National Risk Management and Associates

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Be Careful About Holiday Fires

Courtesy of iii.org

HOLIDAY FIRE LOSSES

Fireworks

On Independence Day in a typical year, far more U.S. fires are reported than on any other day, and fireworks account for two out of five of those fires, according to the National Fire Protection Association (NFPA). Fireworks caused an estimated 17,800 reported fires, including 1,200 total structure fires, 400 vehicle fires, and 16,300 outside and other fires in 2011, according to a fireworks fact sheet from the NFPA. Key stats include:

  • Fireworks fires resulted in an estimated eight reported civilian deaths, 40 civilian injuries and $32 million in direct property damage.
  • In 2013, U.S. hospital emergency rooms treated an estimated 11,400 people for fireworks related injuries; 55 percent of those injuries were to the extremities, and 38 percent were to the head.
  • The risk of fireworks injury is highest for young people under age 4, followed by children 10 to 14.
  • The National Fire Protection Association (NFPA) says Thanksgiving Day is the leading day for home cooking fires, with three times as many occurring on Thanksgiving as any other day of the year. In 2013, there were 1,550 fires on Thanksgiving, a 230 percent increase over the daily average.

Home Fires

  • The National Fire Protection Association (NFPA) says Thanksgiving Day is the leading day for home cooking fires, with three times as many occurring on Thanksgiving as any other day of the year. In 2013, there were 1,550 fires on Thanksgiving, a 230 percent increase over the daily average.
  • U.S. fire departments responded to an estimated annual average of 210 home structure fires that began with Christmas trees from 2009 to 2013, according to a fact sheet from the National Fire Protection Association (NFPA).
  • Home Christmas tree fires caused an average of seven civilian deaths, 19 civilian injuries and $17.5 million in direct property damage annually from 2009 to 2013.
  • Electrical distribution or lighting equipment was involved in 38 percent of the home Christmas tree structure fires. About one-quarter (24 percent) occurred because some type of heat source was too close to the tree. Decorative lights were involved in 18 percent of these incidents. Eight percent of home Christmas tree fires were started by candles.
  • The top three days for home candle fires were Christmas, New Year’s Day and Christmas Eve, according to another NFPA fact sheet.
  • During the five-year-period of 2009-2013, the NFPA estimates that decorations were the item first ignited in an estimated average of 860 reported home structure fires per year. These fires caused an estimated average of one civilian death, 41 civilian injuries and $13.4 million in direct property damage per year, according to an NFPA fact sheet.

For information about Holiday Safety and Preparedness, see our Pinterest board.

FIRE LOSSES

Great strides have been made in constructing fire-resistant buildings and improving fire-suppression techniques, both of which have reduced the incidence of fire. However, in terms of property losses, these advances have been somewhat offset by increases in the number of and value of buildings. In 2014, on average, a fire department responded to a fire every 24 seconds in the United States, according to the National Fire Protection Association. A structure fire occurs every 64 seconds; a residential structure fire occurs every 86 seconds and an outside property fire occurs every 52 seconds.

STRUCTURE FIRES

There are about a half million fires in structures each year, according to the National Fire Protection Association (NFPA). In 2014, 78 percent of structure fires were in residential properties and 22 percent were in non-residential structures, including storage facilities, stores and offices, and industrial properties, and public assembly. Public assembly fires include fires in eating and drinking places and other entertainment venues, houses of worship and other places where people congregate. There are approximately 7,600 structure fires in eating and drinking establishments each year, according to a NFPA report based on data between 2006 and 2010.

According to the NFPA, fires in nightclubs are among the most deadly public occupancy fires, because they contain a large number of people in one main space. In January, 2013 a deadly nightclub fire in Brazil claimed over 230 lives, making it one of the most deadly nightclub fires on record. The deadliest nightclub fire in world history was the 1903 Iroquois Theater fire in Chicago, Illinois in which 602 people were killed, followed by a 1942 Cocoanut Grove fire in Boston, Massachusetts which claimed 492 lives and a fire at the Conway’s Theater in Brooklyn, New York in 1876 which killed 285 people. The 2003 Station Fire in Rhode Island claimed 100 lives, and ranks as number eight. The complete top ten ranking is posted at NFPA: Nightclub Fires.

