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P/C Insurers Apply Lessons from Hurricane Katrina
June 2, 2009
The property/casualty insurance industry is employing advancements in catastrophe modeling and considering the impact of the creation of a national catastrophe fund as it applies lessons learned from Hurricane Katrina.
Experts on a panel moderated by Louisiana Insurance Commissioner Jim Donelon at the Casualty Actuarial Society's Spring Meeting in New Orleans discussed the post-catastrophe landscape in the city that was dramatically changed by 2005's Katrina.
Since Hurricane Katrina, catastrophe modeling firms and the property and casualty insurance industry have learned more about the scientific and actuarial nature of hurricane risk, experts say.
The current state of the science on climate change projects potentially less frequent, but more severe tropical cyclones, said John Rollins, vice president of AIR Worldwide Corp. Rollins added that research on the impact of climate anomalies on hurricanes has influenced modeling advances.
"The research of AIR and other modeling companies has tried to capitalize on climate science and adapt it into the parameters of the catastrophe models," Rollins said.
In validating the models, the 2004/2005 hurricanes provided unprecedented quantities of detailed claims data, Rollins said. He said that modeling firms review actual insurer storm claims data against modeled damage for the same locations and examine results by coverage, construction, and occupancy type.
For example, damage to pool enclosures, which are common in Florida and can cost between $10,000 to $50,000, accounted for about 15-20 percent of losses from these hurricanes. The average claim per unit of exposure was reported to be as much as 35 percent higher for homes with pool enclosures.
"We have to get a handle on what to charge for that because it's the type of thing that might fly under the radar of a catastrophe modeler and the industry until after an event," Rollins said.
Modelers are also in a unique position to help companies address exposure data challenges, he emphasized. They can do this by delivering commercial and residential property specific data, including replacement value, and enhancing the capture and use of quality exposure data at the point of underwriting.
Under Commissioner Donelon's leadership, the Louisiana market has even gotten stronger under the policies the commissioner implemented, says John Forney, managing director for public finance at Raymond James & Associates Inc. The management team Donelon hired at the state-run property insurer of last resort, Louisiana Citizens Property Insurance Corporation (LCPIC), has also been an asset, he added.
"The provision of insurance for natural catastrophes is not a science that is cast in stone," Forney said. "It occurs at the intersection of insurance, finance, economics and public policy and there isn't a huge realm of data that enables an actuary to pinpoint exactly how this whole business works and how it should work from both the financial and actuarial standpoint, as well as from a public policy standpoint," he said.
Forney listed some of the major catastrophes in the U.S. since Hurricane Andrew in 1992 that caused $15.5 billion in insured losses in South Florida and pointed out that seven of the 10 most costly catastrophes have occurred since 2004.
Forney said lessons learned include the extreme difficulty of insuring losses from natural catastrophes.
"Some might say they're impossible to insure," he warned, "they violate some of the fundamental standard conditions of insurability because they're infrequent, they're catastrophic, they unpredictable, and the losses are interdependent."
Forney said that these factors had resulted in an increasing trend toward government involvement in catastrophe insurance and reinsurance. He listed the creation of the Florida Hurricane Catastrophe Fund in 1993, the California Earthquake Authority in 1996, the Terrorism Risk Insurance Act in 2002, and the creation of state-run insurers in Florida (2002) and Louisiana (2003) as examples.
Commissioner Donelon said the creation of Louisiana Citizens Property Insurance Corp. has worked exactly as it was designed and has put the state in a better position than other states with similar programs, such as Florida and Texas.
"Those states, though, like Louisiana, are working to solve their problems but are also looking to the federal government to create a responsible safety net similar to TRIA to provide financial assistance, if needed," the commissioner added.
Addressing the hurricane peril in Louisiana in the post-Katrina landscape from a public policy standpoint, David Chernick, a consulting actuary for Milliman Inc., examined the capacity, availability, and affordability of residential property insurance in the state.
"Since Katrina hit, the size and number of policies in the residual market (LCPIC) is about the same and so obviously the work of the (insurance) commissioner has paid off in keeping the policy count down," he said. But the size of the exposure has doubled from $14.9 billion in December 2005 to $27 billion in April of this year, "and I think this is a phenomenon we're going to see everywhere because the cost of rebuilding houses is going to go up every year."
Chernick provided an overview of the Homeowners Defense Act of 2009, draft legislation that would create a national catastrophe fund, which among its provisions would offer catastrophe reinsurance to state catastrophe plans; encourage states to create state catastrophe funds; offer liquidity and catastrophic loans to state plans; and provide funding for mitigation and preparedness.
