The Role of Property/Casualty Insurance in Catastrophic Events

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"The Role of Property/Casualty Insurance in Catastrophic Events" - Sandra G. Parrillo, CPCU, President and Chief Executive Officer, The Providence Mutual Fire Insurance Company

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The Role of Property/Casualty Insurance in Catastrophic Events

  1. 1. Insurance and Hurricanes Sandra G. Parrillo, CPCU
  2. 2. Inflation Adjusted US Insured CAT Losses by Cause of Loss, 1989-2008* 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C Source: PCS division of ISO. Hurricanes Account for Nearly Half of All Insured Catastrophe Losses Over the Past 20 Years
  3. 3. Top 12 Most Costly Disasters in US History 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C (Insured Losses, 2009, $ Billions) Sources: PCS; Insurance Information Institute inflation adjustments. 8 of the 12 Most Expensive Disasters in US History Have Occurred Since 2004; 8 of the Top 12 Disasters Affected FL Hurricane Katrina Remains, By Far, the Most Expensive Insurance Event in US and World History
  4. 4. Number of Hurricanes Directly & Indirectly Affecting the Northeast Since 1900 Tropical cyclone activity in the Northeast is not all that uncommon Source: New Hampshire Office of Emergency Management RI has been affected by 33 hurricanes since 1900
  5. 5. <ul><li>Source: WeatherUnderground.com </li></ul>Hurricane of 1938 <ul><li>Great New England Hurricane </li></ul><ul><li>September 10-22 </li></ul><ul><li>600+ deaths </li></ul><ul><li>$308 million in damage </li></ul>
  6. 6. Storm Season 1944 Source : WeatherUnderground.com Three storms affected New England *46 deaths * $100 million damage
  7. 7. Storm Season 1954 <ul><li>New England hit by Carol, Edna & Hazel </li></ul><ul><li>Carol: 8-10 ft floodwaters in Providence </li></ul><ul><li>Edna hits Cape Cod </li></ul><ul><li>Combined: 80 deaths </li></ul><ul><li>$501 million in damage </li></ul>Source: WeatherUnderground.com
  8. 8. Storm Season 1960 <ul><li>Hurricanes Brenda and Donna </li></ul><ul><li>148 deaths </li></ul><ul><li>$387 million in damage </li></ul>Source: WeatherUnderground.com
  9. 9. Storm Season 1985 <ul><li>Hurricane Gloria </li></ul><ul><li>September 27 </li></ul><ul><li>8 deaths </li></ul><ul><li>$900 million damage </li></ul>Source: WeatherUnderground.com
  10. 10. Storm Season 1999 Hurricane Floyd September 14-17 $4.5 Billion in damage Source: WeatherUnderground.com
  11. 11. 2010 PREDICTIONS <ul><li>PREDICTIONS </li></ul>
  12. 12. Outlook for 2010 Hurricane Season: 25 % Worse Than Average *Average over the period 1950-2000. Source: Philip Klotzbach and Dr. William Gray, Colorado State University, June 2, 2010. Average* 2010F Named Storms 9.6 18 Named Storm Days 49.1 90 Hurricanes 5.9 10 Hurricane Days 24.5 40 Intense Hurricanes 2.3 5 Intense Hurricane Days 5 13 Accumulated Cyclone Energy 96.2 185 Net Tropical Cyclone Activity 100% 195%
  13. 13. Landfall Probabilities for 2010 Hurricane Season: Very Active *Average over the past century. Source: Philip Klotzbach and Dr. William Gray, Colorado State University, June 2010. Average* 2010F Entire US East Gulf Coast 52% 76% US East Coast Including Florida Peninsula 31% 51% Gulf Coast from Florida Panhandle to Brownsville 30% 50% Caribbean 42% 65%
  14. 14. Lessons Learned from Hurricanes <ul><li>Importance of both strong building codes and effective enforcement. Insurers now incorporate this into rate making in all coastal states that way they take into account quality/proximity to a fire department. </li></ul><ul><li>Created a greater awareness of the importance of building and/or retrofitting a home to withstand a disaster. </li></ul>
  15. 15. Fortified Homes Survive Ike
  16. 16. <ul><li>The 2005 hurricane season (Katrina, Rita, Wilma) showed many people in flood zones failed to purchase flood insurance, many communities in harm’s way had failed to enforce building codes and there needs to be greater attention placed on land use patterns in areas most vulnerable to storm damage. </li></ul>12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C
  17. 17. 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C Fewer people now have a flood insurance policy than a year ago, especially in the Northeast and the West About a quarter from of Americans still believe their homeowners policy covers damage from flooding during a hurricane
  18. 18. Key Facts <ul><li>A new, well-installed roof is one of the best forms of protection available </li></ul><ul><li>Protecting all openings in exterior walls will greatly improve a building’s chances for surviving a hurricane </li></ul><ul><li>Securing loose roof shingles is critical </li></ul><ul><li>Sealing openings, cracks and holes will help prevent water damage </li></ul><ul><li>Strengthening soffits also helps prevent water damage </li></ul><ul><li>Limiting potential flying debris help protect your building </li></ul>Source: Institute for Business and Home Safety, www.ibhs.org
  19. 19. Common Myths <ul><li>Open the windows on the leeward side of the house so the air pressure doesn’t explode the building </li></ul><ul><li>You only need to protect the openings facing the ocean or bay </li></ul><ul><li>Tape windows with a big “X” </li></ul><ul><li>Leaning or pushing against a window or door that is being blown inward by wind pressure can help keep the window or door from breaking or opening. </li></ul>Source: Institute for Business and Home Safety, www.ibhs.org
  20. 20. Key Consumer Education Messages <ul><li>Review Insurance Coverage Before Hurricane Season </li></ul><ul><li>Create a Home Inventory </li></ul><ul><li>Take steps to Make Your Home More Hurricane-Resistant </li></ul><ul><li>Plan your Evacuation Ahead of time </li></ul><ul><li>Test your Evacuation Plan </li></ul>
  21. 21. THANK YOU Sandra G. Parrillo, CPCU President and CEO The Providence Mutual Fire Insurance Company www.providencemutual.com

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