, a magnitude 5.5 earthquake hit Japan’s Osaka Prefecture on June 18, destroying or damaging nearly 30,000 structures. Some 78,838 claims had already been filed with payouts listed at 13.7 billion yen ($125 million), according to the General Insurance Association of Japan.

“Overall economic losses will be much higher,” Impact said of the Osaka earthquake in its report.

China’s Yangtze River Basin saw flooding from seasonal rainfall and convective storms with aggregate seasonal damages now estimated by China’s National Commission for Disaster Reduction at more than $1 billion as Tropical Storm Ewiniar brought another $570 million of estimated economic losses to China and Vietnam, the report said.

Severe weather including wind and hail across Germany, Netherlands, Luxembourg, Czech Republic, Austria and elsewhere caused insured and economic losses “expected to reach” into the tens of millions of dollars, the report said.

“June was one of the most active months thus far in 2018 for natural disasters,” Michal Lorinc, a Slovak Republic-based analyst within Impact Forecasting’s Catastrophe Insight team, said in a statement issued with the report. “A plethora of major events occurred in many regions around the world during the month — notably in the United States, Japan, China and Europe — which has led to a multibillion-dollar economic toll.”

 

 

 

Natural disaster insured losses fall in first half of 2018: Munich Re

Rob Lenihan

7/11/2018 4:01:00 AM

Munich Re Belgium European Union France Germany United Kingdom Catastrophes More +

 

Losses from natural disasters were significantly lower in the first half of the year, Munich Reinsurance Co. said in a report released Wednesday, but individual events caused high losses in specific areas.

Insured losses for the first half of 2018 totaled about $17 billion, Munich Re said in a statement, down from $25.5 billion during the same period last year. However, this year’s total essentially matched the average of $17.5 billion for the first six months over the last 30 years.

The overall losses for the period were $33 billion, roughly half the previous year’s figure of $65 billion and just under half of the price-adjusted average for the last 30 years of $68.3 billion.

Munich Re said about 3,000 people died in natural disasters in the first half of 2018, down from 5,540 in the year-ago period.

However, Munich Re noted that the second half of the year usually brings higher losses, such as in 2017 when hurricanes Harvey, Irma and Maria pushed overall losses for the year to $340 billion.

The first half of the year was marked by windstorms and cold weather in Europe and North America. The most destructive event was Storm Friederike, which swept across the United Kingdom, northern France, Belgium, The Netherlands, Luxembourg and Germany in mid-January.

Thousands of buildings and motor vehicles were damaged and long-distance train travel in Germany was disrupted after uprooted trees had torn down the overhead lines in many places.

Overall losses totaled $2.7 billion, of which $2.1 billion were insured, reflecting the high insurance density of windstorm coverage in Europe. Roughly two-thirds of the losses occurred in Germany, Munich Re said.

North America was hit by several widespread snowstorms, or Nor’easters, from the end of February to mid-March. The most destructive event was a blizzard in the first week of March, which caused overall losses of $2.2 billion, of which $1.6 billion was insured.

In total, Munich Re said, winter losses in Europe came to $4.8 billion, of which $3.6 billion was insured. The winter in North America caused overall losses in the first half of the year totaling $3.8 billion and insured losses of $2.7 billion.

In Guatemala, more than 100 people were killed, with many more still missing, after the volcano Fuego erupted in June.

Munich Re Board Member Torsten Jeworrek said in a statement that “looking at a short timespan may distort the true picture.”

“The most important thing is to understand the long-term developments,” he said. “That is why we must continue to make every effort to understand the background to natural disasters and provide safeguards against them in the form of intelligent prevention measures.”

 

New ILS deals forthcoming for UK

Insurance-linked securities players are likely to transact at least two deals using the U.K.’s new ILS regulatory regime, Artemis.bm reports citing sources. The transactions are likely to include a catastrophe bond and a collateralized reinsurance deal. The cat bond deal is likely to be completed this year while one of the transactions could be linked to a Lloyd’s of London syndicate, the sources said.

Business Insurance

6/18/2018 6:08:00 AM

 

Cyber attacks cost companies $72 billion: Report

A report by U.S.-based consultancy firm Frost and Sullivan Inc. and Microsoft Korea Inc. found that cyber attacks cost South Korean companies $72 billion in economic losses in 2017, Yonhap News Agency reported. The report found that around 90% of losses were indirectly related to loss of clients and damage to companies’ reputations. The report added that cyber-attack concerns have prompted 35% of local companies to delay moves to digitalize operations.

