Hurricanes Harvey, Irma and Maria (HIM) tore through the Caribbean and U.S. in 2017, resulting in insured losses over US$80 billion. Twelve years after Hurricanes Katrina, Rita and Wilma (KRW), EXPOSURE asks if the (re)insurance industry was better prepared for its next “terrible trio” and what lessons can be learned.
Yasunori Araga, managing director – RMS Japan
Christine Ziehmann, vice president – Model Product Management, RMS
On June 14, RMS Japan welcomed 119 insurance professionals to its fourth In:Site conference — a record total, high-up on the twenty-sixth floor of the Sanno Park Tower in Tokyo, with the RMS Japan headquarters also based in this building.
Yasunori Araga, managing director of RMS Japan opened the afternoon event, and introduced an agenda that was highly relevant to the core concerns of RMS clients, from domestic issues such as earthquake risk in Japan, to the flooding and related losses following Hurricane Harvey in 2017. The agenda also explored the impact of modeling on one of the oldest lines of business — marine, and right through to one of the newest with cyber. The event attracted insurance professionals from multiple departments of insurance companies, such as reinsurance, risk management, property underwriting, casualty underwriting, marine underwriting, international and more.
With the 2018 Atlantic hurricane season underway, the (re)insurance industry is still reflecting on the events of last year. The 2017 season will be remembered as one of the most active, damaging, and costliest seasons on record, and specifically for the impacts of three storms: Harvey, Irma, and Maria.
RMS followed its longstanding strategy of delivering thoughtful and thorough analysis of all available data sources when responding to the events of 2017, including the use of instrumentation and in-person RMS staff research and reconnaissance.
For Harvey, we provided insight into our event response with regular updates from across the organization and outlined how we deployed the new RMS® U.S. Inland Flood HD Model in real-time to support a pipeline of flood deliverables for our clients. And for Maria, the use of the latest modeling innovations, up-to-date exposure and vulnerability data supported by on the ground presence and local knowledge helped us to provide clients with a clearer picture of post-event losses across the islands impacted.
There is nothing quite like a “banging EP” to make me feel young again. But that wasn’t the only aspect of my most recent trip to Miami that brought out the millennial in me.
If you missed Exceedance 2018 a few weeks back, you probably also missed Resilience 2018. Embedded every year within Exceedance, RMS holds a space for policymakers and business leaders to collaborate to a very important end: ensuring local communities and regional economies are resilient to the shocks and stresses they face.
Much has been written about how millennials seek work that is meaningful (Schullery, 2013); work which solidifies their self-efficacy (Chalofsky + Cavallaro, 2013). I also blog about the relationship between aims and actions; between purpose and profit.
And there’s some truth in the generational stereotypes. After all, research suggests that impact investing continues to “skyrocket.”
It has been a brisk start to the Pacific Hurricane Season. Within the first two weeks of June, there have already been two hurricanes off the Pacific Coast of Mexico recording Cat 4 maximum sustained winds on the Saffir-Simpson Scale. On June 7, Hurricane Aletta, tracking far off the coast of southern Mexico, saw a period of rapid intensification with winds doubling to 140 miles per hour (220 km/h) within 24 hours before weakening and dissipating. The second named hurricane, Hurricane Bud had a similar intensification, going from 50 miles per hour (80 km/h) on June 10, to 132 miles per hour (212 km/h) some 24 hours later. Bud’s legacy now looks to be a weekend of heavy rain over the Baja California peninsula. For the North Atlantic Hurricane Season, the hurricane tally stays at zero.
So, lots of activity already in the Pacific, but overall, how different is storm activity on the Pacific compared to Mexico’s Atlantic Coast? RMS estimates that for Mexico, around 40 percent of the annual average loss from wind comes from the Pacific. To evaluate the complete hurricane risk for Mexico, the upcoming Version 18 release of the RMS® North Atlantic Hurricane Model will model both the Atlantic and Pacific coasts.
The first full day of Exceedance clearly set the direction that RMS is taking towards transformation — as a strategic partner helping clients to succeed in a time of rapid change. Karen White, chief executive officer for RMS, made her keynote debut on the Exceedance stage, sharing her background working with technology companies during similar game-changing times, and expressing her excitement of the here and know and what lies ahead.
On July 8 last year, the U.K. Prime Minister, Theresa May, announced her intention to establish the Centre for Global Disaster Protection.
The big idea: capitalize on the City of London’s expertise in financial services in order to help the governments of developing countries become more resilient to natural disasters, using risk transfer, where appropriate, to avoid humanitarian crises and augment disaster aid.
Later that month, Lord Bates, the U.K. Government Minister of State for International Development, shared more color on the Centre’s remit. Addressing the International Insurance Society, he explained:
“It is about investing in the data, research and cutting-edge science to analyze risk and design systems that work well for the poorest people. It is about providing training and sophisticated analytics.
It is about pre-disaster planning, including bringing vulnerable people into the dialogue on how support should flow in an emergency.
It is about providing neutral advice — supporting countries in making decisions about which financial instruments are right for them.
It is about innovation — looking at new ways of working and building new collaborations across the finance and humanitarian communities, to design financial instruments that work for developing countries.”
Lord Bates’ address also highlighted the analytical role RMS played in the U.K. Government’s decision to create the Centre.
Climate modeling studies generally agree that anthropogenic climate change will likely cause tropical cyclones globally to be more intense on average, and that the most powerful ones will become more frequent. In response, climatologist Michael Mann (particularly well known for his so-called “hockey-stick” temperature graph) recently advocated the introduction of a sixth category to the Saffir-Simpson Hurricane Wind Scale (SSHWS), in order to better describe the very strongest storms. According to Mann, sturdier construction practices mean that Category 5 storms no longer all cause near-total destruction of human infrastructure and introducing a Category 6 would increase public awareness of the effects climate change is having on tropical cyclone strength. Mann is not the first to propose introducing a Category 6; after powerful tropical cyclones make landfall this is frequently deliberated. Before wading into this debate however, let us look at the SSHWS itself.
RMS has released its 2017 North Atlantic Hurricane Season Review documenting one of the most active, damaging, and costliest seasons on record. The 2017 season saw a total of 17 named storms, with ten of these storms reaching hurricane strength and occurring consecutively within a hyperactive period between August and October. The season will be remembered for its six major hurricanes and specifically for the impacts of three of these storms: Harvey, Irma, and Maria.
The islands of the Caribbean have a problem. The air and earth around them is unforgiving. They are some of the most hazardous places on the planet.
What makes many of these islands so beautiful and dramatic also reflects the catastrophic processes that have built the terrain — the earthquakes, eruptions, floods, and landslides. And these catastrophic processes in turn affect the island economies.