Bermuda strives to become heart of blockchain

On the heels of the launch of the Bermuda government’s new blockchain task force, the island sets out its stool

Bermuda is set on positioning itself as the “blockchain laboratory of the world”, according to some of the island’s key influencers.

Speaking during a panel session at the Montgomery Summit held in California this week, Conyers partner Chris Garrod stated that the island could feel confident positioning itself as the “blockchain laboratory of the world”, highlighting its proven success within (re)insurance as a market that innovates and delivers solutions to global industry challenges.

Garrod, who is also member of the government’s Blockchain Legal and Regulatory Working Group, said: “If we are to make this blockchain business successful in Bermuda, all we need to do is continue to do what we do best. There’s no reason why our world-class market can’t do that.”

The panel was moderated by Bermuda Business Development Agency (BDA) consultant for Emerging Technologies John Narraway, and also included National Security Minister the Hon Wayne Caines, and Aron Dutta, founder and chief executive of Bermuda-based blockchain accelerator Vaphr.

The views expressed were in line with assertions made by the Bermuda Premier at last year’s Global Reinsurance Innovation & InsurTech Bermuda event that the island would establish a technology hub.

He said: “Bermuda understands, and the Bermuda government understands, what lies ahead for the future, and the future is in InsurTech.”

Originally published by Newsdesk 9 March 2018. It has been republished here for the membership of Reinsurance Under 40s.


The US Reinsurance Under 40s Group is celebrating its 10th anniversary in 2018. Sean Ramlal, the organisation’s Fundraising and Technology Chair, tells Reactions about how the group helps its members and the wider industry as well how it will celebrate its 10 year anniversary.

– Sean Ramlal, Vice President, Treaty Underwriter – Reinsurance; QBE Re and Fundraising and Technology Chair at the US Reinsurance Under 40s Group

Sean Ramlal Headshot 2018

Being involved with the US Reinsurance Under 40s Group is probably one of the best things I’ve done for my career. Over the years, I have personally formed more relationships than I can count and learned so much about our industry and the people in it. It has afforded me the opportunity to gain board experience leading a nonprofit, travel internationally on educational tours of various reinsurance hubs, and make strong connections with industry executives and up and coming leaders. I’ve shaved my head for cancer research, been homeless for a night to raise awareness, and cleaned up parks around Manhattan.

Re Under 40s is a nonprofit founded in 2008 by a collective of young industry professionals based off a similar concept in London and Bermuda. The primary aim of the all-volunteer board is to provide educational, charitable, and networking opportunities for the future leaders of the reinsurance industry. From our first meeting of less than 20 people, our membership has grown to over 2,250 registered today. With members in 27 states and 15 countries, we have professionals representing nearly 350 companies who are benefitting from the many learning and networking opportunities we provide. Our members include underwriters, brokers, actuaries, claims professionals, lawyers, accountants, cat modellers, consultants, asset managers, and just about every other profession that touches the insurance and reinsurance industry. All are welcome to attend our events, regardless of age.

We create an environment for our members to advance professionally through education and relationship building. We hold regular panel discussions, presentations on topical issues, webinars, social and charitable events, an annual education tour, and distribute content through “Re-Act”, our news platform. Besides enriching knowledge, these all serve as a medium for members to form relationships early in their careers, with both their peers and the executives that support us. These business associations are critical to the future of any company and their employees. We like to think of it as building the network you might not even know you need.

Insurance is very much a people industry and knowing the party on the other side of a transaction is crucial to making effective business decisions. Additionally, we give back by fundraising and participating in events in collaboration with organisations such as St Baldrick’s, Covenant House, IICF, Junior Achievement of Greater Miami, Riverkeeper, and the NYC Food Bank.

One of the key focuses of the group is to address the generational gap in our industry. There was a time when many insurance companies had large training programmes which equipped today’s leaders with the tools they used to become successful. As budgets were constrained and competition for experienced talent grew, these new hire programmes began to disappear. The Re Under 40s seeks to fill the void left and promote the professional development of young talent in the industry and in academia.

We are one of the few, or perhaps the only, major reinsurance industry groups that does not charge for membership. Furthermore, we aim to make all events free to maximise attendance and encourage participation by members at all stages of their careers. Of course, this cannot be done without the support of our numerous sponsors. Fundraising is core to our group, and thankfully having a mission that serves the industry openly has made our sponsors more than willing to offer their support.