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High Insurance Rates and Litigation

Courtesy of iii.org

It is a standard practice throughout the insurance world: As a convenience, a policyholder grants a third party – an auto glass repair company, a medical practitioner, a home contractor – permission to directly bill an insurer to settle a claim. That practice is called an assignment of benefits, usually known by the acronym, AOB.

In Florida, abuse of AOBs has fueled an insurance crisis. The state’s legal environment has encouraged vendors and their attorneys to solicit unwarranted AOBs from tens of thousands of Floridians, conduct unnecessary or unnecessarily expensive work, then file tens of thousands of lawsuits against insurance companies that deny or dispute the claims. This mini-industry has cost consumers billions of dollars as they are forced to pay higher premiums to cover needless repairs and excessive legal fees. And consumers often do not even know that their claims are driving these cost increases.

The abuse therefore acts somewhat like a hidden tax on consumers, helping to increase what are already some of the highest insurance premiums in the country.

This report discusses how AOB abuse works, how and why it is spreading, and how it is contributing to higher insurance costs for Florida consumers.

Please click on the file name below to view the white paper in PDF format. You will need Adobe Acrobat Reader to view the file.

Download aobfl_wp_121118.pdf

You can download Adobe Acrobat Reader, free of charge, from the Adobe website (https://www.adobe.com/products/acrobat/readstep.html).

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Hurricane Damage Report 2018

Courtesy of iii.org

The 2018 Atlantic hurricane season was less active than the 2017 season but still caused extensive property damage across the southeastern United States, according to the Insurance Information Institute (I.I.I.).

The 2018 hurricane season officially concludes tomorrow (Nov. 30) and saw the formation of 15 named storms. Eight of the 15 became hurricanes, and two (Florence and Michael) became major hurricanes, according to Philip Klotzbach, Ph.D., a research scientist with the Department of Atmospheric Science at Colorado State University (CSU). Klotzbach is also a non-resident scholar with the I.I.I.

The original CSU forecast for 2018, presented in April, predicted slightly above-average hurricane activity with three major hurricanes. The seasonal outlooks CSU subsequently released in the summer envisioned less hurricane activity, with CSU forecasting 12 named storms, five hurricanes, and one major hurricane on Aug. 2.

“Even in what ended up as an average year for major hurricane activity, 2018 was record-setting, with Hurricane Florence spurring statewide rainfall records in North and South Carolina. In addition, Hurricane Michael was the first time on record a Category 4 hurricane made landfall in the Florida Panhandle,” said Sean Kevelighan, I.I.I. CEO. “As financial first responders, the insurance industry continues to be on the ground, helping to rebuild our customers’ livelihoods and economies more broadly. Nonetheless, these extraordinary hurricanes highlighted for coastal residents and businesses the importance of disaster preparedness, building resilient structures and insuring properties against both flood and wind-caused damage.”

A named storm is considered a hurricane when its sustained wind speeds are at least 74 miles per hour. Major hurricanes are those that are designated as a Category 3 storm or higher, with sustained wind speeds of at least 111 mph.

Florence made landfall as a Category 1 storm on Sept. 14 near Wilmington, North Carolina. It was categorized as a major hurricane in the Atlantic Ocean, but the storm’s wind speeds diminished significantly before striking the U.S. coastline. The weather system lingered for days in the Carolinas, dumping as much as 36 inches of rain in North Carolina and 24 inches in South Carolina, the most ever recorded there after a hurricane.

Michael made landfall on Oct. 10 near Mexico Beach, Florida. More than 85,000 of the 125,000-plus claims Florida’s insurers received as of Nov. 16 as a result of Hurricane Michael were for insured residential properties, and the total estimated insured claim payouts currently are estimated at $3.4 billion.

An average Atlantic hurricane season produces 12 named storms and six hurricanes, including three major hurricanes. The 2017 hurricane season had 17 named storms. Ten of the 17 reached hurricane strength and six became major hurricanes, according to the National Oceanic and Atmospheric Administration (NOAA).

