Terror / Disaster insurance

  • Flood insuranceOptions for providing affordable flood insurance premiums

    The National Flood Insurance Program (NFIP) within the Federal Emergency Management Agency (FEMA) faces dual challenges of maintaining affordable flood insurance premiums for property owners and ensuring that revenues from premiums and fees cover claims and program expenses over time. A new report found that these objectives are not always compatible and may, at times, conflict with one another. The report discusses measures that could make insurance more affordable for all policy holders and provides a framework for policymakers to use in designing targeted assistance programs.

  • Man-made quakesOklahoma warns insurers not to deny claims for man-made-earthquake damage

    Oklahoma Insurance Commissioner John Doak is warning insurers about the practice by some insurance companies to exclude “man-made” earthquakes from their policies without clear intent. Some companies are marking quakes caused by waste water injection wells — or “fracking” — as “man-made” and therefore outside of the scope of coverage of policies. This denial of coverage follows a dramatic increase of tremors in the state since 2013. The increase in fracking activity in the state has been accompanied by a dramatic increase in the number of earthquakes: Last year, the Oklahoma Geological Survey identified 567 tremors at or above a 3.0 magnitude, the point at which such quakes can be felt by humans and cause property damage.

  • Aviation securityAviation industry under-prepared to deal with cyber risk: Expert

    The aviation industry is behind the curve in terms of its response and readiness to the insidious threat posed by cyber criminality whether from criminals, terrorists, nation states, or hackers, according to Peter Armstrong, head of Cyber Strategy for Willis Group Holdings, the global risk adviser, insurance and reinsurance broker. Armstrong explained that the aviation industry’s under-preparedness is noteworthy in a sector that abhors uncertainty and works tirelessly to eradicate it.

  • Flood insuranceFlorida lawmakers want homeowners to have more flood insurance options

    Lawmakers in Florida are planning for a future in which coastal communities can no longer depend on the federal government for affordable flood insurance coverage. The Federal Emergency Management Agency’s (FEMA) flood program is facing insolvency after recent disasters such as hurricanes Katrina and Sandy, so Congress has moved to increaseflood insurance rates across the nation.Legislation proposed by Florida state senator Jeff Brandes (R-St. Petersburg) will give homeowners more coverage options in the local private insurance market. If passed, Brandes’s bill could lower premiums by excluding coverage of a detached garage or covering only the value of a home’s mortgage rather than its full replacement cost.

  • DisastersWinter storms costly for Western economies: Aon Benfield

    Aon Benfield’s January 2015 catastrophe report reveals that a series of four powerful windstorms over a seven-day span during January in different regions of Western Europe caused economic and insured losses were expected to reach hundreds of millions of euros. The catastrophe study highlights that two separate winter weather events impacted northeastern parts of the United States during the month, caused total economic damage and losses, including business interruption, estimated at $500 million.

  • Coastal infrastructureCoastal communities can lower flood insurance rates by addressing sea-level rise

    City leaders and property developers in Tampa Bay are urging coastal communities to prepare today for sea-level rise and future floods in order to keep flood insurance rates low in the future. FEMA, which administers the National Flood Insurance Program(NFIP), is increasing flood insurance premiums across the country, partly to offset losses from recent disasters such as hurricanes Katrina and Sandy. Cities can reduce insurance premiums for nearly all residents who carry flood coverage by improving storm-water drainage, updating building codes to reflect projected rise in sea-levels, moving homes out of potentially hazardous areas, and effectively informing residents about storm danger and evacuation routes.

  • EarthquakesFracking-induced tremors lead to changes in building codes, insurance rates

    For its upcoming National Seismic Hazard Map, used by engineers to update building and construction codes and by insurers to set policy rates, the U.S. Geological Survey(USGS) will take into account risks posed by induced or man-made earthquakes. For North Texas, where earthquakes are historically uncommon, an increase in earthquake risk is likely as the Dallas area has suffered more than 120 earthquakes since 2008. Scientists have attributed these earthquakes to nearby fracking operations.

  • Terrorism insuranceInsurers thankful for reauthorization of TRIA

    President Barack Obama signed in a six year renewal of Terrorism Risk Insurance Act (TRIA) last Tuesday, and workers comp insurers sighed in relief after thirteen days of uncertainty following the expiration of the previous bill at the end of 2014. The insurance marketplace has adopted a “wait and see” approach to TRIA’s expiration, convinced that the negative backlash against Congress for allowing TRIA to expire would have been too great for lawmakers not to renew the law. The industry now goes back to business as usual.

