May 2014

Spring is finally in full swing! Aside from the nicer weather, it also marks the end of flu season. In the U.S., this typically lasts from October to May and peaks in February—but of course every season varies.

Late last year the Intergovernmental Panel on Climate Change (IPCC) released its Fifth Assessment Report on climate change and earlier this month, the U.S. Global Change Research Program released its third national assessment of Climate Change Impacts in the United States. Both reports highlight the increased certainty with which climate change has been occurring, its anthropogenic (resulting from the influence of human beings on nature) cause, and its expected continuation.

A year ago, a powerful and destructive EF-5 tornado hit the town of Moore, Oklahoma. Leading the damage survey team that AIR sent out the following weekend, I gained a new appreciation for the destructive force of tornadoes, and severe thunderstorms in general.

The term ‘non-modeled risks’ entered the insurance industry’s lexicon in a big way after a series of major natural catastrophe events in 2010 and 2011 led to significant losses from perils that had not been explicitly modeled. Catastrophe models were well established for Japanese earthquake scenarios in March 2011 when the Tohoku earthquake struck, for example, but none of the widely-available vendor models represented the potential for concurrent tsunami damage and losses at that time. Furthermore, commercial models for floods in Thailand were not available at the time of the 2011 flooding.

The insurance industry has seen a marked increase in the availability of tools to quantify the risk from natural catastrophes. Interest in them is considerable, as evidenced by the crowd that came to Lloyd’s of London in February for the launch of OASIS, an open access cat modeling platform.

A few years ago my father moved to Arkansas City, Kansas ("Ark City), very near the great Arkansas River. His house is a few blocks away from the snaking dike that shields nearly the entire city from flooding. Ark City lies at the confluence of two great tributaries of the Mississippi—the Arkansas River and the Walnut River—and spans two separate river basins, the Lower Arkansas and the Walnut.