Business Insurance

6/18/2018 6:12:00 AM

Nissan embroiled in emissions-related misconduct- July 10, 2018

Japanese automaker Nissan Motor Co. Ltd. said that it had improperly measured exhaust emissions and fuel economy for 19 vehicle models sold in the country, Reuters reported. The automaker said that vehicle inspections at most of its factories in Japan were not in line with domestic standards. The misconduct does not impact vehicles exported overseas, Nissan added.

 

Business Insurance

7/10/2018 6:00:00 AM

US property/casualty rates rise in second quarter- July 9, 2018

Property/casualty rates in the U.S. rose 2.5% percent on average in the second quarter of 2018 compared with the first quarter, MarketScout said in a statement.

Commercial auto lines saw the steepest increase at 6%, according to the statement. Commercial property was up 4% for the quarter.

By industry class, transportation saw the largest increase at 6% in the second quarter, while manufacturing, energy and public entity saw the smallest at 2%.

“It’s hard to find a commercial insurer who hasn’t suffered from a book of auto/trucking risks in the past 10 years,” Richard Kerr, CEO of MarketScout, said in the statement. “There are fewer companies willing to write auto or trucking risks. The demand is exceeding the supply, so rates continue to trend upward.”

Other lines seeing second-quarter increases included business interruption at 2%, directors and officers liability at 2%, and employment practices liability at 3%, according to the statement.

Small accounts up to $25,000 saw a 3% rate hike in the second quarter, as did medium accounts ($25,001-$250,000). Large accounts ($250,001-$1 million) were up 2% and jumbo accounts (over $1 million) were up 1%.

The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout’s analysis of market conditions. These surveys help to further corroborate MarketScout’s actual findings, mathematically driven by new and renewal placements across the United States.

Matthew Lerner

7/9/2018 2:18:00 PM

 

Lawsuit puts a spin on shoplifting ordeals

Here’s something we don’t hear every day: shoplifters are now suing the stores they allegedly swiped goods from.

The claim? Extortion, according to the Bay Area’s NBC News affiliate reporting on a class-action lawsuit filed Monday in San Jose, California.

The suit alleges stores such as Walmart, Bloomingdale’s and Kroger are accusing people of shoplifting, then charging those customers money — in the form of a $400 online class — in exchange for not calling authorities, according to the news station.

The online class is provided by a Utah company called the Corrective Education Co. L.L.C., which gives stores including Walmart a finder’s fee for referring clients, according to the news station. Some 1,000 Californians alone have been affected, the attorney representing the unnamed claimants told reporters.

“I think it’s preying on people’s fear of the criminal justice system, preying on people who don’t have access to legal counsel,” attorney Joel Fleming, a partner with Block & Leviton L.L.P., told reporters. “It’s insidious and wrong.”

“Anytime you have the prospect of money not going to law enforcement, you run into issues involving extortion,” Mr. Fleming said. “So, many people may be paying these fees, even if they did nothing wrong.”

 

Business Insurance

July 3, 2018

Property/casualty insurance premiums up 2.8% in 2017: Swiss Re

Global property/casualty premiums increased by 2.8% to $2.2 billion in 2017, down from a rate increase of 3.3% in 2016 and just above the 10-year average of 2.1%, Swiss Re Ltd. said Thursday in a report.

The Swiss Re Institute’s recent sigma report, World Insurance in 2017, said the results are largely due to lower growth in emerging markets, particularly in China. Property/casualty premiums increased by 1.9% in advanced markets in 2017, up slightly from 1.7% from 2016 and well above the 10-year average of 0.9%.

China and North America were the biggest contributors to global property/casualty premium growth, each contributing 1% each, followed by Western Europe at 0.3%. U.S. property/casualty premium growth was roughly stable at 2.6%, where the industry was bolstered by higher auto rates.

The report noted that while there were slightly fewer catastrophes in 2017 than 2016, they inflicted significantly higher damage, totaling $337 billion, nearly double the prior year figure of $180 billion.

In April, Swiss Re reported that global insured losses from disaster events in 2017 were $144 billion, the highest ever on sigma records. Swiss Re said $138 billion of losses were from natural catastrophes and $6 billion from man-made disasters in 2017.

The biggest insured losses were related to the three hurricanes — Harvey, Irma and Maria —which together accounted for an estimated $92 billion.

The $193 billion difference between total and insured losses illustrates the large global protection gap for catastrophes, the report said.