2018 marks the 10th anniversary of the group and we have a lot to look forward to! We’ve grown so much in the last decade with little sign of slowing down. The first half of the year is already busy with various educational events, including panels, webinars, and lunch and learns on topics such as blockchain and cyber liability. We’re also in the process of finalising our educational tour to Zurich and Munich and our inaugural Golf Social. With expansion to US insurance hubs like Philadelphia, Chicago, Miami and Morristown, we expect continued growth. We are also really excited about launching in Stamford this year! There are many social events in the pipeline, including the Frying Pan Summer Social, as well as charitable opportunities such as the annual St Baldrick’s Foundation head shaving event – where I plan to go bald for the 10th time!


This article first appeared in the March 2018 edition of Reactions. You can find out more information about the magazine by visiting


Surety: Has a new cycle phase started already?


By Sarina Puccio,
VP – Credit, Surety, Political Risk Underwriter
Munich Re America

When I started in the surety reinsurance industry in 2012, coming over from a primary carrier, a lot of new players were entering the reinsurance market. They came in and mainly competed on price. Some of the new entrants neither had a specialized underwriting team nor, in some cases, any expertise at all in surety reinsurance. Partly as a result of these new entrants, reinsurance rates started to decline and continued to do so for the next 5 years. Rates came down even on certain poorly performing programs. Along with rate reductions, terms and conditions also softened. These trends led some industry participants to conclude that this was the new normal for our market. Others have gone so far as to consider our business a commodity, which is a mistake as reinsurers can and do provide significant value to clients: our focus cannot be on price alone.

I believe that we are entering a new phase of the cycle for surety reinsurance as indicated by developments over the past few months. The market was much more stable during the most recent renewal period with the majority of programs renewing on a flat basis. This was especially noteworthy as surety business was not affected by the severe catastrophes of 2017. Reinsurers were particularly disciplined in negotiating loss-affected treaties and with respect to terms and conditions. Furthermore, the number of new entrants slowed down markedly and some reinsurers even pulled back, or at least reduced, their existing shares. Compared to past years, some reinsurers have clearly changed their approach.

Like reinsurers, primary surety carriers are likely to experience significant market developments in the near term, a number of which might include:

  • Rebuilding the infrastructure in the U.S. is widely recognized as an absolute necessity and is a very important part of the current Administration’s agenda (Source:, January 18th, 2018). Assuming that a large government-backed infrastructure program is implemented, it is extremely likely that there will be a sizeable increase in demand for surety bonds. This would be a big positive for the but also has the potential to bring some significant challenges to the industry:
  • Some of the new construction projects will likely be extremely large. What new risks could this bring?
  • There is already a lack of skilled workers across the country. If these new projects move forward, then this labor shortage will likely get more severe, increasing the risk to the industry.
  • If new bonded projects become available, this could also lead to greater competition within the surety sector. Would new surety players continue to enter the market and further soften terms and conditions?
  • Results for primary surety underwriters are still very good, but when the market turns again will the newer management teams be able to adequately address greater claims activity? Due to the excellent surety results over the past 12 years, they have less experience with periods of heightened claims activity.
  • Although public-private partnerships (P3) will become increasingly important, many private sector players, including surety writers, have little experience with P3. This highlights that there is still a lot of educational work to do with respect to P3.

These are only a few examples which show very clearly how the whole underwriting process in the surety sector is likely to be impacted in the future. These developments also have a real potential to affect demand for reinsurance as our clients’ future needs will almost certainly change with these developments. That is why reinsurers need to be prepared, proactively focus on the leading indicators in our industry, and seek to provide new tailored solutions as well as superior service to our valued clients. These insights and value-added services are key to a long-term partnership between reinsurers and their clients.


Original Source:

ICM Spotlight: Blake Berman

As part of the Insurance Careers Month (, find information (in his own words) below on an exciting career of Blake Berman.   Blake works for Guy Carpenter and has a fascinating background.  #RU40s #ICM #careertrifecta #reinsurance


Before starting my reinsurance career, I was a math and physics nerd and avid football and basketball fan/player. Playing team sports helped develop my work ethic and appreciation for contributing as part of a group. Having a passion for math made working as an actuary a great t for a career. My goal is to help Guy Carpenter transition to being a next-generation risk advisor by building valuable new solutions for our clients.


