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BMS launches Severe Weather Analytics

BMS Group announces a new weather risk management module as part of its iVision™ suite of analytical tools and services.
The unique new analytical tools allow carriers to better understand their risk and manage portfolio accumulations in areas prone to tornadoes, hail, straight-line winds and hurricanes.
The new module introduces expanded weather analytics features that make it even easier for insurers to manage severe storm risk. These features include:

  • Live weather feeds from NOAA
  • Daily severe storm shape files featuring AER Respond weather data, highlighting tornado paths, active hail areas, hail size and density
  • Active and forecasted hurricane tracks including detailed hurricane wind-field shapes
  • Historical PCS event library with one-of-a-kind PCS cat event shape files, available exclusively from BMS

“iVision’s new analytical tools augment traditional cat modeling results by enabling users to modify and alter damage ratio and track assumptions for tangible, definable events, which allows them to arrive at a view of loss they can have confidence in,” says Julie Serakos, head of BMS’ Cat Analytics group.
These new weather analytics features facilitate the understanding of the loss potential in a portfolio (thereby stress-testing its vulnerability to loss) by allowing for custom damage ratios to be applied against storm attributes. Additionally, testing portfolio sensitivity to the hurricane track increases confidence in the range of potential loss outcomes for landfalling events.

About iVision
BMS’ iVision is an easy-to-use catastrophe risk management system carriers can access online. Built on the latest GIS technologies, it helps today’s insurance companies increase efficiency and effectiveness in managing their catastrophic risk. iVision’s other analytical features include BMS’ proprietary ScenarioView™ for DIY event analysis, and RiskReveal™ location cat modeling (featuring AIR and RMS cat models) for underwriting. These features let carriers manage large loss exposures and ensure adequate premium before a policy is bound.

BMS enters into exclusive partnership with RTI International, one of the world’s leading research institutes

BMS Group recently entered into an exclusive partnership with RTI International, one of the world’s leading research institutes, to offer clients award-winning Enterprise Risk Management (ERM) services that have a proven track record in managing complex business operations.

The concept of ERM is nothing new. For decades, organizations have been using a variety of methods and processes to intelligently weigh and manage risks against opportunities. ERM provides a framework for this risk management – which typically involves identifying particular events or circumstances relevant to an organization’s objectives, assessing them in terms of likelihood and magnitude of impact, determining a response strategy and monitoring progress. By identifying and proactively addressing risks and opportunities, businesses protect their interests and create value for stakeholders.

But, as highlighted by Solvency II in Europe and ORSA in the U.S., in recent years ERM has evolved in response to the needs of an increasingly sophisticated global marketplace, with more varied and complex businesses and stakeholders who want to understand the broader spectrum of risks so they can be managed effectively. No longer limited to owners, customers and employees, these stakeholders have come to include regulators and rating agencies, which have also increased their scrutiny of risk management processes.

What does all this mean? ERM, which used to be considered a global business trend, has become a recognized best practice. And that’s where the BMS/RTI relationship comes into play.

Close collaboration between BMS brokers and our analytical and technical professionals lets us give clients a superior level of analysis, modeling and strategic guidance,” says David Spiegler, Executive Vice President and Chief Actuary at BMS. “That talent, combined with sophisticated analytical tools, methods, and award-winning risk management processes as provided by RTI, means that we are able to take a truly holistic look at a client’s risk, which is what businesses need today.”

The strength of a business and its reputation is based in large part on management’s ability to properly identify, assess and manage risks. A properly implemented ERM program will help deliver a better-performing organization by allowing us to identify and address risks before they become problems,” says Ward Sax, Vice President, Treasurer and Chief Risk Officer at RTI. “Our applied research in ERM has resulted in award-winning best practices we can share with clients.”

“ERM absolutely includes the capital modeling and analytics, but that’s just one part of the equation,” says Kurt Johnson, EVP of Analytical Services at BMS. He explains that beyond making sure a building and computers are safe, true ERM is about smart business planning and breaking down silos within an organization. “There’s a huge element of common sense to ERM, and we can help demystify it for clients,” Johnson adds. “You can’t eliminate chaos, but you can plan for it.”