Applying the basic structure of a national and state catastrophe fund system to what is in place currently in Louisiana, Chernick showed that for a one-in-a-thousand year event causing $16 billion in insured losses, primary insurers would pay out $6.9 billion, a Louisiana State Cat Fund would be responsible for $4.7 billion, a National Cat Fund would pick up $3.2 billion, and Louisiana Citizens would take care of the remaining $1.2 billion. In contrast, under the current system primary insurers would pay out an estimated $9.5 billion, $4.1 billion would be from reinsurance/catastrophe bonds, and the remaining $2.4 billion would fall to the state-run LCPIC.
A national/state cat fund system would result in an average statewide savings in Louisiana of about 28 cents out of every dollar of homeowner insurance premium, he said.
Strong storms sweep through N. Texas
01:53 AM CDT on Thursday, June 26, 2008
By WFAA-TV Staff Reports
As North Texas storms moved across the area, many areas felt the brunt.
In Haltom City, damage was so severe on 28th Street they closed the street off between Eastridge Drive and Higgins Street, which was scattered with large debris. A snapped power line left a transformer lying on the street. Not too far from that spot, several large awnings were blown down.
The storm also left a large area of Haltom City without power and trees were reported down throughout the city.
"I was like, 'Yea, we're not going to get much,'" said Jessica Stevens, who was walking along the street when the storm suddenly blew through. "And no sooner did I say that, a gust of wind head up. There was hail everywhere. A tree went down right next to my car. I heard this big old bang and sirens; and this is just amazing that nobody has been killed."
Throughout the night, the National Weather Service issued flash flood warnings for parts of North Texas, including Tarrant and Collin counties. Severe thunderstorm warnings were also issued for the same areas.
At about 8:52 p.m., Dallas-Fort Worth International Airport announced they were experiencing 31 to 45 minute delays. That time decreased to 16 to 30 minute delays at about 9:40 p.m. Many of the delays were also due to weather in other states.
As of 10 p.m., 22 D/FW flights were diverted and 12 cancelled.
Thursday in North Texas, skies were forecast to be mostly sunny in the Dallas and Fort Worth areas with highs in the upper 90s in the region and heat index values making temperatures feel as high as 100 and 101. Southerly winds between 10 and 15 mph were expected. Temperatures could drop the upper 70s at night.
The Associated Press contributed to this report
State May Have $2.1 Billion Storm Burden
The Dallas Morning News
AUSTIN – The state could be on the hook for as much as $2.1 billion because of the massive property damage inflicted on the Texas coast by Hurricane Ike.
Officials with the Texas Windstorm Insurance Association said Wednesday that claims paid by the so-called wind pool – the insurer of last resort that covers most of the coast – could reach as high as $4 billion in residential and commercial property losses.
Although insurance companies will initially have to pay most of the claims through mandatory assessments by the state, they will be able to recover those payments through deductions in their state premium taxes. Insurers can generally deduct about 20 % of their assessments each year.
Hurricane Ike was the third most destructive hurricane to ever hit the United States.
Monster Hailstorm near Breckenridge, TX on May 5, 2009!
Storm damage hits Texas hard
By The Associated Press
A line of strong thunderstorms with winds of up to 88 mph moved through portions of Texas late Tuesday, damaging homes and businesses, downing trees and knocking out power.
There were no immediate reports of injuries.
Hamilton County authorities in north central Texas said they had widespread power outages and downed trees. There were no immediate reports of damages to businesses or homes. Volunteer firefighters were out checking for damage. Power outages and downed trees also were reported in nearby Bosque County.
The Waco Tribune-Herald reported roof damage at a vacant shopping center and metal roofing strewn near a restaurant in Waco.
"The wind all of a sudden started going real, real fast, probably 89 miles an hour and then all of a sudden a big loud thud ... sounded like an airplane was hitting the roof," Gene Drautz told Dallas-Fort Worth television station KTVT. "My wife and I jumped up and ran towards the bathroom and the whole roof came off the house."
Greenville firefighter Chris Fanning told the Greenville Herald-Banner that straight line winds blew the roof off a medical services building next to the Hunt Regional Medical Center. Power lines were also downed.
Wylie Assistant Fire Chief Noe Flores said a porch was blown off one house in that community just northeast of Dallas.
There were reports of a tornado touching down in Bowie in far northern Texas but no major damage.
The line of storms was moving quickly across North Texas, bringing hail, rain and strong winds.
Meanwhile, winds of more than 60 mph across parts of West Texas caused dust storms Tuesday afternoon that reduced visibility so much in some areas that some roads have been closed, the National Weather Service said. It also reported a wind gust of 88 mph in Hillsboro.
