The Risks of Hazard

Summer is here, and in the Pacific Northwest and Western Canada, it really feels like it. Record highs are being set all over the region, the Calgary Zoo is closed so the animals can be cooled, and the wildfires are burning.

The most newsworthy wildfire so far is the Sleepy Hollow wildfire in Wenatchee, WA. It's burning homes and industrial buildings, and as of today is only 10% contained. It will get bigger before it gets smaller.

Two weeks ago, I wrote a post that explored the May 2015 Houston floods and suggested some lessons that might be offered by the events. This topic attracted a large audience and generated a lot of questions and discussion. In my conclusion, I suggested that carriers might consider creating a flood analytic specifically for this city.

With Tropical Storm Bill currently bearing down on Texas, today I will take a closer look at how a carrier or underwriting group could use Intermap's risk assessment software, InsitePro, to build a new analytic to handle "Houston Flood" as a distinctive peril.

Now that 2014 is far enough in the past, we can read summaries about the natural catastrophes that affected global insurance. Let’s explore some of the more interesting facts from last year regarding insured losses.

First of all, it was a very quiet year for natural catastrophes. There was no major event that will define the year 2014, unlike 2011 (Thailand Floods, Tohuku), 2013 (Sandy), or of course 2005 (Katrina). In fact, no event was close to the Top 40 events of the past 45 years in terms of insured losses. As is usual when there is no major hurricane or earthquake, convective storm was the natural peril that caused the most damage to insured property.

The tragic flooding in Houston over the past few weeks has been well covered by the global media, as one would expect when the 4^th largest city in the United States is submerged under water. Property insurers are obviously concentrating on claims right now, helping their customers through this traumatic time and getting them ready to rebuild their lives. But as the facts and statistics begin to emerge, it is also interesting and instructive to explore how the risk of events like this can be adequately understood for underwriting and accumulation control by insurers.

In publications and websites devoted to risk, there is a distinct sub-genre of articles that can be called “Predicting Mega-Disasters.” A mega-disaster is a natural catastrophe that wreaks unprecedented destruction — either by an event of never-before-seen force, or a severe event that impacts an increasingly vulnerable population. Here are just three recent examples of these mega-disaster prediction articles: