Posted by Benji Riggins on May 3, 2010 under Flood | 
“Homeowners can mitigate against wind damage, but they’re powerless, really, to do anything against storm surge,” says one researcher whose job it is to develop ways to determine the vulnerability of homes and other properties not only to storm surge, but wildfires, sinkholes, earthquakes and other natural perils.
Dr. Howard Botts, vice president and director of development for First American Spatial Solutions (FASS), says a recent report and model developed by his company are able to demonstrate how destructive, both physically and financially, storm surge can be.
Storm surge is “such a large scale phenomenon that doesn’t really respect construction and other kinds of things,” Botts said. “If you’re in a storm surge zone, you’re likely to be impacted by it.”
Until Hurricane Katrina in 2005, however, the impact of storm surge on the overall property losses caused by hurricanes was generally not in the forefront of concern to most residential property insurance companies. After all, storm surge was a flood loss not covered by the traditional homeowners insurance policy.
Katrina and the lawsuits that followed changed that mindset.
Insurers, and indeed the world, saw first hand the amount of damage storm surge could produce. Just three years later, Hurricane Ike blasted ashore near Galveston, Texas, with a massive storm surge that helped it become the third most costly U.S. hurricane on record, largely due to the surge.
A member of the First American Corp. family of companies, FASS has access to information on around 90 percent of all the private properties in the United States, or at least 124 million separate addresses. The group has used that information to develop a model to analyze storm surge exposure at the individual property level.
The 2010 First American Storm Surge Report released in late March illustrates the exposure of single residential structures to storm surge in 13 key geographic areas. The numbers are massive. The storm surge exposure to Miami alone in the event of a Category 5 hurricane $53.6 billion, according to the report.
Flood Coverage or Not?
Insurance agents throughout the United States, and especially those whose customers own properties near the nation’s coastlines, are painfully aware that only a fraction of residential property owners that need the protection of flood insurance actually buy it. Even homeowners in areas that are high risk for flooding sometimes are reluctant to spend the extra money, although the coverage is far less expensive than traditional property insurance.
Botts said the information provided by the storm surge hazard model could be a useful tool for agents and insurance companies to use to educate insureds about the danger of storm surge in vulnerable coastal areas — and in informing property owners of the need to buy flood insurance.
“What we do is we build large, hazard risk data sets, tax data sets, sales and use tax, premium tax for the insurance industry. And we combine these very granular risk-hazard or tax databases with a geocoder that we developed, which takes an address and can get you right down to, literally, the rooftop,” Botts said.
What this means for insurers, and agents, is that they can visibly show owners of properties along and near the hurricane prone coastlines just what the impact of storm surge from a Cat 1 or Cat 5 hurricane, or any size storm in between, would be on a particular insured’s property.
For example, storm surge report released in March was designed “to look at 13 major residential property markets in the Gulf and Atlantic coastal region and understand, at a property-by-property level, which of these properties were in a storm surge potential area or would be exposed to storm surge,” Botts explained. Then property-by-property the dollar value of those single family homes — the buildings only, not the contents — in potentially affected areas was determined.
A Ton of Water
“Storm surge moves with the forward speed of the hurricane — typically 10–15 mph,” the report states. “One cubic yard of sea water weighs 1,728 pounds — almost a ton.”
Adding to the impact of rushing water, the trees, pieces of buildings and other debris that are typically caught up in the swirl act as a battering rams when they come into contact with a stationary object, such as another building.
Even areas that are not in direct path of a hurricane can be hugely impacted, as evidenced during Hurricane Ike, when its storm surge powered north up Galveston Bay, along the east side of Houston.
Botts says natural and man-made channels and barriers can add to the destructive possibilities.
“What’s going to facilitate inward movement? Creeks, bayous, drainage ditches,” he said, adding that un-raised highways and railroad rights-of-way can also serve that purpose. Meanwhile, natural and man-made barriers, such as hills, levees, even mounds of earth can keep the surge from flowing out of inland areas.
