PCS and NFIP to Report Aggregate Flood Loss Estimates
87K NFIP Claims from Hurricane Harvey, with More Than $819 Million Incurred So Far; 23K Additional Claims from Irma in Florida, Georgia, South Carolina
JERSEY CITY, N.J., October 5, 2017 — Beginning with Hurricane Harvey, Property Claim Services® (PCS®), a Verisk Analytics (Nasdaq:VRSK) business, will publish aggregate flood loss information supplied by the National Flood Insurance Program (NFIP). Historically, NFIP losses have been excluded from PCS’s industry insured loss estimates. With this combined effort, PCS loss estimates will provide a fuller view of catastrophe losses across the country.
PCS and the NFIP agree that this collaboration represents an important step forward for risk and capital management regarding flood risk in the United States, particularly in light of the NFIP’s decision to secure reinsurance protection earlier this year. The additional reporting through PCS—the world’s leading catastrophe loss aggregation platform—adds a new area of support for the global insurance and reinsurance industry.
“We see this as an opportunity to better integrate with the insurance industry,” said Roy E. Wright, FEMA’s director of the National Flood Insurance Program. “This better understanding of flood losses is in the interest of FEMA and our private sector partners. It can deepen the understanding of flood risk as the industry explores broader use of private lines in this space.”
Tom Johansmeyer, assistant vice president, PCS, said, “We appreciate the opportunity to work on this important initiative with the NFIP. The combined effort is the direct result of requests from our clients around the world to report NFIP losses, particularly in light of the program’s recent engagement with the global reinsurance community. Improved reinsurer risk and capital management should benefit both the NFIP and the policyholders it protects.”
Ted Gregory, director, PCS, added, “The benefits of our combined effort reach beyond risk transfer. With Hurricanes Harvey, Irma, and Maria, flood losses are expected to be a significant portion of the insured losses from these events. Both insurers and independent adjusters can serve claimants more effectively when they have access to more event-specific data. With demand for claims-related services escalating rapidly because of the three storms, I’m proud that PCS is in an immediate position to help.”
For Hurricane Harvey, the NFIP has received more than 87,000 claims and incurred more than $819 million in losses as of September 26. In Florida, Georgia, and South Carolina, the NFIP has received 23,000 claims and incurred losses of $15.8 million so far. For these storms and future events, the NFIP will report claim totals and incurred (rather than projected ultimate) losses in accordance with the PCS reporting cycle. PCS will publish NFIP losses only for PCS-designated catastrophe events.
PCS is in the process of developing a database for NFIP catastrophe loss data—which will be maintained separately from the existing PCS database for insured losses from catastrophe events for at least 12 months. PCS arrived at this decision to ensure that forms of reinsurance protection currently in force, such as industry loss warranties (ILWs), are not unexpectedly affected. After that waiting period, NFIP losses will likely be added to the U.S. database as a fourth and separate category alongside auto, personal, and commercial. From this point forward, PCS suggests that ILWs and other forms of risk transfer that reference PCS data specify the classes of business included, instead of simply using a PCS insured loss total in the trigger.
Johansmeyer explained, “The ILW market provides an important source of capacity for insurers and reinsurers worldwide, and we want to respect the careful efforts made for the risk-transfer transactions currently in force. With this in mind, we encourage companies planning new ILWs or catastrophe bonds to contact us with any questions.”
Existing PCS subscribers will be notified when the database of NFIP loss information is completed.
About Verisk Analytics
Verisk Analytics (Nasdaq:VRSK) is a leading data analytics provider serving customers in insurance, natural resources, and financial services. Using advanced technologies to collect and analyze billions of records, Verisk Analytics draws on unique data assets and deep domain expertise to provide first-to-market innovations that are integrated into customer workflows. Verisk offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, global risk analytics, natural resources intelligence, economic forecasting, and many other fields. Around the world, Verisk Analytics helps customers protect people, property, and financial assets.
Headquartered in Jersey City, N.J., Verisk Analytics operates in 29 countries and is a member of Standard & Poor’s S&P 500® Index. In 2017, Forbes magazine named Verisk Analytics to its America’s Best Mid-Size Employers list and to its World’s Most Innovative Companies list. Verisk is one of only seven companies to appear on both lists. For more information, please visit www.verisk.com.