Insurers & Resiliency John M. Huff Director, Missouri Department of Insurance President, National Association of Insurance Commissioners

Agenda Insurance and Resiliency Natural Disasters Economic Recovery Economic Opportunity Importance of Mitigation and Adaptation Consumer Education Investment Opportunities

Insurance & Resiliency People like to build in catastrophe-prone areas: Near rivers, lakes and the ocean Near earthquake faults On mountains In areas subject to wildfires Today there is more insured value is in harm’s way than ever before We know people are attracted to water. They love the ocean, lakes and rivers and often want to build by them. As a result property values exposed to catastrophe loss have grown over time. Roughly half of the insurance property value in the U.S. is exposed to hurricane loss. Builders are frequently replacing modest coastal homes with larger, more expensive ones.

Insurance & Resiliency Insurance allows people to choose to live in areas where natural disasters occur Insurance is the economic glue holding the economy together Insurance is perhaps the most important resiliency tool Insurance provides the funding for economic redevelopment following a disaster In 2015 natural disasters in the United States totaled $16.1 billion. As striking as this amount appears, it was a relatively better than average year. The U.S. averages over $20 billion a year in insured losses from catastrophes. In an average year the U.S. sees over 1,300 tornadoes, 11,000 major hailstorms and 13,000 major windstorms. Our country experiences numerous other diverse catastrophes including hurricanes, earthquakes, wildfires, droughts and snowstorms. In 2015, severe thunderstorms accounted for roughly 60% of insured losses. It was a very light year for hurricanes, in part due to a strong El Nino effect which tends to suppress hurricane activity in the Atlantic Basin. Property and casualty insurers write coverage for houses and businesses allowing families and business owners to rest easy knowing they will have the funds to rebuild if the worst happens. Insurance allows people to chose to live in areas where natural disasters occur. Insurance is perhaps the most important tool for a community to rebuild following a catastrophic event. At the end of 2015, insurers operating in the U.S. maintained over $700 billion in policyholder surplus to fund future property and casualty losses. These insurers collected over $500 billion in written premiums and paid out almost $300 billion to help people and business rebuild or recover economic losses. Without a strong property and casualty insurance industry, lenders would be reluctant to lend for new construction or repair of damaged property. Economic development would grind to a halt.

Mitigation & Adaptation Strong building codes & enforcement Mitigation before a loss Each $1 spent on mitigation saves $4 in future losses Groups like IBHS have demonstrated the impact of strong building codes and construction techniques As the world changes, we must adapt: More frequent or more severe storms Rising sea levels

Regulatory Adaptation Assistance After Hurricane Katrina, regulators assisted Mississippi with a call center to supplement the department’s efforts After Superstorm Sandy, similar assistance was provided to New Jersey The NAIC has offered a disaster data collection mechanism to obtain policy level information from regulated entities at the ZIP Code level

Consumer Education Consumers need to be informed about risks Information is empowering Information must be practical Mitigation suggestions must be affordable Economic incentives for mitigation work well

INSURE U – Disaster Preparedness http://www. insureuonline

Home Inventory Checklist & App

Investment Opportunities There are many opportunities presented by disasters: People can invest in effective pre-loss mitigation Insurers can encourage policyholders to mitigate Insurers can invest in businesses providing mitigation tools to people and businesses Insurers can invest in solid infrastructure projects

Thanks