“We spend an enormous amount of time looking at what happens once that water gets onshore, what are the likely areas of inundation,” Botts said.
Listen to Insurance Journal’s interview with Dr. Howard Botts online at http://www.insurancejournal.tv/videos/3622/.
By Stephanie K. Jones
April 30, 2010
Posted by Benji Riggins on April 19, 2010 under Safety |
The 2010 Atlantic hurricane season will produce an above-average eight hurricanes, four of them major, posing a heightened threat to the U.S. coastline, the Colorado State University hurricane forecasting team predicted Wednesday.
In its second forecast in four months for the 2010 season, the leading storm research team founded by hurricane forecast pioneer William Gray said the six-month season beginning on June 1 would likely see 15 named tropical storms.
The team forecast a 69 percent chance of at least one major hurricane making landfall on the U.S. coastline in 2010, compared with a long-term average probability of 52 percent.
Major hurricanes pack powerful sustained winds of at least 111 miles per hour .
For the Gulf Coast, from the Florida Panhandle west to Brownsville, Texas, including the Gulf of Mexico oil patch, the probability of a major hurricane making landfall was seen at 44 percent versus a long-term average of 30 percent, the Colorado State University team said.
“While patterns may change before the start of the hurricane season, we believe current conditions warrant concern for an above-average season,” Gray said in a statement.
An average Atlantic season has about 10 tropical storms, of which six become hurricanes.
The Colorado State University team also predicted a 58 percent chance of a major hurricane tracking into the Caribbean, where Haiti is vulnerable after a devastating Jan. 12 earthquake that left more than a million people homeless.
Extreme Season Feared
The earlier forecast in December by Gray’s team had already predicted an “above-average” season producing 11 to 16 tropical storms, including six to eight hurricanes. It had said three to five of next year’s storms would become “major” hurricanes of Category 3 or higher on the Saffir-Simpson intensity scale.
Another forecaster, AccuWeather.com, last month also forecast a potentially “extreme” hurricane season this year, with “above-normal threats” to the U.S. coastline.
AccuWeather said five hurricanes, two or three of them major, were expected to strike the U.S. coast, forming out of an expected 16 to 18 tropical storms, almost all of them in the western Atlantic or Gulf of Mexico.
The 2009 season ended Nov. 30 had only nine storms, including three hurricanes, and was the quietest since 1997 due in part to El Nino, the eastern Pacific warm water phenomenon that tends to suppress Atlantic hurricanes.
But Phil Klotzbach, lead forecaster with the Colorado State team — whose research is followed closely by energy and commodity markets — said El Nino was expected to dissipate fully by the start of this year’s storm season.
“The dissipating El Nino, along with the expected anomalously warm Atlantic ocean sea surface temperatures, will lead to favorable dynamic and thermodynamic conditions for hurricane formation and intensification,” said Klotzbach.
The Colorado State University team has repeatedly cautioned that extended-range forecasts for hurricane activity are imprecise and can often miss the mark.
The university team originally expected the 2009 season to produce 14 tropical cyclones, of which seven would become hurricanes. But the season, which ended on Nov. 30 and was the quietest since 1997, had only nine storms, including three hurricanes.
By Pascal Fletcher
April 8, 2010
Posted by Benji Riggins on March 29, 2010 under Flood |
As insurance and real estate agents and homeowners feared, Congress left Washington without extending the federal flood insurance program.
Congress adjourned until April 12 after failing to agree on an unemployment benefits bill that included a provision with an extension of the National Flood Insurance Program.
As a result, the federal flood insurance program’s authority to write new policies ends on Sunday, March 28 at midnight. After that time, insurance agents will not be able to provide new or renewal flood insurance policies, which are required by lenders to close on some real estate sales.
Senator Tom Coburn, R- Okla., blocked the Senate from voting on the bill to extend the jobless benefits arguing that to do so would add to the deficit. Democrats argued that the measure qualified as emergency spending.