 

Click here to visit the BMS Analytical Services ERM page

 

 

About RTI:

RTI International is one of the world’s leading research institutes, dedicated to improving the human condition by turning knowledge into practice. Our staff of more than 3,700 provides research and technical services to governments and businesses in more than 75 countries in the areas of health and pharmaceuticals, education and training, surveys and statistics, advanced technology, international development, economic and social policy, energy and the environment, and laboratory testing and chemical analysis. For more information, visit rti.org.

 

 

Philippines Review, Reactions Magazine – Andy Siffert

Andy Siffert, BMS’ resident Meteorologist, featured in Reactions Magazine online discussing the challenges the Philippines faces in it fragile recovery from the devastation caused by Super Typhoon Haiyan.

Click here to read the article (registration required).

 

Inside Medical Liability Magazine – Dave Spiegler

BMS’ Chief Actuary Dave Spielger featured in PIAA’s Inside Medical Liability, 4th Quarter edition, discussing the MPL Sector.

Click here to read the article.

Reprinted from the fourth Quarter 2013 issue of Inside Medical Liability, Physician Insurers Association of America. Copyright, 2013.

Click here to access the article online

Click here to read all about the BMS Analytical Services offering.

 

Hurricane Wilma’s 8th Anniversary

As we approach the end of the 2013 Atlantic hurricane season and take in the media attention around the anniversary of Superstorm Sandy, it is also important to mark the 8th anniversary of Hurricane Wilma’s landfall, which occurred October 24, 2005. This was the last major hurricane to make landfall on the U.S. coastline. It has now been 2,938 days without a major landfalling hurricane – remarkable given the changes scientists said might result from warmer sea-surface temperatures in the Atlantic Ocean. The U.S. landfalling hurricane event data set is one of the best meteorological records that exist in the U.S. In looking at the historical landfall record, the longest period without a major landfalling hurricane stands at 3,316 days (August 11, 1860 – September 8, 1869). If a major hurricane doesn’t make landfall in the U.S. next year, we will surpass the longest period without one.

Unless we are in some very unusual climate state that has not been discovered, there is a growing disconnect between overall Atlantic Basin activity and landfalling named storms. While the average overall Basin numbers are higher than normal since 2006, with every passing year since then the U.S. has seen only 19 named storms make landfall, and only six hurricanes – with no major hurricanes making landfall. This translates to a landfall rate of 0.75.

Using the landfall data from 1900, in a given year the expected landfall rate of a hurricane impacting the U.S. coastline is 1.5, with a 77% probability of at least one hurricane impacting the U.S. coastline. For major hurricanes the rate is 0.5 with a 40% probability – so the U.S. landfall rate is significantly below average.

Given this landfalling hurricane drought, the United States coastline has been lucky. Although insurance companies have been suffering losses of other types over it, the average annual hurricane loss during this drought has been just $4.9 billion, according to Property Claims Services. This is below the long-term average annual loss of $6.4 billion as calculated using the insured historical loss data from Dr. Pielke Jr., a database that attempts to normalize hurricane damages in the United States. Accounting for Superstorm Sandy in 2012, which was not a hurricane at landfall, this average annual loss since 2006 would increase to $7.7 billion.

With a below normal landfall rate of only 0.75 hurricanes since 2006, in the future the trend for more landfalls should correct back closer to the long-term rate if we assume that hurricane landfalls follow a poisson distribution and we are not in some unknown climate regime. After all, the probability of not having a major hurricane make landfall over a 9-year period is a very low 1%, meaning insurance companies should expect an increase in losses from hurricanes in the future. Something to ponder as we await next year’s forecast.

It’s a risky world

Over the last few weeks Travelers and Swiss Re released polls suggesting people perceive that the world is becoming a riskier place and many are under-insured.

The main driver for public opinion is that this is a perceived period of “more extreme weather”. Although many mention that it is a riskier world, many people don’t seem to be doing much about it. Generally, preparation for extreme events is poor and there often seems to be an overreaction or under-reaction of preparation to such events. This contrast highlights the subjective nature of individual risk perception.

It seems only urgent alarms of an impending “Frankenstorm” really inspire proactive preparation, sending people shopping for batteries and bottled water. All too often people assume that their flashlights, sandbags and backup generators will protect them from the fierceness of Mother Nature. Therefore, the more control over a risk you think you have, the less worried you might feel – no matter how false that sense of control might be.