I help North American clients make better decisions on growth, capital, and enterprise risk management strategy by creatively leveraging data and technology. I work with a team of passionate professionals who are singularly focused on developing solutions for client needs, and who have the capacity to e ciently prototype and automate commonly used analyses.


The re/insurance industry is a great eld for anyone who is mathematically inclined, has people skills, and is not afraid to put a lot of time and energy into developing a career. A career in reinsurance can quite literally take you all over the world and introduce you to many interesting people. I chose to work at Guy Carpenter because of its strong reputation as a top broker, and for the satisfaction I get from learning a wide variety of skills while helping clients solve real-world business problems.


I’m most surprised by the deep connections that people in our industry develop with one another — even as years go by and people may change jobs, those connections endure. I wouldn’t have thought it would be that common to go on vacations with your reinsurance broker, or to invite them to your wedding, but it happens quite often!

PS: The above post was taken from the source below:

Towards a flood resilient future

Flooded town1

Raghuveer Vinukollu, Nat Cat Solutions Manager, Munich Re America

As we begin 2018 and approach the National Flood Insurance Program (NFIP) reauthorization date of Jan 19th, this is an important time to share key insights on the future of flood insurance and how we, as a community can best achieve flood resilient communities in the U.S.

Insurance plays a major role in developing resilient communities. There are studies that
highlight the importance of high insurance penetration and the correlation to strong resilient countries. So where do we stand in terms of flood resilience in the United States? From a flood insurance penetration standpoint, we are behind the curve. Post Hurricane Harvey, it came to light that a staggering 80% of the homes in Houston were not insured for flood1.  The flood insurance penetration rate was not much better in NY and NJ during Superstorm Sandy 2 . Note that these are coastal states where hurricanes and extreme flooding events are common and where homeowners and businesses should be more aware of the risks. Across the country, according to the Insurance Information Institute, only about 12% of homeowners in the U.S. purchase flood insurance3.

Exacerbating the situation is the fact that an extremely large number of Americans are living in one in 100 year flood zones, or areas that have a 26% chance of flooding over the course of a 30 year mortgage. A recent study by scientists and engineers from University of Bristol and Princeton University revealed that approximately 40 million Americans are living in 100 year flood zones4.  This corresponds to $5.5 trillion of property value! In contrast, only 5 million policies are in force by the NFIP5.  This protection gap is significant and can have a major impact on the economy as there is a direct impact on tax payers money and thus the overall GDP.

Part of the solution for this flood insurance protection gap is better communication of the risk. Unfortunately, Flood Insurance Rate Maps (FIRM), the official flood maps in the U.S., are not frequently updated and are binary in nature (i.e. either you are “in” or “out” of the flood zone). Both Sandy and Harvey events showed several instances of FIRMs being inadequate to evaluate the extent of flooding. The FIRMs designate the flood risk at a point in time and do not reflect the changing risk of the property. Flood models and flood tools have developed well past the. outdated FIRM methodology and can inform more risk appropriate pricing.

The 21st Century Flood Reform Act, which provides a package of NFIP reforms and has been passed by the US House of Representatives, is a good start toward improving flood risk awareness. FEMA would have to use, apart from the applicable FIRM, other appropriate risk assessment models, data, and tools to communicate flood risk. FEMA must also consult governmental agencies like USGS and NOAA to obtain information relevant to flood insurance mapping.

The bill also includes requirements in order to increase consumer choice through private flood insurance market development. This includes broader coverage offerings, removing the non-compete clause restricting Write Your Own (WYO) companies from selling private flood insurance, and allowing a policyholder to switch between NFIP and the private flood market. The private market is unlikely to take on NFIP properties that have incurred multiple flood losses, or “repetitive loss properties”, so the bill fortifies the solvency of the NFIP by limiting coverage and charging premiums that reflect the actual flood risk of those properties. While these are some of the proposals that the U.S. House has passed, the final decisions and changes are yet to be approved by the full Congress.

In May 2017, the Deputy Associate Administrator for Insurance and Mitigation at FEMA, Roy Wright challenged everyone to aim to double the number of flood insurance policies, both NFIP and private insurance by 2023. A goal like this is crucial for increasing the flood insurance penetration, thus making our communities more resilient. While there have been three extensions so far, extending the existing program without meaningful reforms does not improve flood resiliency. We hope that Congress considers meaningful changes, without lapse, to the NFIP with an outlook for a long term reauthorization of the program and a more flood resilient future for the United States.