  • Disaster recoveryFEMA paid cities for damages that should have been covered by insurance: Audit

    Though the hurricanes which ravaged much of Florida in 2004 and 2005 are 10-year-old events, the Federal Emergency Management Agency (FEMA) is still dealing with the damages and fallout, and a new audit reveals that the agency may have paid for city damages that should have been covered by insurance companies. It is estimated that $177 million in payments may be at issue. The audit also found that FEMA improperly waived the need for hurricane-stricken communities to buy insurance to protect against future events, meaning that the agency and taxpayers may have to pay to cover future damages that they would not have had to cover if the procedures had been followed. More specifically, the audit found that FEMA stands to lose roughly $1 billion in future damage costs because of this.

     

  • Terrorism insuranceBusinesses welcome TRIA extension, but small insurers worry about reimbursements

    Last week, the property insurance, real estate, and financial services industries applauded Congress for passing the recent version of the Terrorism Risk Insurance Act (TRIA), which President Barack Obama is expected to sign into law. TRIA has already been extended twice and the most recent version of the bill will, beginning in 2016, raise the federal coverage backstop from $100 million to $200 million by 2020 with an increase of $20 million per year. S&P welcomed the passing of TRIA through both houses of Congress, but cautioned that the bill could hurt small insurers. The company is concerned that small insurers may not see any TRIA reimbursements with the doubling of the federal coverage backstop to $200 million.

  • Terrorism insuranceInsurance firms, developers face uncertainty now that TRIA has expired

    Insurance firms and commercial property developers are uncertain about how the commercial real estate industry will react now that the Terrorism Risk Insurance Act (TRIA) has expired. Many commercial property developers relied on TRIA to fulfill their loan requirements. Analysts predict real estate projects and construction jobs in Maryland, for example, will be affected by the failure to extend TRIA.

  • Flood insuranceJudge orders review of insurance companies’ processing of Sandy-related damage claims

    Several insurance companies contracted to handle Hurricane Sandy claims on behalf of the National Flood Insurance Program, administered by the Federal Emergency Management Agency (FEMA), are facing lawsuits filed by homeowners in New York and New Jersey, who claim that insurance firms improperly reduced flood-damage payments. More than 1,000 lawsuits allege that homeowners received less than they should have for storm- related damages because of altered engineering reports that insurance companies knowingly accepted as part of the claims-adjustment process. The judge described the work done by one engineering firm on behalf of an insurance company as “reprehensible gamesmanship.”

  • Terrorism insuranceInsurance industry rattled by Congress's failure to reauthorize terrorism insurance backstop

    Major commercial insurers and lenders serving the real estate, tourism, and construction sectors were surprised by Congress’s failure to reauthorize the federal government’s terrorism insurance backstop,or at least extend it into 2015, when the new Congress can then reach a consensus. The Terrorism Risk Insurance Act(TRIA) was established in November 2002 as a federal backstop to protect insurers in the event an act of terrorism results in losses above $100 million. It has been extended and reauthorized twice. The insurance industry had hoped that TRIA would be renewed for another six years. The bill — the Terrorism Risk Insurance Program Reauthorization Act of 2014 — was passed by the House, but Senate Republicans and Democrats remained in disagreement through the end of the legislative session.

  • Terrorism insuranceSenate expects to extend terrorism insurance after House passes bill

    After the House passed the Terrorism Risk Insurance Program Reauthorization Act of 2014 (TRIPRA) last week, supporters of the bill expect the Senate to approve it, although they are unsure when that will occur. The current version of the program is expected to expire by 31 December unless Congress renews the legislation or places a temporary extension.The House version would extend TRIPRA for six years, increase the threshold for government reimbursement from $100 million to $200 million, and increase companies’ co-payments to 20 percent from 15 percent.

  • Disaster insuranceFEMA will review denied or underpaid Sandy-related claims by owners of damaged homes

    Hundreds of homeowners who were denied claims for damages caused by Hurricane Sandy will now have their claims reviewed, according to a series of reforms by the Federal Emergency Management Agency (FEMA), which operates the National Flood Insurance Program. According to FEMA administrator, W. Craig Fugate, contractors hired to handle homeowner claims allegedly conspired to underpay flood insurance settlements to homeowners.