Peak of Thunderstorm Season Approaching

Although we are approaching the start of May, which is the peak month for thunderstorm development, the 2014 thunderstorm season has been off to a historically slow start. One advantage to this inactivity is that the insurance industry benefits from low thunderstorm losses not seen since 2004. In fact, the insurance industry has reported only $780 million of wind and thunderstorm event losses over three events (with two events yet to be estimated), according to Property Claims Service (PCS). This is far below the $4.6 billion in wind and thunderstorm event losses that have occurred on average over the last 10 years.

Not including the tornadoes that have occurred over the last few days as designated in PCS Event #40, the Storm Prediction Center has recorded 109 tornadoes as of April 24 for the 2014 calendar year which, according to BMS’ in-house tornado database from the Storm Prediction Center, indicates that this year is the slowest start to a tornado season in the 62 years of recorded data. Although the recent outbreak of tornadoes will add to the tornado count, the official count will still be in record-low territory. Harold Brooks at the National Severe Storms Laboratory, who has examined nearly 100 years of past tornado records, states that he is “challenged” to find a year that started with less tornado activity than 2014. Of the nearly 100 tornadoes reported this year, only 20 of them had been rated EF1 or higher, with the first EF3 or higher rated tornadoes only recently being recorded with this latest outbreak. This breaks a streak of 159 days, which currently stands as the fourth-longest streak on record between major tornadoes.

Despite the massive tornado that carved a swath of damage across Moore, OK during the 2013 tornado season, overall tornado statistics show that the U.S. has been in a tornado drought since the second half of 2012, with a record low number of tornadoes in 2013. Part of the explanation for the drought in intense tornadoes that has occurred since October 2013 is the persistent dip in the jet stream over the eastern half of the nation. This has unlocked the floodgates for arctic air, essentially shutting down the instability that is needed to develop explosive thunderstorms, which are often fueled by heat and moisture from the Gulf of Mexico.

The long-term forecast suggests much of the same cold will continue across the North Central Plains into the East Coast through the start of May, which should aid in putting a lid on thunderstorm development. But an extremely quiet start to the tornado season guarantees nothing about its future course, since May and June, which average 116 and 60 tornadoes, respectively (based on records from 2003 – 2013 of EF1-rated tornadoes or greater), are usually the two busiest tornado months of the year in the U.S. Despite the historically slow start, when looking at the tornado data recorded since 1953, 37 of the 62 years, or 59%, have started with below-average tornado counts of EF1 or greater. Of the 37 years that started below average, 6 years, or 16%, ended up having an above-average tornado season, The most recent years with slow starts but above-average tornado activity are 2010 and 2004, which resulted in $12.7 billion and $3.5 billion, respectively, in wind and thunderstorm event losses, according to PCS. As we saw with the recent PCS #40 declaration, there will be tornado outbreaks that cause billions of dollars in damages, but a major year like 2011 or 2008 could almost be ruled out and this recent trend should make one rethink the claims of the “new normal” back in 2011.

 

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.

Andrew Bustillo named as President & CEO of BMS Intermediaries, Inc.

BMS Associates Limited, the independent specialist insurance group, has appointed Andrew Bustillo as the new President & Chief Executive Officer of its US-broking arm, BMS Intermediaries, Inc.

Industry veteran Mr. Bustillo will join BMS on March 3rd, 2014, reporting directly to Dane Douetil, Chief Executive Officer of BMS Associates Limited. He will join the Group Executive Committee as well as the Board of BMS Inc. Mr. Bustillo will be headquartered in New York.

Mr. Bustillo is a proven executive in the reinsurance industry with nearly 30 years of experience. He currently runs RedBank Re, LLC., which he founded in 2009, providing advisory and reinsurance services to a range of clients. Prior to forming RedBank Re, Mr. Bustillo was Executive Vice-President and a member of the Executive Committee for Benfield Inc.’s U.S. operations, where he was responsible for managing Benfield’s U.S. business. Previously, Mr. Bustillo held senior leadership roles at Guy Carpenter and EW Blanch Company where he focused on the development of team-oriented sales processes that delivered client-centric solutions to the industry. His career began in 1985 in the underwriting community, holding positions with M&G Re and Constitution Reinsurance Corporation, before moving to the intermediary business in 1990 with Aon Re.

Dane Douetil commented:

“I am delighted to welcome Andrew to BMS in his new role to lead our fast-growing U.S. business. Andrew’s appointment is a strong statement of intent about our commitment to the U.S. market. We see significant growth potential in the United States where clients value and desire the high-touch service proposition provided by our very experienced broker teams and supported by our competitive actuarial, analytical and modelling capabilities. Andrew’s experience as a strong sales leader and team-builder, coupled with his proven track record as an energetic and driven executive, will be invaluable in taking BMS Intermediaries Inc. to the next stage in its development.”

