October 4, 2021

The country’s flood insurance market is slowly transitioning toward private insurers providing additional options to the federal government’s program for those seeking coverage, according to a new AM Best report.

But private sector carriers are being selective, tending to avoid risks in flood-prone areas and concentrating more on commercial properties than homeowners, an AM Best report shows.

According to Best’s Market Segment Report, “Appetite for Flood Risk Among Private Insurers Still Small,” more than 70% of overall private flood premium has been generated from commercial property exposures.

Also the report finds that private insurers tend to avoid flood-prone areas, noting that Florida experiences tropical systems more frequently than any other state and represents about one third of the total National Flood Insurance Program (NFIP) insured value.

Yet, Florida represents only about a quarter of the total flood premium, partially illustrating the larger issue that the NFIP is subject to an inherent risk of adverse selection.

Cyber Insurance

By: TOM DAVIS | October 2021

Key Points

• Attacks Increasing: Since May 1, there have been at least 37 “significant” international cyber incidents, including the Colonial Pipeline attack that caused a spike in gas prices, according to a report from the Center for Strategic and International Studies.
• Premiums Rising: Cyber premiums have more than doubled since 2016, rising from $1.3 billion to $2.7 billion last year, according to Fred Eslami, senior financial analyst at AM Best.
• Insurers Are Selective: The cyber activity is so high now, “we can be in a position of saying to clients, ‘If you don’t have these controls in place then you’re not going to get covered for these types of attacks,’” said Tracie Grella, global head of cyber insurance for AIG.

Vishaal Hariprasad, CEO and co-founder of cyber insurer Resilience, didn’t hesitate when President Joe Biden looked right at him and asked: “How can the insurance industry help drive better cyber standards for the country?”

Hurricane Ida to be in the range of $28–30 billion

October 5, 2021

On an industry level, Swiss Re now estimates that total insured market losses from Hurricane Ida to be in the range of $28–30 billion, excluding federal flood insurance losses.

Hurricane Ida, the second-most intense hurricane on record to hit the state of Louisiana, also caused extensive wind and flood damage across the Eastern and Mid-Atlantic parts of the U.S. After making landfall on August 29, 2021, the category 4 hurricane caused wide-ranging power outages and severe infrastructure damages particularly in Louisiana, before triggering exceptional flash flooding and storm surges in the Northeastern regions of the country.

Swiss Re estimated its own preliminary claims burden from Hurricane Ida at approximately $750 million.

The estimates may need to be adjusted as the claims notification and assessment process continues.

Photo: Lyndell Scott walks past the debris of his gutted home in the aftermath of Hurricane Ida in LaPlace, La.,