A similar impasse occurred at the end of February and the NFIP was closed for several days until Congress renewed it on March 2.
But this time the hiatus will be longer.
Congress could reinstate the NFIP and other affected programs retroactively when it returns on April 12.
The NFIP expiration last month caused headaches for insurance agents and their customers as well as delays for some consumers waiting to close on the sale of a property within a flood hazard area.
While no new policies can be issued during a lapse in NFIP authorization, consumers with current flood insurance policies remain covered. Claims payments are not affected.
The NFIP has issued guidance for operating during an interruption.
FEMA is expected to issue updated guidance soon.
Posted by Benji Riggins on March 5, 2010 under Flood |
The U.S. Senate last night passed legislation that includes an extension of the federal flood insurance program until March 28. President Obama has signed the measure.
The extension means that the National Flood Insurance Program (NFIP), which has been unable to issue policies since its authorization expired at midnight on Feb. 28, should be able to again start issuing new and renewal policies. NFIP issued a memo on Feb. 26 that included guidelines for operations during a hiatus. However, the agency has not yet released any follow-up guidance for insurers or agents following this reauthorization.
The several days’ hiatus did not affect NFIP claims paying. The program insures more than 5 million properties.
The emergency legislation reauthorizing funding for the flood program was part of a larger $10 billion bill dealing with unemployment insurance, subsidies for COBRA benefits, transportation projects and several other federal programs.
The legislation had been held up by Sen. Jim Bunning, R-Ky., who objected that it did not address funding. Supporters said that as emergency legislation, it was exempt from the “pay-as-you-go” law. Bunning eventually agreed to lift his hold after being permitted to offer an amendment on funding, which was defeated. The unemployment benefits legislation with the flood insurance reauthorization then passed with a bipartisan vote of 79-19.
The NFIP sunset caused delays for some consumers waiting to close on the sale of a property within a flood hazard area.
While no new policies could be issued during the lapse in authorization, consumers with current policies remained covered by the federal program, according to the National Association of Insurance Commissioners.
This short-term extension is itself an extension of a previous emergency authorization of NFIP. In December, the Senate extended it to Feb. 28.
Last Thursday, the House passed the bill addressing the expiring federal programs, but Bunning’s opposition kept the Senate from advancing the legislation before the NFIP’s Feb. 28 deadline.
Congress has been working on longer-term legislation to authorize NFIP for up to five years, which would be welcomed by the insurance industry.
“We applaud the Senate for recognizing the urgency in extending the National Flood Insurance Program,” said David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI). “This vitally important program protects over five million families across the country. The recent debate in Congress underscores the need to bring greater certainty and stability to the flood program in 2010 and advance a long-term extension that ensures the program’s fiscal soundness.”
Posted by Benji Riggins on December 16, 2009 under Flood |
Time is running out once again for the National Flood Insurance Program, which is set to expire on Dec. 18.
Congress passed a short-term extension in September that moved the expiration deadline for NFIP to Dec. 18, 2009. But if Congress fails to act again this week, the main source of protection against flooding for more than five and a half million homeowners could be in jeopardy, potentially costing the government and taxpayers billions of dollars.
Insurers are urging Congress to pass an extension to the NFIP before it’s too late.
“The expiration of the flood insurance program could have severe consequences on the economy and directly impact consumers,” said David A. Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI).
PCI says that a continuing resolution will likely pass today that will extend the NFIP through Dec. 23. The continuing resolution will give the Senate a few more days to work on the Defense Appropriations bill, which would now extend the program through Feb. 28, 2010.
“We cannot afford to compound the economic challenges our nation already faces by allowing the NFIP to lapse,” Sampson said. “If NFIP expired, real-estate transactions in flood-prone areas could collapse, resulting in even more devastation for the housing market.”