We often view these risks in terms of probabilities, but many people are bad at understanding probabilities. It’s a good bet that most people who experienced a “once in a century” storm feel that such freakish weather is not likely to happen in the next few years or decades. Sorry, but Mother Nature does not work that way. There are probabilistic patterns for assessing the risk of natural disasters over the long-term. Managing risk is a real trick as the risks over the long-term are much larger than our very brief lifetimes have witnessed or can remember.

Our short memories often refer to past historical weather patterns that tend to get replaced by what we remember seeing more recently. As a meteorologist, I am not the only one guilty of consistently watching The Weather Channel when a major weather event is occurring. Some people would say many of us have become addicted and can’t stop watching television and scanning news sites and social media, far more than we actually require to stay informed.

That brings us to the transmitters of storm news – the media, both news and social. News coverage is far more likely to warn us that the sky is falling than to reassure us that it isn’t. “If it scares, it airs”, because anything that threatens us is more likely to grab our attention. If weather forecasts include days of Frankenstorm predictions, the future is going to feel frightening. To be fair, despite their breathless alarm-ism, the news media did make the public aware of Sandy, helping us prepare. The aftermath of Sandy demonstrated why we should worry.

Risk perception determines how prepared we are — or aren’t. It determines whether we follow government evacuation orders or make sure we have candles, working flashlights, and bottled water. When it comes to flood insurance, risk perception determines whether we buy insurance and polls suggest most people are confident that their home or dwelling are properly insured. However, flood insurance take-up rates are ridiculously low, suggesting the perception of flood risk is that flooding is not a high risk, yet time and time again high uninsured flood losses occur. Opinions of “it won’t happen to me” or “I’ve been through these storms before, it won’t happen again” do persist.

 

 

 

Tropical Update: Approaching the Peak of the Hurricane Season

Historically, September 10 is the peak of the North Atlantic hurricane season, which typically sees 10 or 11 named tropical storms. This climatology number climatology number is usually represents the last 30 or 50 years, but the average since 1995 is higher – at 15 named storms, 8 hurricanes and 4 major hurricanes – and corresponds to the so-called active era in the North Atlantic, caused by warm Atlantic Multidecadal Oscillation. With the storm Erin just being named in the eastern Atlantic Main Development Region (MDR), the storm total for this year (through the second week of August) sits at 5. This is about two weeks ahead of climatology, which suggests the fifth named storm is often observed around August 31. The first hurricane is climatology-observed on August 10, so unless the current activity develops into a hurricane, the Accumulated Cyclone Energy will continue to fall behind the climatological norm.

In August, Sea Surface Temperatures (SST) in the MDR extending from the Lesser Antilles to the Cape Verdes Islands warm significantly, which is one reason why three storms have formed in the MDR so far this year. It’s also part of the reason seasonal forecasts are calling for a more active than normal hurricane season.

Figure 1 shows the SST in the MDR. Image Credit: www.weatherbell.com

SSTs are solidly 27°C off the African coast and rise slowly to 28°-29° as tropical waves approach the Caribbean islands.  But lately the main issue is the presence of Saharan dust in the MDR.

Figure 2 is a look at the graphics from the NASA GEOS-5 model, which shows the dust that continues to occur over the MDR. Image Credit: www.weatherbell.com

I am not quite sure what is considered to be normal in terms of dust occurrence. But as a proxy in lieu of actual dust measurements over the MDR, we can look at the at the 400-mb- specific humidity over the last dozen years to demonstrate how dry the MDR has been (Figure 3). This dry, dusty air is not conducive to tropical development and has been the main reason why Chantal, Dorian, and most likely Erin have stayed below hurricane status and could result in less overall named storm active compared to what has been forecasted.

Figure 3 is the 400 mb Specific Humidity since June 1, 2013 over the MDR. Image Credit: NOAA / Earth System Research Laboratory

Over the past week many media outlets have been hyping the upcoming few weeks of the hurricane season.  This is because the strong, opposing wind shear has weakened across the MDR. Furthermore, the dry, Saharan air off the African coast has begun to dissipate, compared to earlier this season. Thus, conditions in the Atlantic are quickly becoming more favorable  for hurricane development, which should come as no surprise since about 80% of the season’s hurricane activity is produced in mid- to late August and  September.

Updated Seasonal Impact Forecast:

A high impact for the U.S. is still expected, but the newest weather pattern forecasted for the next month suggests a shift centered at a corridor near Florida rather than in eastern Florida and up the east coast. The European Center for Medium Range Weather Forecasting (ECMWF) model September forecast appears to be much wetter in the Caribbean and eastern Gulf, which supports the idea of seeing storms track in that area at this time of year.

