General Session - The Big One Robert J. Curry, FCAS Insurance Services Office

The Big One Historical Hurricane Activity What’s Changed Hurricane -- What Ifs Historical EQ Activity EQ -- What ifs Mitigation http://www.iso.com/hurricane_experience/index.html

HURRICANE HISTORY LONG-TERM FREQUENCY OF HURRICANES Ten year moving average

Largest Insured Hurricanes 1949-1999 Reported Rank Year Name Losses ($B) 1 1992 Andrew 15.5 2 1989 Hugo 4.2 3 1998 Georges 3 4 1995 Opal 2.1 5 1999 Floyd 2 Source: ISO’s Property Claim Services

What has changed? Population Growth

Growth In Population Density

What has changed? Population Growth Inflation Amount of Property per person

Amount of Property per person Size of new home has increased 1645 square feet in 1975 2190 square feet in 1998 % of homes with 4 + bedrooms 21% in 1975 33% in 1998 % of homes with 2 1/2 or more baths 20% in 1975 52% in 1998 source: US Department of census

Largest Insured Hurricanes 1949-1999 Adjusted Rank Year Name Losses ($B) 1 1992 Andrew 22.9 2 1965 Betsy 7.4 3 1989 Hugo 7.4 4 1970 Cecelia 4.2 5 1998 Georges 3.1

Hurricane -What Ifs Hurricane Bret Hurricane Gloria Hurricane Andrew

Hurricane Bret In 1999 made landfall south of Corpus Christi $30 million in damage Made landfall in Galveston, Texas today? Potential Modeled Losses => $11.6 Billion Source: Applied Insurance Research, Inc.

Hurricane Gloria In 1985 passed over Cape Hatteras, NC as a Cat 3 & made landfall in Long Island as Cat 2. $400 million reported; $850 million adjusted Made landfall in Long Island, NY as a Cat 4 today? Potential Modeled Losses => $25 Billion Source: Applied Insurance Research, Inc.

What if Hurricane Gloria… Made landfall in Brooklyn, NY as a Cat 4 today? Potential Modeled Losses => $39 Billion Source: Applied Insurance Research, Inc.

Hurricane Andrew What if storm like Andrew made landfall in downtown Miami today? Potential Modeled Losses => $50 Billion Source: Applied Insurance Research, Inc.

Largest Insured Loss EQs since 1940 Reported Rank Year Name Losses ($B) 1 1994 Northridge 12.9 2 1989 Loma Prieta 1.2 Source: ISO’s Property Claim Services

Earthquakes - What Ifs 1886 Charleston, SC 1906 San Francisco 1811-12 New Madrid

1886 Charleston EQ M7.3 in Charleston SC MMI 10 Estimated insured damage if happened today $10 Billion Source: Risk Management Solutions

1906 San Francisco EQ 1906 San Francisco EQ M8.3 Significant fire following damage Estimated insured damage if happened today $36 Billion Source: Risk Management Solutions

1811-12 New Madrid EQ 1811-12 => series of 4 EQs over 7 week period MMI 10+ Estimated insured damage if happened today $88 Billion Source: Risk Management Solutions

Mitigation Efforts BCEGS Community graded based on Building Code Effectiveness Grading Schedule Community graded based on building code in force enforcement of that code Credits associated with better grade 4,600 communities evaluated approved in 48 states

Good versus Bad Construction Practices - Hurricane Andrew