Catastrophes in Texas
Storms continue to batter Texas
4/30/09 6:01 PM
Storms continue to batter the state of Texas. Another storm, consisting of high winds and hail, hit the Texas area on Wednesday, April 29 and Thursday, April 30 leaving behind moderate damage. The counties of Carson and Bexar, specifically the cities of Panhandle and San Antonio, appear to be the most impacted with wind and hail damage to homes and vehicles.
Texas hit again drenching the Houston area
4/28/09 8:38 PM
Another band of thunderstorms with heavy rain drenched parts of Texas April 26 through 28, 2009. Most of the claims that have been reported to date are flooded auto claims which are concentrated in the Houston metropolitan area specifically the county of Harris. Other areas of concentrated claim activity are in the Dallas/Fort Worth Metropolitan area specifically the counties of Tarrant, Dallas and Tom Green counties. Property losses have also been reported in the same areas with a majority of claims coming from Harris County. There were reports of wind damage as well as home fires as a result of lighting.
News Release
American Red Cross Expected to Spend $120,000 Helping Tarrant
and Denton County Families Recover from Deadly Flash Floods
Emergency Fundraising Appeal Launched for North Texas
FORT WORTH, TX – The last thing North Texans needed this morning was more rain. But, Mother Nature had a different plan. As the rain fell, many people migrated to nearby Red Cross shelters, which have been operating since the early morning hours of June 18. The latest round of storms, coupled with existing devastating wide-spread damage has led the Red Cross to launch an emergency fundraising appeal so that all families affected can get the help they need.
Red Cross officials estimate that more than $120,000 will be needed to help the disaster victims in Tarrant and Denton counties alone. Hundreds of thousands more may be needed as the Red Cross continues to respond in communities such as Gainesville and Sherman.
“Help is needed now for residents of North Texas to dry out, clean up and move forward,” said Jason Smith, chief executive officer, American Red Cross Chisholm Trail Chapter, Fort Worth, TX. “During the last two days we provided shelter, food, financial assistance, emotional support and vital relief supplies for our neighbors affected by these storms.”
Leadership gifts totaling more than $50,000 have already been received from several area corporations, including Chesapeake Energy, BNSF Railway, Alcon Labs and Miller Distributing. Additional fundraising efforts have generated around $20,000 for a total of nearly $80,000 raised, leaving a deficit of around $50,000 for the Tarrant and Denton County areas.
“All of us at Chesapeake Energy are saddened by the losses incurred by flash flooding, particularly in Haltom City where an entire mobile home park was flooded,” said Lynn Platania, director of community relations – Barnett Shale. “We applaud the efforts of the American Red
Cross, city officials and those giving to the Disaster Relief Fund to help these residents during this difficult time. As an early supporter of the fund we hope to help those victims of disasters in Tarrant County and encourage others in the community to join us in support of this effort.”
Monday’s devastating storms affected some 120 residences in the Haltom City area alone, leaving hundreds temporarily or permanently without a place to call home. Thousands more have been displaced from their homes in the Denton, Grayson and Cooke counties.
Red Cross chapters in Dallas and the Fort Worth area have provided shelter for 15 people, served up 700 meals and distributed hundreds of supplies such as rakes, shovels and garbage bags. In addition, the Red Cross has already provided nearly $50,000 in direct financial assistance to more than 60 families at the Skyline Mobile Home Park in Haltom City. More than four dozen volunteers have supported chapter relief efforts in Denton and Tarrant counties.
Smith is asking the community to contribute to the National Disaster Relief Fund as the Red Cross responds to the North Texas floods.
“When disasters happen, friends and family in our communities turn to the Red Cross,” Smith said. “Your financial contributions translate into immediate help for these people who need it.”
Hurricane Ike
On the morning of September 13, 2008, the eye of Hurricane Ike approached the Texas coast near Galveston Bay, making landfall at 2:10 a.m. CDT over the east end of Galveston Island. People in low-lying areas who had not heeded evacuation orders, in single-family one- or two-story homes, were warned by the weather service that they may "face certain death" from the overnight storm surge.
In regional Texas towns, electrical power began failing before 8 p.m. CDT, leaving millions without power (estimates range from 2.8 million) to 4.5 million customers). Flood waters begin to rise in a neighborhood of Galveston, Texas. In Galveston, by 4 p.m. CDT on September 12, the rising storm surge began overtopping the 17-ft (5.2 m) Galveston Seawall, which faces the Gulf of Mexico; waves had been crashing along the seawall earlier, from 9 a.m. CDT.
