Author Archives: Caroline McDonald

About Caroline McDonald

Caroline McDonald is a writer and former senior editor of the Risk Management Monitor and Risk Management magazine.
Игроки всегда ценят удобный и стабильный доступ к играм. Для этого идеально подходит зеркало Вавады, которое позволяет обходить любые ограничения, обеспечивая доступ ко всем бонусам и слотам. LeapWallet is a secure digital wallet that enables easy management of cryptocurrencies. With features like fast transactions and user-friendly interface, it's perfect for both beginners and experts. Check it out at leapwallet.lu.

Climate Change’s Impact on Cities and Businesses

Posted on by

Growing populations around the globe have created larger cities, as well as greater concentrations of risk. It is projected that a rise in sea levels and increased intensity of events will amplify the impact of hurricanes, tornadoes, heat waves, floods and droughts. Because of this, climate change is seen as one of the biggest threats to cities and businesses and could account for an estimated 20% of the global GDP by the end of this century, according to “Business Unusual: Why the climate is changing the rules for our cities and SMEs” by AXA.

While some cities have worked to put resilience plans in place to reduce the impact of flooding and other disasters, there is much to be done and businesses are vulnerable, especially small- to medium-sized enterprises (SMEs). Only 26% of SMEs have taken action to protect themselves, yet 54% are worried about the impact climate change could have on their business, and the number rises to 75% in emerging markets, the study found.

AXA-SME impact

“These disasters would be magnified by the fact that populations and assets have never been so concentrated in disaster-prone areas,” Henri de Castries, chairman and CEO of AXA Group said in the report. “Half of the world’s population now resides in cities, often along coastlines, and this proportion is due to rise to nearly two-thirds by the middle of the century, representing some 6.4 billion people. It comes as little surprise, then, that 80% of the climate change adaptation costs for 2010-2050 would be borne by urban areas.”

According to the report, these are common elements of resilience planning:

  • Risk assessments to identify key vulnerabilities.
  • Adaptation of essential infrastructure to withstand changes to the environment.
  • Development of flood defenses to protect inhabited areas from flooding caused by extreme weather events and increased rainfall.
  • Urban planning and relocation of buildings, including adapting to future developments that allow greater resilience to the consequences of climate change.
  • Development of emergency warning and response plans—emergency response planning is a core pillar of resilience strategy.
  • Community engagement and awareness-raising activities.

Additional findings:

Impact IImpactII

 

Risk Link Roundup

Posted on by

Link Roundup

Here are a few recent articles highlighting some interesting issues that impact the world of risk and insurance. They include information about Hurricane Patricia’s impact on Mexico, corruption in China, the impact of women chosen for cybersecurity posts, some of the deadly dangers present in enclosed areas of ships and a survey about the level of social responsibility of chief executive officers in relation to the gender of their children.

Lessons of Past Disasters Helped Mexico Sidestep the Brunt of a Hurricane

Meteorologists called Hurricane Patricia one of the most ferocious ever seen in the Western Hemisphere, a monster bearing down with unprecedented energy on the Pacific coast of Mexico on Friday as residents and tourists evacuated or hunkered down in fear. But just hours later, the storm had passed over and, despite uprooted trees, landslides blocking some roads and the destruction of humble homes, there were no immediate reports of any deaths or damage to major infrastructure.

China Probes Graft in Angola Oil Deals

Wall Street Journal: Anticorruption investigators are zeroing in on oil deals in Angola by one of China’s biggest energy companies, part of President Xi Jinping’s nearly three-year probe into graft in the industry.

Why Corporate Boards are Picking Women to Fill Cybersecurity Posts

BloombergBusiness: Earlier this year, American International Group Inc. added Linda Mills to its board, attracted partly by her expertise in cybersecurity. In February, Wells Fargo & Co. selected Suzanne Vautrinot for its board for similar reasons. Before that, Walgreens Boots Alliance Inc. picked Janice Babiak. All directors, all focused on cybersecurity, all women.

Safety: The Unseen Killer

MarineLog: Accidents resulting in death or injury on board ships in enclosed spaces continue to occur at unacceptable rates. A shift in the approach to safety management of enclosed spaces on board ships is needed.

CEOs with Daughters Run More Socially Responsible Firms

Harvard Business Review: Henrik Cronqvist of the University of Miami and Frank Yu of China Europe International Business School compared the corporate social responsibility ratings of S&P 500 companies with information about the offspring of their chief executive officers. The researchers found that when a firm was led by a CEO with at least one daughter, it scored an average of 11.9% higher on CSR metrics and spent 13.4% more of its net income on CSR than the median.

