Severe weather impacts dominate at Zywave Property Insights

It wasn’t billed as an extreme weather conference, but you’d be forgiven if you thought it was. Weather, natural catastrophes and climate change were the leading topics at the 2023 Zywave Property Insights Conference in New York City in November. Even the front cover of the printed agenda featured four icons depicting a tornado, a hurricane, a snowflake and a thunderstorm. 

Zywave, an insurtech provider, said the program was designed to explore “the challenges and opportunities facing the global property insurance market,” with discussions about “underwriting and pricing developments, the impact of the reinsurance market, and evolving client expectations.” 

The one-day conference, attended by several colleagues from Zurich's Property team (some of whom are in the photo above), lived up to its description. The event touched on a variety of topics, including reinsurance, talent acquisition, inflation, investment and artificial intelligence. But if there was a single villain lurking behind every PowerPoint presentation, it was severe weather fueled by climate change. 

The rise of secondary perils 

While risk managers expressed frustration with rate increases, insurance providers and brokers explained that they are needed to help cover losses driven by the increasing frequency and severity of extreme weather. It’s not just Atlantic hurricanes and California wildfires. Billion-dollar losses are now being caused by convective storms that bring about tornados, hail, localized flooding and straight-line winds. Extreme cold weather in historically temperate climates has led to burst pipes and widespread power outages. 

“What’s throwing everything into the blender is the secondary perils (including) the severe convective storms,” said Joffre Mishall, Head of Property for U.S. National Accounts at Zurich North America, who was a panelist on the View from the Top discussion. “Severe convective storms spin out tornados, hail, flash flooding. And then on top of all that, you have your California wildfires.” 

Data from the National Oceanic and Atmospheric Administration (NOAA) shows 25 confirmed weather and climate disasters exceeding $1 billion in damage so far in 2023 — the most events on record in a calendar year — and 19 of those have been severe storms. The historical average is about eight per year. This year also saw hurricane activity threatening previously unlikely places like California, Maine and Nova Scotia.

“The end of hurricane season no longer brings the sigh of relief it once did,” said Mishall. “Severe weather is an all-seasons concern now. The hazard maps for severe convective storms have sprawled.” 

The last two years, winter storms have been a leading cause of loss for many property insurers, he added. 

Insurance providers need to clearly articulate to customers why rates are rising, Mishall said. “You need to explain to your customers and brokers which perils are driving loss costs on their individual account.”

In a panel discussion on the state of the market, panelists discussed the rise in frequency of $1 billion events outside of hurricanes and how these dynamics are resetting what’s normal for catastrophe losses. What used to be tornado alley is now a much wider swath, with tornados spotted east and north of the previous borders.

Joe Christiana, Partner with Dowling & Partners, an insurance equity research firm and broker-dealer, presented a keynote on the various forces driving the property insurance market. He focused on the “three I’s” – inflation, interest rates and Hurricane Ian. The surprising strength of Ian was “the straw that broke the camel’s back,” he said. 

Hurricane Ian made landfall in Southwest Florida in September 2022 as a Category 4 storm. The weather system caused more than 150 fatalities in the U.S., and overall damage estimates are well above $50 billion, making it one of the 10 costliest Atlantic hurricanes on record. 

“Now, it seems like $10 billion events are happening all the time,” Christiana said. “We've had ten $10 billion events over the last 10 years, five of which were over the last three. And, of course, 2023 is left blank. But that’s not good news, because, as you’ve heard, secondary perils have been off the charts. We’re approaching that $100 billion loss level yet again without any major events, without any peak perils.” 

AI and recruiting talent 

The final session of the day was the View from the Top panel discussion, which was moderated by Zywave Senior Vice President Jeff Cohen and included Mishall as well as Michael Chang, Head of Corporate Risk & Broking for North America at WTW; Brenda (Ballard) Austenfeld, CEO and President for National Property at RT Specialty; and Bret Ahnell, Chief Operating Officer at FM Global. The panelists talked about challenges for the industry including talent acquisition and retention. They also discussed the use of artificial intelligence (AI) to assist in the underwriting process. 

AI can help insurance providers and their customers better identify and quantify emerging risks, Mishall said, opening the door to more solutions to mitigate the risks and tailor coverage. “More investment in the AI world is going to be a huge step for us going forward,” he said. 

The panel addressed the need to attract and retain diverse talent, including from related industries like banking and accounting where workers have transferable skills that can be built upon. Effective onboarding is critical to candidates’ success and satisfaction, Mishall said. “Once we do get them in, let's make sure we provide the right training and resources to enable them to learn quickly and not frustrate them,” he said. 

Mishall said there’s another aspect to retention and a rewarding career that’s often overlooked: Fun. Carriers and brokers deal with serious challenges, and fun may not be the first word people associate with the industry. But ensuring workers can connect, collaborate and celebrate successes creates a strong culture. It helps make people want to come to work each day to take on the next challenge.

Many insurance professionals fall into the industry, and as Mishall himself found out, “once you’re in it is fun.”

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