Mr. Bustillo commented

“It is a privilege to join BMS, a well-respected, global, privately-held and independent firm with roots in the London market, a significant presence in the U.S., a growing international capability and a unique business model. I am very excited to take responsibility for driving the BMS business forward in the U.S. BMS Intermediaries Inc. has all the right ingredients for success that made it a really compelling proposition to accept the challenges of being its CEO. The company has hired great people, it has established its brand and built a great culture. With a clear strategy for growth and with its innovative business model, I am hugely excited by the opportunity for us to further build a great business.”

Mr. Bustillo holds an MBA in Finance & International Business from NYU Stern School of Business and graduated from Middlebury College with a BA in Economics & Spanish. He is married with 3 children. He is Chairman of the Board Covenant House International, the largest privately funded provider of services to homeless and trafficked youth in the Americas.

 

What makes BMS stand out in the crowded reinsurance arena?

It’s the passion, creativity and care we bring to every aspect of our client relationships. And when you experience it, you’ll know.

Want to feel it? Watch the video

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New BMS creative brings brand to life at NAMIC Annual Convention 2013

What makes BMS the reinsurance advisor clients want to work with time and again? Creative, custom solutions and a caring, entrepreneurial spirit. We think fast, but never wing it.

Want to feel it? Play the Video:

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BMS Sponsors Brand-New reCharge Lounge at NAMIC Annual Convention 2013

We are pleased to announce BMS’ sponsorship of the reCharge Lounge at the 2013 NAMIC Annual Convention, Sunday, September 22 – Tuesday, September 24.

The reCharge Lounge is one of the newest offerings at NAMIC. Located in the South Lobby, Level Four, Washington State Convention Center’s Main Concourse (Across from the NAMIC registration area), the lounge will provide a place for attendees to relax and recharge themselves as well as their devices – with chairs, tables, and a tall charging tower to power portable electronics.

The lounge will be available for the duration of the convention and we look forward to seeing you there.

 

 

 

 

 

 

BMS appoints Dane Douetil as new Group Chief Executive Officer

BMS Associates, the specialist independent broking and underwriting group, has appointed Dane Douetil as its new Group Chief Executive Officer.

BMS Associates is the parent company of BMS Group Limited, its UK broking entity; of BMS Intermediaries Inc., its US broking arm; and of Pioneer Underwriting Limited, its underwriting platform.

Mr Douetil, who is expected to commence his role in early September, will lead the company in the second phase of its development strategy, which has seen BMS revenues grow by 27% since 2010 as it has taken advantage of global opportunities and established its fast-growing Pioneer Underwriting platform.

Mr Douetil, previously Chief Executive Officer of Brit Insurance Holdings NV, has more than 30 years of industry experience, covering broking and underwriting in insurance and reinsurance as well as in retail and wholesale environments. Prior to restructuring Benfield Re, which became Brit Insurance, Mr Douetil was a founding shareholder and director of specialist insurance broker Special Risk Services Limited, a business which was successfully transformed from a start-up to a highly profitable enterprise and sold to Minets (now AON).

Mr Douetil, who began his career at Willis, has deep roots in Lloyd’s and the London markets, having previously been Chairman of the Lloyd’s Market Association and of the London Market Reform Group. In 2007, Mr Douetil was made a Commander of the British Empire (CBE) in recognition of the reform work undertaken in the UK insurance market.

Christopher Hopton, Chairman of BMS Associates, said:

We are delighted to welcome Dane into his leadership role with us. He will build on the strong foundations already in place at BMS, leading the growth of our broking platform and the further development of Pioneer Underwriting. Dane’s experience as a leader in both broking and underwriting will be great assets for BMS. With his entrepreneurial track record of building successful businesses and his reputation, particularly in Lloyd’s and internationally, Dane’s appointment shows that we are determined to carry through our growth plans to success, and continue to deliver outstanding service to our clients.”

Mr Douetil said:

Leading a company of the calibre and scope of BMS is a very exciting prospect. BMS is an intriguing and compelling proposition with significant growth potential. It will be refreshing to return to my roots as a broker and combine this with my underwriting experience in a leadership role here at BMS. This is a rare opportunity in the market and one that is a great marriage of my experience and BMS’s strategy of developing both its broking and underwriting platforms.”

Mr Hopton added:

BMS is building an exciting market proposition and Dane’s track record of innovation in transforming businesses will be of enormous value.”

BMS also announced that Nick Cook has been confirmed as Chief Executive Officer of BMS Group Limited, its regulated UK broking entity, having successfully fulfilled the role on an interim basis since April this year. Mr Cook has been with BMS since 2010, and was previously Chief Executive Officer of Glencairn Group Limited. He is an executive director on the board of BMS Group Limited and BMS Associates Limited.

Commenting on the appointment of Nick Cook, Christopher Hopton said:

Nick has built-out the wholesale platform at BMS, posting encouraging growth and winning new business. He has increasingly taken on additional responsibilities, including our UK reinsurance strategy. With his experience in building successful businesses and his strong network in the markets, he is very well positioned to lead our UK broking activities.”

Mr Cook said:

I am proud to lead our broking business in the second phase of our strategic plan. I look forward to working closely with Dane in continuing to build our business and drive our international development. These are very exciting times for BMS and our clients.”