1 Insurance Business America, Majority of Harvey Victims did not have flood insurance,
January 2018
2 Rutgers School of Public Affairs and Administration, The Impact of Superstorm Sandy on New Jersey Towns and Households
3 iii, Facts + Statistics: Flood Insurance, October 2017
4 BBC News, US Flood Risk Severely Underestimated, December 11, 2017
5 NFIP Statistics

Wildfires More Likely to Trigger P/C Industry Changes Than Hurricanes, says Blake Berman, RU40s Member

Reposted from Best’s News Service dated Nov 15, 2017

A record-setting wildfire season in California is more likely to trigger U.S. property/casualty changes than the three major hurricanes that hit the country, according to a Guy Carpenter & Co. LLC senior vice president of North American strategic advisory.

Hurricanes are a “very heavily modeled peril,” and this year’s losses are likely within the realm of expectation, said Blake Berman, author of a Guy Carpenter annual report on insurance risk benchmarks. Insurers don’t have the same modeling capacity for wildfires. Berman said the insurance industry, particularly in terms of modeling, is “still building our understanding” of wildfires. He said he thinks underwriters will look more closely at risk factors such as a structure’s distance from tree or brush lines before writing policies.

“It’s getting increasingly dry in parts of our country,” he told Best’s News Service. “The wildfire activity is unprecedented this year,” and follows high losses in other recent years.  Seven of the top 20 most-destructive and five of the deadliest wildfires in California have occurred over the past three years, including the Tubbs Fire in October. It claimed 5,643 structures and 21 lives, according to the California Department of Forestry and Fire Protection (Cal Fire). The National Interagency Fire Center reported 53,986 fires through Nov. 10, fewer than the 10-year average of 64,388. However, the 8.88 million acres burned is significantly higher than the 10-year average of 6.81 million acres. It is the second-highest number after the record-setting 2015 wildfire season.

Five years of severe drought in California left many forests less resilient to wildfire (Best’s News Service, July 21, 2017). At the same time, Berman said, there has been a shift in population away from the Northeast and some rust-belt states to areas with more favorable weather and lower taxes. Some popular areas are catastrophe-prone, whether it’s hail in Colorado or Texas, hurricanes in Texas and Florida or wildfires in California.

The wildland-urban interface contains about one third of U.S. housing units, then-U.S. Forest Service Chief Tom Tidwell said earlier this year in a speech. Fast-growing areas with moderate- to high-wildfire potential range from the South to “large parts” of the West. “Across many of these degraded landscapes, fuel buildups have created explosive conditions made worse by the effects of climate change, such as drought and insect epidemics. Fires are getting bigger than ever before, with more extreme fire behavior,” he said.

The fires followed a third quarter in which three Category 4 hurricanes made landfall in the United States and two earthquakes shook Central Mexico. The property/casualty industry posted a 0.4% underwriting loss in 2016, its first calendar-year loss since 2012, which the Guy Carpenter report attributed to emerging risks, catastrophe frequency and severity and changing capital needs (Best’s News Service, Oct. 24, 2017).  Adverse reserve development in a small number of large but influential lines was a factor, said Berman. The median accident year loss ratio among personal lines carriers increased 3% since 2013, according to the report, with private passenger automobile and commercial auto liability writers netting median combined ratios of 107. The homeowners market continued to perform strongly last year, a lift it likely lost this this year due to the string of catastrophes, said Berman. Commercial liability “continued to see an uptick in losses,” last year, Berman said. The industry’s 10-year run of favorable prior-period reserve development ended in 2016. Ongoing improvements in workers’ compensation improved overall results last year. And stock market gains “have had a very soothing effect” on performance, masking some reductions in underlying underwriting profitability.

One surprise was the industry expense ratio. Guy Carpenter expected it to decline at a quicker rate as companies adopted new technologies and better distribution strategies. He said he thinks insurers instead have used technology to maintain or reduce prices while improving services such as claims management and increasing consumer engagement options.

“The market never really stands still in the property and casualty industry,” Berman said.

The top five writers of homeowners multiperil in the United States in 2016, based on direct premiums written, were: State Farm Group, with an 19.26% market share; Allstate Insurance Group, 8.64%; Liberty Mutual Insurance Cos., 6.81%; Farmers Insurance Group, 6.03%; and USAA Group, 5.84%, according to BestLink.