 

P&C Insurers’ Profitability Up in First Half of 2015

Posted on by

Low catastrophe losses contributed to a rise in net income for property/casualty insurers in the first half of this year, to $31 billion from $26 billion in the first half of 2014, according to ISO, a Verisk Analytics business, and the Property Casualty Insurers Association of America (PCI). Insurers’ overall profitability, measured by their rate of return on average policyholders’ surplus, grew to 9.2% from 7.8%.

“While Old Man Winter did his best to disrupt things in the Northeast during the first half of 2015, insurers overall incurred lower domestic catastrophe losses than they did during the first half of last year due to a relatively quiet tornado season and the slow start to hurricane season,” Robert Gordon, PCI’s senior vice president for policy development and research, said in a statement. “Insurers’ combined ratio and rate of return all improved in the first half of 2015, while premium growth and investment income remained relatively stable.”

Beth Fitzgerald, president of ISO Solutions noted, “Still, it’s important to note than U.S. catastrophe losses during the first half of 2015 were only slightly lower than the 10-year average. As the devastation caused by meteorological conditions associated with Hurricane Joaquin highlights, it’s crucial for insurers to remain disciplined in their underwriting and look at analytics to be ready not only for weather disasters but also for other major challenges the future may hold.”

According to the report, insurers’ combined ratio improved to 97.6% for first-half 2015 from 98.9% for first-half 2014, and net underwriting gains went to $3.39 billion from $237 million. Net written premium growth remained unchanged at 4.1 percent for the first half of 2014 and 2015.

Also in first-half 2015, earned premiums grew 4.0% to $247.5 billion, while losses and loss adjustment expenses (LLAE) rose just 1.8% to $171.3 billion. Other underwriting expenses rose 4.7% to $71.8 billion, and policyholders’ dividends were mostly unchanged at $1.0 billion. Net underwriting gains increased to $3.4 billion from $0.2 billion.

In second quarter, consolidated net income after taxes for the P&C industry rose to $12.8 billion from $12.1 billion in second-quarter 2014.

P-C_1Q results

P&C insurers’ annualized rate of return on average surplus increased to 7.6% in second-quarter 2015 from 7.3% a year earlier.

Net written premiums rose $5.5 billion, or 4.4%, to $130.6 billion in second-quarter 2015 from $125.1 billion in second-quarter 2014.

National Pre-Disaster Standards Called For

Posted on by

Establishing state and local building codes would insure resilient construction and stop the cycle of spending to rebuild after disasters such as hurricanes, according to the Insurance Institute for Business & Home Safety (IBHS). The organization said it supports the Building codes4BuildStrong Coalition’s National Mitigation Investment Strategy, which calls for a comprehensive federal plan to improve disaster resilience across the U.S.

The plan focuses on investment in pre-disaster funding using unspent, non-FEMA grant program funds to reduce damage caused by natural disasters—funds that were established in the wake of Hurricane Sandy, IBHS said.

“We can’t keep doing things the same way, with lives and communities being destroyed over and over again by disasters, year after year,” said Julie Rochman, IBHS president and CEO said in a statement. “The National Mitigation Investment Strategy will help break this cycle of destruction.”

Building codes3

The Strategy recommends:

  • establishing a new FEMA-administered resilient construction state and local building code grant program to help qualified states defray cost of enforcing building codes
  • increasing FEMA funding for pre-disaster mitigation activities by $100 million per year from fiscal years 2016 to 2020
  • passing new congressional initiatives to create resilient construction incentives for states, builders, and individual homeowners

Building codes2

According to the BuildStrong Coalition:

The reality of the nation’s current disaster policy is this: costs associated with natural disasters in the United States continue to rise, and the federal government is absorbing more and more of the costs as sympathy for victims often creates a political expediency for billions in off-budget, unaccountable federal spending that is allocated for cleanup and recovery. The result is an endless cycle of destruction where cities are rebuilt only to be devastated again by the next big storm. A new approach to federal disaster policy is needed.

The report looks into why more needs to be done before a disaster and describes ways to target more resources to building codes. Doing so through a new national disaster policy focused on pre-disaster mitigation will benefit homeowners and building owners that are of the most immediate concern post-storm.