Along with January renewals and analyzing whether existing policies offer sufficient coverage, the new year is a perfect reminder to review company-wide emergency plans. While 2013 may have been a relatively light year for catastrophe losses, there’s no reason to assume 2014 will be, too.
Check out this infographic from Boston University’s Masters in Specialty Management program for a jump-start on identifying the risks of natural disaster and updating plans for how to handle any emergency:
Weather damage never goes out of season. According to a new report from the Insurance Information Institute (I.I.I.), winter storms are historically the third-largest cause of catastrophe losses, behind only hurricanes and tornadoes.
“Winter storms accounted for 7.
1 percent of all insured catastrophe losses between 1993 and 2012, placing it third behind hurricanes and tropical storms (40 percent) and tornadoes (36 percent) as the costliest natural disasters,” said I.I.I. President Robert Hartwig.
Between 1993 and 2012, winter storms resulted in about $27.8 billion in insured losses—or $1.4 billion per year, on average, according to Property Claims Service for Verisk Insurance Solutions.
A December ice storm in North Texas left at least $30 million in residential insured losses in its wake, the Insurance Council of Texas reported. This figure does not include estimated damage to vehicles or government property, nor does it take into account the significant municipal expense of safety or cleanup measures. Dallas County alone spent 0,000 to 0,000 just to battle slick roads, according to conservative estimates from County Judge Clay Jenkins.
He told Insurance Journal that, while sanding and salting roads constituted some of the county’s greatest efforts, the biggest cost came from closing offices, including the court system. Weather-related shutdown resulted in lost productivity of about .
5 million, he said.
Nation-wide, December weather caused total economic and insured losses estimated in the hundreds of millions of dollars and claimed 29 lives, Aon Benfield reported.
But 2013 should have made some fair-weather friends in the insurance industry. Last year, according to Munich Re, direct overall losses caused by global disasters amounted to around $125 billion and insured losses of around $31 billion. While exceptionally costly, these were below the 10-year averages of $184 billion and $56 billion, respectively.
Windstorm Xaver: Model shows a large area of high winds in the lower atmosphere pushing waters of the North Sea into the coasts around western Europe.
Courtesy WeatherBELL Analytics.
Natural catastrophes and man-made disasters worldwide reached $44 billion in insured losses in 2013—down from $81 billion in 2012, according to a Sigma preliminary report by Swiss Re.
The study found that total economic losses from disasters in 2013 totaled $130 billion and 25,000 lives were lost. Hurricane Haiyan alone, which hit the Philippines in November with record-breaking winds, claimed more than 7,000 lives. In 2012 total economic losses were $196 billion and 14,000 lives were lost.
Flooding in central and Eastern Europe in June 2013 created overall losses of $18 billion, with insured losses estimated at $4 billion, according to the report.
In the United States, severe spring and autumn weather spawned thunderstorms and deadly tornadoes.
While this caused devastation of personal and commercial properties and heavy losses to the insurance industry, the 2013 North Atlantic hurricane season proved to be benign, the report found.
Alberta, Canada in June experienced flooding caused by heavy rains. Insured losses were about $2 billion—the highest ever recorded in the country for any disaster.
The most costly insured catastrophe losses in 2013
| Date | Insured losses (US $B) |
Economic losses (US $B) |
Event | Country | |||||
| 1 | June | 4.1 | 18.0 | Floods | Germany, Czech Republic | ||||
| 2 | July | 3.4 | 3.8 | Hailstorm Andreas | Germany, France | ||||
| 3 | June | 1.9 | 4.8 | Floods | Canada | ||||
| 4 | May | 1.8 | 3.2 | Severe thunderstorms, tornadoes | US | ||||
| 5 | March | 1.6 | 2.2 | Thunderstorms, tornadoes, hail | US | ||||
| 6 | May | 1.4 | 2.0 | Severe thunderstorms, tornadoes, large hail | US | ||||
| 7 | October | 1.4 | 2.7 | Windstorm Christian | Germany, Denmark | ||||
| 8 | April | 1.1 | 1.6 | Snow storm, ice, tornadoes, heavy rains | US | ||||
| 9 | December | 1.0 | 1.4 | Windstorm Xaver | UK, Denmark | ||||
| 10 | January | 1.0 | 1.5 | Floods caused by Cyclone Oswald | Australia |
Swiss Re Sigma preliminary estimates
Who knew A Christmas Story was so full of dangerous and costly risks? Think about it. A “double dog-dare” could have led to a disasterous school yard injury and we all know what can happen when kids play with BB guns.
Lockton, which recognized the huge risks involved, has published a white paper examining these and other risks in the classic movie. They have even gone a step further, outlining the potential costs of coverage.
For example, consider this: unsupervised children left to amuse themselves on an icy cold playground.
“Winter is filled with fun, but also dangerous with recess activities like snowball fights and playing tag on icy blacktops. Even with the best of intentions, some injuries are unavoidable and parents are bound to hold the school liable,” according to the report, Ralphie’s Risk Management Story: An Insurance Perspective on the Holiday Classic, “A Christmas Story.” Cost of insurance for this risk? A policy with limits of ,000 for each individual—with a premium cost of 0.
And who could forget the “priceless” leg lamp, won through a newspaper sweepstakes, but broken during a “vacuuming accident?” In this scenario it’s Lloyd’s to the rescue with $1 million in coverage and a premium of $5,000.
But wait, there’s more. The paper looks at exposures including shipment of Ralphie Parker’s pink bunny suit; workers compensation for employees of the Chop Suey Palace—where a worker cuts his finger preparing the Parkers’ Christmas dinner; the Parker home and automobile risks; Santa’s infamous slide at Higbee’s Department Store; and the risks of a Red Ryder BB gun misfire. Now that’s a lot of risk, but fortunately, all manageable.
Happy Holidays!