Bermuda expects to pay 25% of HIM losses: ABIR

This Re-ACT contribution is from our colleagues from Bermuda Reinsurers Under 40, Abigail Soares and Cindy Hooper. This was originally published in the Insurance Insider and written by Catrin Shi.

Bermudian (re)insurers expect to pay a quarter or more of the approximately $100bn of losses from hurricanes Harvey, Irma and Maria, according to the Association of Bermuda Insurers and Reinsurers (ABIR).

The Bermuda share of hurricane losses will come from business segments including commercial insurers and reinsurers; captive, or self-insurance companies; catastrophe-focused MGAs, and alternative capital risk funds and pools, the ABIR said.

Based on historical experience, regulatory stress tests, and publicly announced preliminary estimates by listed companies, ABIR expects the Bermudian market will absorb 25 percent or more of the industry loss.
ABIR estimates total insured HIM losses at $100bn by aggregating preliminary loss estimates.

The association said Bermudian companies had already started to pay claims from the events, and reinsurers had wired “hundreds of millions of dollars” to primary insurers shortly after the storms struck.

“Bermuda’s global insurers and reinsurers first and foremost express their sympathy to those suffering from the loss of life, property, food and water from the recent storms,” said Kevin O’Donnell, ABIR chair and president and CEO of RenaissanceRe.
“At this time, we are helping in the best way we can-by forwarding billions of dollars to help begin and sustain recovery in Texas, Florida, Puerto Rico, the US Virgin Islands and the rest of the affected Caribbean and Southeast US.”

Since 2000, the Bermuda market has contributed more than $50bn towards US catastrophe losses, including 10 percent of the World Trade Center attack claims and a third of liabilities incurred during 2005’s Hurricane Katrina, according to the ABIR.

ABIR figures show its member companies wrote combined global gross written premium of $92bn on a capital base of $124bn at year-end 2016, and provide more than a third of capacity for Lloyd’s.

Ten large Bermuda reinsurers have $12bn invested in US subsidiaries, the association said.


Bermuda Under 40s Re/Insurance Group Lookback on Recent Events

Wisdom and Wine featuring Cathy Duffy

Golf Day July 4th at Tucker’s Point Club

Summer Networking Event at Sea Breeze, Elbow Beach Hotel

Biennial Panel Discussion: Disruption in a Globalized Market – Is Bermuda an X-Factor?

Fall Quiz Night

A Blockchain Conversation with John Cusano, Senior Managing Director, Insurance at Accenture

Note: This Q&A originally appeared in RU40s April 2017 Newsletter.

RU40s sat down with John Cusano, Accenture’s Senior Managing Director for Insurance, for a discussion about technology and transformation in the (re)insurance industry, with a particular emphasis on blockchain. We asked John questions that we thought would demonstrate his perspective on the convergence of technology and the (re)insurance industry and here’s what he had to say:

Q: Blockchain seems like one of those buzz words that gets thrown around alot in InsurTech discussions. What exactly is blockchain and where do you think it can have the most impact operationally?

Blockchain is ultimately a ledger or database technology which is different from SQL or Oracle in that blockchain in “distributed” – that is, there could be multiple owners each maintaining a copy of the same database. This is a marked difference from traditional databases where just a single trusted party is responsible for administration and maintenance. However, it is important to remember that this is a new technology and there will be a cycle of evolution to achieve commercially applicable maturity. One of the key steps to gaining widespread acceptance is a proof of concept. And to that end, we do see some short-term, “faster to reality” use cases which can demonstrate the value of blockchain.

There is an obvious sweet spot which would have a meaningful operational impact on the business and that is the syndication of large commercial or reinsurance risks. Currently, we may have 20 or 30 insurance companies who all individually maintain and verify the accuracy of certain particulars of the deal, resulting in a massive duplication of effort. In addition to this inefficiency, the insured maintains its own ledger of the same information as well as the broker. The broker often facilitates the movement of payments through our existing financial institutions, resulting in yet another administrative cog in the process. Streamlining the administration aspect of this scenario by hosting all of this information within a blockchain ledger would release enormous value for the industry. Of course, this achievement also reduces barriers to entry into the industry which may incentivize “new” capital to continue their entry into the space.


Q: What is the downside risk?

