The world is less risky now than it was 25 or 50 years ago, Foley says. “
Fatalities in auto accidents are down even though there are so many more
vehicles.” He says organizations such as the Insurance Institute for Highway
Safety have had a “tremendous impact in the safety of vehicles” and adds
that in the future, automobiles will become even safer. He points to an initiative by Volvo to develop new technology to prevent accidents outright.
Foley says the same is true for homes—where the strengthening of building codes
has had a desirable effect on safety. As an example, he points to the coastal town of
Gilchrist, Texas, where Hurricane Ike destroyed every home except for one that was
built under updated codes.
Risk and safety are not mutually exclusive; they exist together. As risks
rise, we respond by increasing our efforts to counter those risks.
We’re entering an era of more frequent and more severe natural catastrophes,
but at the same time new technology is being developed to help people stay
safer. In recent years, new, more effective early-warning systems for tsunamis and tornadoes have
been developed that increase alert times. Similar systems for earthquakes are being researched.
Social-media sites such as Twitter can serve as another real-time emergency-alert system.
There are other examples of increased risk being met with additional response. The past
decade has seen a rise in acts of terrorism, along with a response that included creation
of the Terrorism Risk Insurance Act, which enables specific insurance coverage to protect
against an increased risk and create a measure of certainty.
President | REINSURANCE
ASSOCIATION OF AMERICA
In testimony before the Financial Services and General Government
Appropriations Subcommittee of the Senate Appropriations Committee,
Nutter said data points to a
“clear increase in the number and financial
impact of U.S. and non-U.S. natural catastrophes,” including geophysical, climatological,
hydrological and meteorological events.
Nutter said that much of this increase can
be attributed to changes in weather intensity
and climate-related impacts. However, he
said, “the fundamental driver is the increase
in the number of people living in areas vul-
nerable to catastrophic storms, the increase
in property values in these high-risk areas,
and the vulnerability of construction materi-
als and technology.”
Nutter said that the “reality is that our
society has moved increasingly to areas
with the greatest exposure to natural ca-
tastrophes along our coasts and rivers and
invaded the natural landscape in areas sus-
ceptible to wildfire and drought.”
cHief Under Writing officer
ZURICH NORTH AMERICA
The world certainly feels
riskier, with catastrophic events all across the globe
immediately visible through
24-hour media. As underwriters, we take risk, and the key
thing is to look objectively
at the data and understand
whether the actual experience changes our view of the
underlying risk. Often, tragic
though the events are, they
are anticipated in our risk
models and reflect precisely
why insurance is so important
to the world economy. We are
seeing a lot of “blue lobsters,”
though, at the moment—like
black swans, blue lobsters were
thought to be impossible, but
they do actually exist with a
one in two million probability.
national sPokesman | STATE FARM
the mere existence of insurance makes this a safer world from a financial perspective.
But the fact that insurance does protect us from financial ruin may make us more
careless than we would be if we didn’t have the comfort of that financial protection.
the other side of the coin is that insurers are inherently motivated to do all they
can to help create a safer world. through the years state farm has been a champion
in this area, particularly with regard to auto safety. We were a founding member of
the insurance institute for Highway safety, we have always encouraged the use of
seatbelts, and our 50-plus-year relationship with auto manufacturers has matured to
include our vehicle-research facility where our technicians give feedback to manufacturers about safety systems, structural engineering and ease of repair.
cHief researcH officer | RISK MANAGEMENT SOLUTIONS
one can point to countries and situations where risk is increasing, alongside other developed countries where risk continues a slow decrease. the broad trends in many areas over
the past 100 years have been to reduce risk of loss of life—by introducing building codes
for earthquakes, better forecasting, and evacuation plans for hurricanes and floods. However, there has not been an equivalent focus on reducing monetary loss in catastrophes,
and for many reasons, including situations where insurance serves to cross-subsidize
those who choose to live in higher-risk locations, property losses continue to rise. longer
term, climate change, through more intensive downpours of rain, through raised sea levels
and more extreme hurricanes, is also likely to increase the hazards that drive the risks.