Although Seawall Boulevard is elevated above the shoreline, many areas of town slope down behind the seawall to the lower elevation of Galveston Island. Even though there were advance evacuation plans, Mary Jo Naschke, spokesperson for the city of Galveston, estimated that (as of Friday morning) a quarter of the city's residents paid no attention to calls for them to evacuate, despite predictions that most of Galveston Island would suffer heavy flooding storm tide.
By 6 p.m. Friday night, estimates varied as to how many of the 58,000 residents remained, but the figures of remaining residents were in the thousands. Widespread flooding included downtown Galveston: six ft (2 m) deep inside the Galveston County Courthouse, and the University of Texas Medical Branch at Galveston was flooded. - source: Wikipedia
Texas Insurance ADJUSTER Property & Casualty Licensing Course & Exam
STATE APPROVAL NUMBER
45064EX400
LICENSE CATEGORY
Adjuster License Course & Exam - Propery & Casualty
APPROVED HOURS
40 Hours
COURSE DESCRIPTION
This course will prepare individuals for the Property & Casualty Insurance Adjuster exam which is administered at the end of this course. This course not only covers all foundational concepts related to property and casualty insurance adjusting, but the very important Texas-specific insurance laws and regulations provided by the Texas Department of Insurance in relation to property and casualty insurance adjusting.
TOPICS COVERED
- Standard Fire Policy
- Auto Liability & Texas PAP
- Personal Lines Coverage with ISO & TX Forms HO-A, HO-B, and HO-C
- Commercial Lines Coverage
- Inland Marine
- Ocean Marine
- Additional Coverages, Exclusions, and Extensions
- Bonds
- Insurance Terms and Related Concepts
- Licensing Requirements (TX)
- Marketing Practices (TX)
- Adjuster Practices, Responsibilities, and Duties (TX)
LESSONS
- Introduction
- LESSON 1: Insurance Basics
- LESSON 2: Adjusting Losses
- LESSON 3: Homeowners & Dwelling Policies
- LESSON 4: Personal & Business (Commercial) Automobile Insurance
- LESSON 5: Commercial Lines Coverage
- LESSON 6: Workers' Compensation
- LESSON 7: Other Coverages
- LESSON 8: Texas Statutes & Rules Common to Property & Casualty Insurance
- LESSON 9: Adjuster Practices, Responsibilities & Duties
- LESSON 10: Coverage for Homeowners, Automobile & Workers' Compensation
SUBJECT MATTER EXPERT
This course is created and brought to you by 360training, a leading provider of accredited e-learning courses to working professionals through today's leading schools, associations and corporations. 360training's high quality e-learning courses assist thousands of working professionals each month in a wide range of disciplines to succeed in today's marketplace, renew licenses, acquire certification or prepare for a new profession.
This course was created by the instructional design staff of 360training in connection with field professionals that bring many years of experience in adult educational theory and distance learning technology to make the process of certification, compliance and training as convenient, engaging and cost-effective as possible.
If you have any requests for technical or instructional support, please contact the 360training Support Department located in the HELP section of your account profile. Technical support inquiries are handled immediately and instructional support questions are returned within 24 business hours with answers provided by a qualified professional in your field through our network of subject matter experts.
COURSE ACCESS
The course will be accessible 24/7 with around the clock technical support available.
COURSE AVAILABILITY
The course will be available for 365 days from registration.
TESTING REQUIREMENTS
Testing will consist of lesson quizzes and one final examination.
You will need to pass the examination with a 70% in order to receive your Texas Propery & Casualty Adjusters License.
Upon course completion you will need to submit your certificate along with a finger print card, Adjuster License application and the $50 fee to the Texas Department of Insurance. Once this is submitted TDI will process the approval and mail the Adjuster License to you.
CERTIFICATE AVAILABILITY
Upon Course Completion Your Certificate will be mailed to you within 5 - 7 business days.
Approved Course Number(s):
45064EX400
Texas P&C Licensing course and exam - standard fire, inland marine, ocean marine, adjuster practices for property damage
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Comprehensive Online Professional Training
Texas Insurance Adjuster Online Training
Texas P&C Licensing course and exam - standard fire, inland marine, ocean marine, adjuster practices for property damage
March 25 hail storm most costly in Austin
11:11 AM CDT on Tuesday, March 31, 2009
KVUE News
The March 25 hail storm has become the most expensive in Austin history.
The Insurance Council of Texas revealed Monday that between home and car damage, the storm has cost Central Texans a total of $160 million.
The second and third most costly hail storms also struck on March 25th -- in 1993 and 2005.