The reality is that we have technology today to solve the previously described problem of duplication of labor – we can do this with an Oracle database. With that information, it becomes clear that the biggest impediment to blockchain in insurance is collaboration between companies, which has so far begun with industry consortiums. Once the technology matures and the real value is demonstrated,
blockchain may make it just that much easier for insurance companies to collaborate and if it tips in that direction, the industry may move to build out the framework for utilization of the technology in a production environment. While the distributed model of blockchain could help achieve administrative efficiencies, such a shift will undoubtedly require the development of a governance framework as well as compliance rules and other standards.

Still, some use cases show more immediate promise than others and continued to be tested through proof of concept blockchain iterations. In identifying such proofs of concept, a sound approach may be to focus on one company and one ecosystem in order to prove the concept in one functional area. Claims is a good example of an
early use case where a company could build central a repository within an organization to manage claims transactions without impacting other critical areas of the business, such that the blockchain exists only within an insurer’s internal operations. However, there is a real “early adopter” risk associated with this movement. There is a risk that a company initiates a substantial investment in a technology stack that is not ultimately the winner for the industry as a whole. For example, Oracle and SQL now dominate the industry for database technology but we can’t forget that there were countless other competitors throughout the evolution of the technology and as such a great deal of sunk cost associated with supporting technologies that were not widely adopted.

Q: Are there any notable examples of early adopters?

Currently, there aren’t any major (i.e. multi-billion dollar) investments but we do see increasing amounts of activity in the capital markets space, particularly with exchanges and clearing houses using this blockchain in the early stages with the goal of simplifying settlement processes. There isn’t too much in a final production environment but we have observed some investment and good positive momentum. There is a lot of momentum behind the B3i initiative being undertaken by the insurance industry and there is real money being spent here. However, there is a “chicken or egg” argument here since everything needs to be tested before robust development can be considered. Unfortunately, the investment in development is difficult to justify without a demonstration of production value. As such, there has been a great deal of proof of concept piloting. Even still, an Accenture survey found that 35% of insurers are currently using blockchain in a production environment.

Q: Accenture has written on editable blockchain. What is this and how is it different than other unalterable blockchains?

The significance of editable blockchain is that there is a good chance that errors find their way into the chain. In a permissioned system managed by a consortium, wouldn’t it be great to have a way to correct what every party agrees is an error in the chain? The idea is that edits to the chain would not be made often and the edit itself would be kept in the chain, providing a record that an amendment was made. A corrective blockchain action which would optimize the chain and continue to solve problems associated with the technology, which contributes to the maturity of the technology and improves adoption potential in future.

Q: Does Accenture favor a certain platform for blockchain?

We don’t necessarily have a favorite. Accenture has laid out the “pros and cons” of each platform for our clients – the fact is, some platforms are optimized for security and data privacy but have drawbacks related to processing speed. Other platforms are more “open” and trade ironclad security for faster speeds. What is important is to educate clients and fit the appropriate technology to the relevant use case at hand.

Q: Blockchain can change distribution – how can companies prepare for this?

At a minimum, companies should remain aware and knowledgeable about developments on the technology front. Companies need to be constantly thinking about the implications of a technology movement for their business but should not lose sight of what the opportunities could be. It could be valuable to have a strategic discussion about being a first mover and whether or not there may be advantage associated with making an early investment. Putting their heads in the sand is not a good move.

With that said, I feel that most companies are pretty good about becoming educated and the insurance industry is proactive about remaining aware of developments, even if we are less so the “proactive first mover”. An acquisition strategy is one way for major players to establish a foothold in developing technologies, though the downside to that strategy is that a new company could grow so quickly that the incumbents do not have time to buy it. But imagine blockchain as applied to quake insurance – if blockchain can facilitate an efficient administration of a broad, massive syndication of risk, we could theoretically spread the financial impact to every single insurer.

Q: This is unrelated to blockchain, but do you have any thoughts on the autonomous vehicles movement and the resultant impact on personal auto market?

There is no way around it: autonomous vehicles will have a massive impact on personal auto industry. I feel that we’ll probably be in a semi-autonomous stage for a longer time than we think and that probably means business as usual for a little while. Full autonomy, however, is likely to pull a great deal of premium out of the industry. Good news is that the risk is not going away since this risk will just move to the commercial market with the auto manufacturer simply assuming the exposure. I feel that weather will continue to be a major hurdle since the autonomous vehicles continue to struggle under adverse weather such as rain or snow (plowed snow, for example). If we are 98% autonomous, the concept still doesn’t really work as advertised.

