Property Insurance Trends - Extreme

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Published on March 10, 2014

Author: genreperspective

Source: slideshare.net

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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.

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

Sources: 1. PCS, iso.com 2. PCS – Top 20 List, iso.com making it the 14th most costly disaster in U.S. history.2 Therewerecostlyweathereventsin theUnitedStates betweentheyears2010 to 2012 Flooding from Hurricane Irene led to much of its $4.3 billion insured loss,1

Therewerecostlyweathereventsin theUnitedStates betweentheyears2010 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.

$1 billion each event. Over 11 thunderstorm and tornado events occurred with insured values in excess of Therewerecostlyweathereventsin theUnitedStates betweentheyears2010 to 2012

Sandy ledto significantpolicyand Underwritingissues: FEMA maps were out of date and did not accurately mark flood zones.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.

Sandy alsocreatedoverwhelmingclaims, causing legislative proposalsthatcould changetheway claims are handled. Sources: "Sandy Poweroutage 1.jpg" by Hybirdd / CC BY-SA 2.0.

Theseproposals 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

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

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

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. GlobalPerspectiveon CatastrophicEvents: EarthquakesinChileand NewZealand

GlobalPerspectiveon CatastrophicEvents: Thailandflood andJapan 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.

GlobalPerspectiveon CatastrophicEvents: Thailandflood andJapan 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.

GlobalPerspectiveon CatastrophicEvents: Thailandflood andJapan Earthquake Access to insured buildings was a problem, delaying assessment and business interruption time and scope.

GlobalPerspectiveon CatastrophicEvents: Thailandflood andJapan Earthquake Sources: RMS, PropertyCasualty360. The estimated loss was between $10 billion and $20 billion, making it the largest fresh water flood event in history.*

Summary: LessonsLearned Insurers’ profitability will continue to be significantly influenced by extreme global weather patterns.

Summary: LessonsLearned Preparing, planning and implementing a catastrophe plan is necessary to respond to a natural disaster.

Summary: LessonsLearned Timely and effective catastrophe claim handling will aid policyholder retention and minimize the likelihood of reactionary legislation.

Summary: LessonsLearned There are issues that can impact claims dollars paid, including: scope of coverage, event facts, underinsurance, sublimits, policy language and regulatory changes.

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 michael.griffin@genre.com +1 203 328 5526 We welcometheopportunity to helpyou meetthesenew challenges. John Harmonay jharmon@genre.com +1 203 328 5498 Sue Stein sstein@genre.com +1 203 328 5495 Geoff Piggot gpiggot@genre.com +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. E P E P E P E P

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