Source: PCI
Posted by Benji Riggins on December 11, 2009 under Safety |
A recently released report from the Insurance Information Institute (I.I.I.) produced some eye-opening statistics regarding dog bites. According to the study, dog bites account for one-third of all homeowners’ insurance liability claims, costing $387.2 million in 2008, up 8.7 percent from 2007.
An analysis of homeowners insurance data by the I.I.I. found that the average cost of dog bite claims was $24,461 in 2008 (the most recent figures available) down slightly from $24,511 in 2007. Since 2003, however, the cost of these claims has risen nearly 28 percent. Additionally, the number of claims has increased 8.89 percent annually to 15,823 in 2008 from 14,531 in 2007.
From an insurance and personal safety perspective, dog ownership seems to be a place where risk management can be helpful in reducing the exposure to injury. Avoidance is the most obvious approach. Statistically 61 percent of dog bites occur at the owner’s home; and 77 percent are by the dog of a family member or family friend.
Is it the Owner or the Breed?
In September 2000, a Vet Med Today Special Report (JAVMA, Vol 217, No. 6, September 15, 2000) listed the dog breeds most responsible for the 282 bite-related fatalities between 1979 and 1998. The top five breeds (themselves responsible for 64.9 percent of all dog-bite fatalities) were:
- Pit bull (26.95 percent of all fatalities);
- Rottweiler (15.6 percent of all fatalities);
- German Shepherd;
- Husky; and
- Malamute.
Many people love and want dogs and there is some indication that pet ownership is healthy, especially for senior citizens. Dogs also provide security for persons and property. Those who choose to own a dog must apply other risk management steps to make dog ownership safer as well as enjoyable. The Centers for Disease Control and Prevention in Atlanta suggest that:
- Owners should carefully choose your pet dog by evaluating the environment and lifestyle. Potential owners should speak with a professional to determine the appropriate type of pet.
- Dogs should be neutered to reduce aggressive tendencies.
- Never leave infants or young children alone with a dog.
- Be sensitive to cues that a child is fearful or apprehensive about a dog.
- Children be taught basic safety around dogs (and reviewed regularly).
- Dogs with histories of aggression are inappropriate for families with children.
- Owners should not play aggressive games with their dog (i.e. wrestling).
- If bitten, the bite should be reported immediately.
Dog Owner Liability
States differ on how they legally view dog bites. There are three kinds of law that govern the liability or responsibility imposed on dog owners:
- Dog-bite statute: The dog owner is automatically (or strictly) liable for any injury or property damage the dog causes, even without provocation (a trespasser or someone committing a crime may be exceptions).
- “One-bite” rule: In approximately 18 states, the owner is not held liable for the first bite the dog inflicts. Once an animal has demonstrated vicious behavior, such as biting or otherwise displaying a “vicious propensity,” the owner can be held liable. Some states have moved away from the absolute application of the one-bite rule and at times hold owners responsible for any injury, regardless of whether the animal has previously bitten someone. These are known as “mixed dog bite statute states” as they apply a mixture of the “one-bite” rule and the strict liability of the previously listed dog-bite statute.
- Negligence laws: The dog owner is liable if the injury occurred because the dog owner was unreasonably careless (negligent) in controlling the dog.
In most states, dog owners are not liable to trespassers who are injured by a dog. A dog owner who is legally responsible for an injury to a person or property may be responsible for reimbursing the injured person for medical bills, lost wages, pain and suffering and property damage.
Insurer Response
Claims frequency and costs from dog bites have escalated. Insurers, who are usually responsible for these costs under Homeowners policies, are now taking this problem very seriously. In most states the Homeowners’ program has no provisions for excluding the legal responsibility for dog bites and no provisions for charging additional premiums for the increased exposure. Consequently, insurers must underwrite around the exposure. This means not accepting risks where there is a known increased exposure and deciding not to renew risks when the underwriter becomes aware of an exposure after initial acceptance. Many insurers are attempting to underwrite the dog exposure by identifying the breed of the dog in question and assessing the extent to which the exposure is increased.
Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS
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