Florida, which just had its wettest July on record (with 12.38 inches of rainfall – 4.91 inches above average), is an example of the large amount of moisture that has been observed along the east coast this hurricane season.  Because wet soil can increase basement leakage and tree fall, these wet soil conditions should lead to increased losses if the area is impacted by a named storm.

Approaching the Peak of the Hurricane Season

Historically, September 10 is the peak of the North Atlantic hurricane season, which typically sees 10 or 11 named tropical storms. This climatology number  usually represents the last 30 or 50 years, but the average since 1995 is higher – at 15 named storms, 8 hurricanes and 4 major hurricanes – and corresponds to the so-called active era in the North Atlantic, caused by warm Atlantic Multidecadal Oscillation. With the storm Erin just being named in the eastern Atlantic Main Development Region (MDR), the storm total for this year (through to the second week of August) sits at 5. This is about two weeks ahead of climatology, which suggests the fifth named storm is often observed around August 31. The first hurricane is climatology-observed on August 10, so in terms of hurricane activity and the Accumulated Cyclone Energy will continue to fall behind the climatological norm.

In August, Sea Surface Temperatures (SST) in the MDR extending from the Lesser Antilles to the Cape Verde Islands warm significantly, which is one reason why three storms have formed in the MDR so far this year. It is also part of the reason seasonal forecasts are calling for a more active than normal hurricane season.

Figure 1 shows the SST in the MDR. Image Credit: www.weatherbell.com

SSTs are solidly 81°F off the African coast and rise slowly to 83°-84°F as tropical waves approach the Caribbean islands. However, lately the main issue is the presence of Saharan dust in the MDR.

Figure 2 is a look at the graphics from the NASA GEOS-5 model, which shows the dust that continues to occur over the MDR. Image Credit: www.weatherbell.com

I am not quite sure what is considered to be normal in terms of dust occurrence. But as a proxy in lieu of actual dust measurements over the MDR, we can look at the 400-mb- specific humidity over the last dozen years to demonstrate how dry the MDR has been (Figure 3). This dry, dusty air is not conducive to tropical development and has been the main reason why Chantal, Dorian, and most likely Erin have stayed below hurricane status and could result in less overall named storm active compared to what has been forecast for the season.

Figure 3 is the 400 mb Specific Humidity since June 1, 2013 over the MDR. Image Credit: NOAA / Earth System Research Laboratory

Over the past week many media outlets have been hyping the upcoming few weeks of the hurricane season. This is because the strong, opposing wind shear has weakened across the MDR. Furthermore, the dry, Saharan air off the African coast has begun to dissipate, compared to earlier this season. Thus, conditions in the Atlantic seem like they are quickly becoming more favorable for hurricane development, which should come as no surprise since about 80% of the season’s hurricane activity is produced in mid-to-late August and September.

Updated Seasonal Impact Forecast

A high impact for the U.S. is still expected with fewer named storms, but the newest weather pattern forecasted for the next month suggests a shift centered at a corridor near Florida rather than in eastern Florida and up the east coast. The European Center for Medium Range Weather Forecasting (ECMWF) model September forecast appears to be much wetter in the Caribbean and eastern Gulf, which supports the idea of seeing storms track in that area at this time of year.

Florida, which just had its wettest July on record (with 12.38 inches of rainfall – 4.91 inches above average), is an example of the large amount of moisture that has been observed along the east coast this hurricane season. Because wet soil can increase basement leakage and tree fall, these wet soil conditions should lead to increased losses if the area is impacted by a named storm.

Wet East Coast Increases Loss Concern this Hurricane Season

As we approach the peak of the 2013 Atlantic hurricane season (which peaks around September 10), the forecasts (for an active season) made back in April have partially panned out – if you consider the total number of named storms. Looking at the last 50 years (1976-2012), the average formation dates of the fourth named storm and first hurricane are August 19 and August 3. So in terms named tropical storms, the season is ahead of par with climatology, but slipping behind on the occurrence of the first hurricane for 2013. In terms of Accumulated Cyclone Energy (ACE), 2013 is essentially average for this date. We’re at 6.6 compared to the 1981-2010 average of 9 for this date.

