Today is World Tsunami Awareness Day — designated by the United Nations General Assembly, and according to the United Nations Office for Disaster Risk Reduction (UNISDR), on average, tsunami events have a higher mortality rate than any other hazard. Over the past 20 years (1998-2017) tsunamis have claimed more than 250,000 lives and are also attributable for US$280 billion of the US$661 billion of total recorded economic losses for earthquakes and tsunamis. Between 1978-1997, tsunamis claimed 998 lives, and US$2.7 billion in losses. Overall, tsunamis are rare, but as the UN points out, when they occur they are deadly and hugely damaging. This infrequency makes building awareness and preparedness more of a challenge.
The UN has promoted World Tsunami Awareness Day since 2015, and the UN Secretary-General’s Special Representative for Disaster Risk Reduction, Mami Mizutori, stated that “…it is an occasion to promote greater understanding of tsunami risk to avoid future loss of life. This year we also want to bring attention to the economic losses tsunamis can inflict as a result of damage to critical infrastructure located along vulnerable, densely populated coastlines.”
With positive changes under way to improve both public and private carrier participation across the U.S. flood market, many are looking to seize the opportunity that the U.S. flood market presents. Insurers, reinsurers, and the capital markets are exploring this opportunity which, in turn, has created a thirst for knowledge. I had the opportunity to see this first-hand when I was invited by Trading Risk magazine to take part in a panel discussion at the Trading Risk ILS: Reloaded and Resurgent event in New York last month. Sofia Geraghty from Trading Risk served as our moderator, and Joanna Syroka, Director of New Markets at Fermat Capital Management, and Ian Hanson, Vice President of Willis Re, were also on the panel.
One point that the audience wanted to understand was the level of demand to take on flood risk from an investor’s viewpoint, and also whether U.S. flood risk can be a portfolio diversifier. From the insurance-linked securities (ILS) side, Joanna confirmed the demand is there, but as with any peril, the ILS market needs to be able to clearly understand and define the risk to get comfortable enough to invest.
I had the privilege of joining Property Casualty 360 for a Facebook Live video discussion last week, together with my colleague Wallace Hogsett, client manager at RMS. Danielle Ling, associate editor at PC360 was the host of the discussion, entitled “2018 Hurricane Season: Where Are We Now?”.
We began by providing a perspective on the impacts of this season’s hurricanes. The two big hurricane events to impact the U.S. in 2018 (so far) have obviously been Hurricanes Florence and Michael, but each possessed very different characteristics. Florence maintained Category 4 status on the Saffir-Simpson Hurricane Wind Scale (SSHWS) for around a week, before wind shear tempered it to a Category 1 as it made landfall near Wrightsville Beach, North Carolina on September 14. While many areas were subject to significant wind gusts and storm surge, Florence was primarily a flood event, causing historic rainfall and inland flooding throughout the Carolinas.
On the other end of the scale, Wallace stated how Michael was a classic intense hurricane — the most intense to make landfall in the U.S. since Andrew in 1992 — almost reaching Category 5 status upon its landfall in Mexico Beach on October 10. The scenes of structures reduced to their “slabs” with just their foundations left showed that this was primarily a wind and storm surge event. In total, damages stretched from the Florida Panhandle region through the Southeast and the Carolinas.
The effective use of data is so important to every insurance business — especially as big data and analytics are seen as a “silver bullet” for transformation. But to get on this transformative journey, your approach to data in your business may have to change. The traditional view of data focuses mainly on data collection and storage: how to collect, store, access and arrange the data, with rules and procedures to achieve this.
There is a tendency to separate data from analytics. If you think of data analytics, the image may be of the hard-pressed team of analysts and IT specialists, working to tight deadlines, “mining the data” to deliver the core reports that the business needs.
If any of the above rings true, you may need to change your mindset. First, for data collection and storage, the cloud has revolutionized the way data is stored, accessed and managed, offering high capacity and high availability, all typically on a pay-as-you-use basis. Historically, this is where much of the investment in this area went. But with the cloud, the burden has lifted as businesses now do not need to become experts in data storage or to plan, build and manage data centers, which were seen as critical in-house infrastructure in the past.