“Looking ahead, we expect global life insurance premium growth to improve over the next few years,” the report said. “While advanced markets are expected to grow at a moderate pace, emerging markets are set to outperform, mainly driven by strong growth in China. Nevertheless, in terms of absolute volume, advanced markets will contribute around half of the additional future annual premium income over the next five years.”

 

Business Insurance

July 6, 2018

Preparing for the Hurricane Season – “A perspective from the Insurance Claims side”

I’m not much of a gambler, so I purchase a fair bit of insurance. Given the advances in climatology, the internet of things (IOT) and trends in severe weather occurrences, not having adequate property insurance is a gamble in which you will consistently lose.

The official hurricane season for the Atlantic Basin (the Atlantic Ocean, the Caribbean Sea, and the Gulf of Mexico) started on June 1st and runs until November 30th. The height of the season is between mid-August to late October but a dangerous hurricane can occur anytime during the hurricane season.

Beautiful Caribbean living comes with the caveat of the occasional hurricane. Although buying insurance isn’t the most attractive purchase, during hurricane season (and all year-round) consider it as more of a requirement, than an option.

One can argue some form of property ownership is unavoidable. Most of us prefer not to pay for hurricane damage to our property out of pocket. An even larger segment would prefer not to have a hurricane at all. Since hurricanes are becoming an unavoidable part of a Caribbean summer, risk transfer (insurance) the best alternative to protecting our beloved possessions.

Prior to the hurricane season is the ideal time to contact your insurance representative to confirm the details of your various policies. There’s still time to do this now, well in advance of a storm so that you have the opportunity to match your expectations to contractual reality. Be sure to confirm your policy coverage as well as key words and phrases within your policy. Look out for the following keywords:

Coinsurance, pro rata condition of average or average: is a term used when calculating a loss payment against a claim where the policyholder has undervalued the sum insured. This is often referred to as underinsurance. Underinsurance is when your insurance cover, or sum insured, is less than the specific value at risk.

Deductible/excess: a specified amount that has to be paid before your insurer will pay your claim. The specified amount can be expressed as a dollar figure or percentage of the sum insured

Mitigate loss: the spirit of the term in law is that a party who has suffered a loss (in our scenario under contract) has to take reasonable action to minimize the amount of the loss suffered. This may mean any reasonable measure taken to protect your property from further damage.

After realizing the impact of Hurricanes Irma and Maria, hurricanes shouldn’t come as a surprise to anyone.  With the plethora of storm tracking apps and dedicated websites, anyone with a mobile phone or data connection can become their own neighborhood or family storm tracker.  It is with these tools that you take further control of your timely preparation.

Don’t be afraid to ask your insurance representative a few tough questions. Knowing whether they have a disaster recovery plan, or how then plan to service you after a storm better informs you of how you will be serviced following a hurricane.

The single most important step in hurricane preparation is to have your property appraised to understand current rebuilding rates. You can only insure your home or building for the rebuilding cost not market value in the context of real-estate sales.   Following Irma and Maria and to some extent Matthew, it was painfully evident many homes were not insured to value. Construction/rebuilding costs change over time. Following the passing of a hurricane, simple rules of economics come into play. The shortages of qualified and capable contractors in addition to readily available supplies drive up repair cost. This immediate inflation goes unchecked by local governments in a seemingly free-for-all by certain contractors. This often leaves the insured in a difficult position.

That said, the prudent home owner will have their buildings appraised, and then annually track the cost per square foot to rebuild and make the necessary adjustments to your policy. Maintain an adequate sum insured and you will eliminate the likelihood of average being applied to your claim, therefore leaving the contractor and your insurance representative to work out repair cost differences.

After the passing of a hurricane the following are suggested steps in improving your insurance experience.

  1. Inspect the interior and exterior of your home noting storm related damages
  2. Where possible begin loss mitigation efforts
  3. Create separate listings for the interior and exterior detailing the damages seen
  4. Contact your insurer via phone or complete a notice of loss form to be submitted
  5. Locate a contractor to provide a repair quote(s) to be submitted to your insurance representative
  6. Be patient, but speak up if your home is uninhabitable

It is critical that consumers understand the frailties of your local infrastructure. Flooding risk, organized crime, flat topography, limited telecommunications, and relative isolation play a critical role in how quickly Governments and businesses alike are able to resume operations. This again points back to managing expectations and adequate preparation.

Keep in mind that most insurers will not be inclined to provide you with property coverage days before a hurricane is due to impact your island. The good news is, there are still months of hurricane season left. The better prepared you are now, the less you will have to worry about later.

 

 

Larenzo Ratteray

Vice President – claims

BF&M Ltd., Bermuda

 

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