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Staying Safe with Enough Sleep!

Courtesy of iii.org

I came across &l=91097_HTML&u=41978829&mid=6230351&jb=0&utm_medium=email&utm_source=SRI+newsletter+01&utm_campaign=http%3a%2f%2finstitute.swissre.com%2fresearch%2flibrary%2feyes_wide_shut.html">this from Swiss Re around 2 a.m., which helps explain why it caught my (sleepy) eye:

Consider these two facts: Firstly, two out of three man-made losses worldwide are due to human failure. Based on Swiss Re’s sigma research, this would mean that people trigger a loss volume of around USD 3 billion per year.

Secondly, life insurance generated premiums of USD 2.6 trillion in 2017. These two facts are linked because tired people make more errors and insomniacs are at a greater risk of dying earlier than would otherwise be the case.

That’s right – the insurance angle on sleep.

The lack of sleep is associated with increased rates of heart attacks, strokes, obesity and other diseases. Sleeping less can also contribute to the development of Alzheimer’s. And recent research found that chronic sleep restriction increases risk seeking behaviour.

If these trends change the loss patterns in property and casualty or mortality rates, this could have a multi-billion dollar impact on the insurance industry in the long run.

The lack of sleep has caused some high profile accidents, the most notable in my world being a New Jersey Transit train that in 2016 crashed into Hoboken terminal because the engineer, suffering from sleep apnea, zoned out at a crucial moment. One woman died, dozens were injured.

Swiss Re posits that society, ever accelerating, robs us of ever more sleep. The less we sleep, the woozier we become. And the more errors we make. (Our bodies wear out faster too, becoming susceptible to the maladies Swiss Re mentions above.)

A good dose of resilience helps here. New York area railroads are installing (by federal mandate) positive train control systems, which automatically stop trains in any sort of peril, including that of a tired engineer. The illustration above describes how the system works.

As for my own struggles – an e-book of white text on black background, and perhaps a cup of chamomile tea.

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Join Us to Reduce Distracted Driving

Courtesy of http://www.iii.org/fact-statistic/distracted-driving

Activities that take drivers’ attention off the road, including talking or texting on cellphones, eating, conversing with passengers and other distractions, are a major safety threat. The National Highway Traffic Safety Administration (NHTSA) gauges distracted driving by collecting data on distraction-affected crashes, which focuses on distractions that are most likely to affect crash involvement such as dialing a cellphone or texting and being distracted by another person or an outside event. In 2013, 3,154 people were killed in distraction-affected crashes, and 424,000 people were injured. There were 2,910 distraction-affected fatal crashes, accounting for 10 percent of all fatal crashes in the nation, 18 percent of injury crashes and 16 percent of all motor vehicle crashes in 2013.

FATAL CRASHES AFFECTED BY DISTRACTED DRIVERS, 2013

Crashes Drivers Fatalities
Total fatal crashes 30,057 44,574 32,719
Distracted-affected fatal crashes
Number 2,910 2,959 3,154
Percent of total fatal crashes 10% 7% 10%
Cellphone in use in distracted-affected fatal crashes
Number 411 427 445
Percent of fatal distracted-affected crashes 14% 14% 14%

Source: U.S. Department of Transportation, National Highway Traffic Safety Administration.

View Archived Tables

NHTSA says that in 2013, 14 percent of distraction-affected crashes occurred while a cell phone was in use. The chart below shows driver hand-held phone use by age.

DRIVER HAND-HELD CELLPHONE USE BY AGE, 2005-2014 (1)

 

(1) Percent of drivers using hand-held cellphones.

Source: U.S. Department of Transportation, National Highway Traffic Safety Administration.

View Archived Graphs

NHTSA’s website, Distraction.gov has more information on distracted driving. “It Can Wait”, a public awareness campaign funded by four by wireless carriers, provides resources on the dangers of distracted driving, including “From One Second to the Next”, a film by director Werner Herzog profiling the victims of distracted driving.

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National Risk Management & Associates
220 Magnolia Avenue
Sanford, FL 32771
Phone: (407) 767-2950