The Risks of Hazard

AM Best has had some really compelling videos on their site this week, including this clip from Tuesday that showed us the future of underwriting through the crystal ball of Gail McGiffin of Ernst & Young. She and Meg Green discuss what property insurance underwriters of the future will be expected to do and how they will do it.

On AM Best’s online TV channel, there is an interesting story featuring Philadelphia Insurance Company’s joint effort with the Arbor Day Foundation to plant 80,000 trees in an area of Texas that has been devastated by wildfire. (Click here to watch the full video.) I sent the link to my friend Chris White, of Anchor Point in Boulder (creators of the No-HARM model for wildfire risk) to get his perspective on the initiative through the lens of wildfire risk.

In the United States, ZIP codes are universally understood proxies for location. People often instantly recognize an address’s state or region from the first digit or two, and sometimes a full ZIP becomes well known (e.g., 90210 for Beverly Hills).

But these days, ZIP codes do much more than route mail. They are used for things like credit card identity checks; demographic data collection by the U.S. Census; real estate pricing and marketing; and (incongruously) property insurance risk rating, accumulation, and reporting. That last one may come as bit of a surprise, so let's take a look at how insurance companies use ZIP codes — and whether or not their methods make sense. 

Have you heard it’s raining in California? Los Angeles has broken precipitation records for July, and there have been flash floods throughout southern California and Arizona. The Angels even had a ball game rained out for the first time in over 20 years. The moisture has helped with the drought and a bad wildfire season, but it has added to the headaches of property insurers writing in California. Weather from the west coast is regularly newsworthy, but this past week has been extraordinary. How weird has it been? It even snowed in the Sierra Nevada this week.

It’s time to take a second look, as promised, at last month’s Inside the Minds of Insurance Innovators, a Q & A session about innovation that features 16 leaders within the insurance industry. Published by Carrier Management, it provides a rare and real opportunity to consider industry ideas that are both common and unique. This post is dedicated to the latter, highlighting the three responses that stood out to me the most.