Nick Cook and Darren Doherty, Chief Executive Officer of Pioneer Underwriting, along with other members of the company’s Executive Committee, will report to Mr Douetil. The search for a CEO of BMS Intermediaries, its US broking arm, continues, and the successful candidate will also report to Mr Douetil.

Mr Douetil’s and Mr Cook’s appointments are subject to approval by the UK regulator, the Financial Conduct Authority.

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

 

2013 Half Year Review – U.S. Extreme Weather Events

Andy Siffert, BMS’ resident Meteorologist, reviews the first 6 months of 2013 in terms of U.S. extreme weather events and their impact on the industry.

As we round the corner into the second half of 2013 we can now put into perspective some of the U.S. extreme weather events that occurred during the first half of the year. With the tally of some of these disasters still being assessed, the U.S. insurance losses estimated by Property Claims Services (PCS) will continue to rise. As of July 1, 2013 the U.S. has seen $6.8 billion in PCS claimed losses from weather events across the U.S. Considering the expected upward adjustment of claimed weather events, losses reported thus far would fall below the five-year average for first- and second-quarter weather-related losses, which total $13.1 billion. This below-average loss is primarily connected to the current “Tornado Drought” that has been ongoing since the second half of 2012. Severe convective storm outbreaks in May 2013 produced major tornadoes causing widespread damage to properties in Texas, Oklahoma, and other states. But as of July 1, the tornado count is 42% below the five-year average, with a major portion of the tornado activity occurring in the lower Mississippi and Tennessee River valleys. Given that May is peak tornado season in the Central Plains, it should be no surprise that strong and violent tornadoes formed and caused damage there. In Tornado Alley this typically occurs during the second quarter of the year, but the number of tornadic weather events in the Central Plains and Midwest regions has been below normal again this year.

The overall lower PCS loss numbers could also be a result of fewer hail events, which, according to Storm Prediction Center (SPC) storm report data, are currently 21% below normal (with only 3,714 hail reports). With the main drivers of severe convective storm losses resulting from the May 20 tornado in Moore, OK and overall hail reports below the five-year normal trend, it seems that derecho or straight-line wind events are the likely driver of most U.S. weather-related losses to-date. These events appear to be trending with the five-year SPC severe wind reports, which as of July 1 stand at 7,360 vs the five-year mid-year average of 7,369 severe wind reports.

The Black Forest wildfire in Colorado appears to be one of the most destructive fires in Colorado’s history. Because of this, wildfires have been getting a lot of media attention lately and it might be interesting to put the current wildfire season into perspective.

According to the National Interagency Fire Center, the U.S. is about a million acres below the 10-year running mean of 2.4 million acres burned in the 22,050 wildfires that have been reported. This is also 15,000 fires fewer than the 10-year running mean. In fact, in 2013 there have been fewer fires than in any of the last 10 years, and the year stands next to last in terms of acres burned.

Like the tornado season, so far the fire season has been well below normal. The Black Forest wildfire in Colorado and the recent deaths of 19 fire fighters in the Yarnell Hill, Arizona wildfire are examples of fires that stick out like a sore thumb in a below-normal wildfire season – just like the two late-May tornadoes which were exceptions to the trend of the overall tornado season.

It is my understanding that in both the Black Forest and Yarnell wildfires, areas burned that had not burned in the previous 40 years – which has to be a major factor contributing to the wildfire catastrophe. The media would say the fires are due to dry conditions, which definitely exist and in some cases are extreme. But if it had been a wet spring, then more fuel would have been available as the summers always see drier conditions in the southwest. The old saying, “Pay me now or pay me later” applies here: If it’s wet, the resulting new growth will eventually dry out and die. And if it’s dry and dead, it will eventually burn.

Worldwide, recent catastrophes seem to be focused largely on flooding-related events, with the notable events originating from the remnants of Tropical Cyclone Oswald that triggered severe flooding in Queensland and New South Wales in Australia. More recently, flood losses that impacted a large area along the Elbe river basin in Europe will likely surpass the 2002 European flood losses. In North America, heavy rainfall provoked catastrophic flooding in southern Alberta, Canada – which will likely go down as the largest flood-related loss ever experienced in Canada. However, with the 7th-latest start to the typhoon season, few typhoons have resulted in flooding or the kind of disasters typically seen in Asia. In fact, global Accumulated Cyclone Energy (ACE) is still stuck in the lowest range – which began in 2007 and is similar to the 1980s. Before Super Typhoon Soulik was upgraded on July 10 to a major 96+ knots tropical cyclone, the last major tropical cyclone, Sandra hit just east of Australia on March 11. And the clock is still ticking on the 2,811 days since the U.S. was last hit by a Cat3+ hurricane – the longest such period since 1900, if not before.

Overall it would appear there is a silver lining – because extreme weather events could be worse based on past years, plus you can’t control nature. Most often, catastrophic events like the wildfires, tornadoes and floods of 2013 can be tied to events of similar magnitude that occurred in the past. We are building bigger towns in locations where catastrophic events have occurred in the past, and the understanding of changes in population, income and housing units can often explain the increase in loss.