Insurance is essential for individuals, businesses and communities to recover quickly from natural disasters – but the threats have advanced to the point that risk transfer, while necessary, is not enough to ensure resilience.
Sean Kevelighan, CEO of Triple-I, said at a conference that better insured communities recover faster, but “the long-term resilience of both natural disaster-hit communities and the industry itself depends on preparedness and improved risk mitigation.” He was one of three panelists who attended the webinar.
“There has to be something”
U.S. insured natural catastrophe losses totaled $ 67 billion in 2020 after an Atlantic hurricane season of 30 named storms, record-breaking forest fires in California, Colorado, and the Pacific Northwest, and a major derecho in Iowa. This year’s hurricane season seems to be more severe; the Oregon bootleg wildfire – so big and intense that it has started creating its own weather and affecting air quality in the east all the way to New York City – is unlikely to be fully contained until late November; and these disasters follow devastating winter storms in the first quarter.
As Kevelighan put it in his panel discussions and pointed out a 700 percent increase in insurance claims costs since the 1980s: “Something has to give.”
“As the country’s financial first responders,” he said, “insurers are not only responsible for helping communities affected by natural disasters, but also planning for potential disasters.”
One of the ways that insurers do this is by building the industry’s accumulated policyholder surplus – the amount of money left over after insurers’ collective liabilities are deducted from their assets. At the end of 2020, the US policyholder surplus was a record high of $ 914.3 billion.
Mitigate and educate
The insurance industry’s role has grown beyond risk-taking, educating the public, regulators, and corporate decision-makers about the changing nature of risk and promoting a resilience mindset that is characterized by a focus on preventive risk reduction and rapid recovery excels. Triple-I and a host of other insurance industry organizations have played a key role in promoting public-private partnerships and leveraging advanced data and analytics to understand and address threats in advance.
For example, Triple-I’s online resilience accelerator provides access to data and risk maps that enable the public to assess and prepare for specific risks to their own communities.
This webinar, jointly presented by the institute’s Griffith Foundation and the Insurance Regulator Education Foundation, included panelists Hanna Grant, Head of Secretariat, Access to Insurance Initiative; and Dr. Abhishek Varma, Associate Professor of Finance, Insurance, and Law, Illinois State University. It was moderated by James Jones, Executive Director, Katie School of Insurance and Financial Services, Illinois State University.