With August being the month where typically the number of tropical systems ramps up and Colorado State University’s August forecast calling for an active landfalling season, the likelihood of the season’s wet soil conditions leading to increased losses from a landfalling named storm must be considered.

The Ohio Valley and East Coast were much wetter than average. June precipitation totals for 18 states – from Georgia to Maine – ranked among their 10 wettest in the historical record. The fact that this weather continued into July undoubtedly creates concern over a named stormed impacting these rain-soaked areas.

 

 

NOAA Advanced Hydrologic Prediction Service view of the past 60-day Percent of Normal Precipitation. Over the past 60 days, much of the East Coast has seen 150% – 350% of normal precipitation.

Research shows that past hurricanes have demonstrated the combined effects of subsequent excessive rainfall and a named-storm wind speed that can have a major impact on insured losses. These losses might not otherwise be represented if the subsequent seasonal rainfall was normal or below normal. This loss increase is primarily associated with increased basement leakage and tree fall. (When soil is saturated, the connection between the root plate of a tree and the soil is lessened, which can increase tree fall.) Research also shows that the average wind speed expected to snap a hard- or softwood tree trunk is a 90 mph gust. Therefore, while more intense winds wouldn’t necessarily increase the loss, lower wind speeds might – given the weakened condition of saturated soil.

Recent examples of events that might have seen increased losses due to higher soil moisture are hurricane Isabel 2003 and Irene 2011. With New Jersey and Delaware having had their wettest June on record and 18 other eastern states having had Junes ranking in their top 10 wettest, this August has seen some of the highest soil moisture levels ever recorded. And this could increase the risk of river and basement flooding as well as tree fall if a named storm were to impact the area.

 

BMS Receives Special Achievement Award for Exceptional Application of Geospatial Technology

BMS Group received a Special Achievement in GIS (SAG) award at the Esri International User Conference (Esri UC) in San Diego, California held July 10, 2013. This award acknowledges vision, leadership, hard work and innovative use of Esri’s geographic information system (GIS) technology.

BMS uses the Esri ArcGIS platform to provide a robust base and flexible architecture to support the customized solutions in its proprietary iVision™ product – a premier catastrophe risk assessment application that’s revolutionizing how insurance carriers understand and underwrite their risk, as well as how they respond to catastrophic events. BMS partnered with GeoDecisions, a global leader in the information technology industry specializing in geospatial solutions, in developing the solution.

About iVision:

The goal of iVision is to provide an easy to use catastrophe risk management system that clients can access online. iVision analytical features include weather analytics for claims response, BMS’ proprietary ScenarioView™ for stress test analysis, and RiskReveal™ location modeling for underwriting. These features allow carriers to reduce claims handling expense, manage large loss exposures and understand a policy’s portfolio loss correlation before it is bound.

Most spatial analytical products are built to be used by expert data analysts who understand how to navigate complex data systems. For insurance carriers, often it is the divisional or executive management teams who benefit most from these emerging tools, yet find them to be too cumbersome and complex to use. Often they aren’t able to dedicate the staff and resources needed to learn and understand the systems, and because the portfolio management features aren’t interlinked, users have an incomplete view of risk. “Competitive products are under-utilized because they can be difficult to navigate,” says Debra Grubb, Senior Vice President, Catastrophe Analytics at BMS. “Plus, iVision is a highly customizable solution, offering more useful information specific to our individual clients’ needs along with improved ease of use.”

“BMS’ iVision is part of a suite of analytical tools and services BMS offers clients,” says Julie Serakos, Executive Vice President at BMS and head of Catastrophe Analytics. “It is built on the latest technologies – including Esri ArcGIS – and is the kind of product insurance companies need today, to increase efficiency and effectiveness in managing their catastrophic risk.”

About the Esri UC

The Esri UC honors organizations from around the world that span industries including agriculture, cartography, climate change, defense and intelligence, economic development, education, government, health and human services, telecommunications and utilities.

“The SAG Awards identify the organizations and people who are using the power of geography to improve our world and drive change,” says Esri President Jack Dangermond. “At Esri, we are always deeply inspired by the passion and innovation of our users. They deserve recognition for both solving their communities’ greatest challenges and for their invaluable contributions to the continued evolution of geographic science.”

For more information about the 2013 Special Achievement in GIS Award winners, visit esri.com/sag

For more information regarding BMS iVision click here