John Cusano is Accenture’s Senior Managing Director for Insurance. He is responsible for setting the industry group’s overall vision, strategy, investment priorities and client relationships. Mr. Cusano joined Accenture in 1988 and has held a number of leadership roles in Accenture’s insurance industry practice. He led Accenture’s North America Insurance client service group and, prior to that, Accenture’s Insurance Software Solution Group. Mr. Cusano has overseen a number of large client relationships and the execution of projects ranging from strategic consulting to multi-year global programs to transform company operations.

“25 Years After Hurricane Andrew, Did Floridians Relive History?”

Marla Schwartz, Atmospheric Perils Specialist, Swiss Re

On August 14, 1992, a small and seemingly insignificant tropical wave developed off the west coast of Africa. Three days later, the depression reached tropical storm status, earning the innocent name Andrew. After intensifying over warm Gulf Stream waters, not-so-innocent Andrew slammed into Miami-Dade County at 5:05am on August 24.

The first Atlantic tropical storm of the 1992 hurricane season arrived in South Florida at an ill-fated time. Decades had passed since South Florida’s last major hurricane landfall, and memories of Betsy’s 1965 destruction had faded. Some Floridians grew complacent when it came to hurricane preparation and traditional stick frame houses were widespread.

Plowing into the coast with one-minute sustained winds over 165mph, Hurricane Andrew’s 1992 rampage caused USD 26.5bn in economic damage (1992 USD), destroying more than 25,000 homes and damaging an additional 100,000. The storm left nearly 250,000 people temporarily homeless and 65 dead. One of only three hurricanes to be at Category 5 intensity upon its landfall in the US, Hurricane Andrew upended homes, businesses and lives in the Miami suburbs.

In response to Andrew, Florida improved hurricane preparedness, emergency management and disaster recovery. The state beefed up building codes and began regular house inspections. Andrew left a mark on the (re)insurance industry by changing our perception of risk and stimulating trust in catastrophe models.

Last month, we marked the 25 years since Andrew’s landfall in South Florida. This benchmark served as an opportunity to remember the devastation and lives lost, as well as to appreciate the rebuilding efforts and resilient spirit that have allowed South Florida to flourish again.

With all the talk about Andrew’s impact on South Florida and (re)insurance, it is only natural to wonder: What if Andrew hit South Florida in 2017? Is South Florida a sitting duck for the next Big One? Fortunately, the insurance industry has tools to answer these questions and a recent Swiss Re publication took a deep dive into this topic.

Andrew caused 26.5bn (1992 USD) in economic damage, but losses from a present-day storm with an identical track and at the same intensity would dwarf the losses experienced in 1992. Our analysis shows that physical damage from a present-day Andrew would exceed USD 80bn-100bn, and only USD 50bn-60bn would likely be insured.

Damages increase due to a combination of population growth and coastal development. Yet, the physical damage is under USD 100bn because of efforts to address South Florida’s vulnerability. (Miami-Dade, together with neighboring Monroe and Broward Counties, maintains the nation’s highest wind standards when it comes to building codes.)

As hurricane geeks and reinsurance professionals, an even scarier hypothetical comes to mind: What if Andrew made landfall about 20 miles north of its historical landfall location in Fender Point, FL? This would place Andrew’s eye directly over Miami, an area far more populated, developed and commercialized compared to Homestead, yet arguably no less vulnerable or prone to hurricanes.

Catastrophe models allow us to estimate the financial impact of hurricanes that have not necessarily occurred in the historical record, but are physically possible. A hurricane of comparable intensity and size to Andrew that makes landfall in the city of Miami is estimated to produce losses to the insurance industry of a magnitude not yet observed: USD 60bn-180bn. The estimated economic damage from such an event ranges from USD 100bn-300bn, making it the costliest natural disaster ever in the US.

While these numbers invoke a sense of “sticker shock,” the difference between economic and insured losses calls attention to a profound protection gap and the remarkable weight carried by society when natural catastrophes like Andrew occur. We must close the protection gap together to reduce the impact of these inevitable shocks.

Numbers like these serve as a wake-up call: It is more important than ever to better understand hurricane risk, to learn about new solutions that address the protection gap, and to consider if insurance instruments are sufficient to cover financial needs in the event of a significant loss, like an Andrew.
You can download a copy of the full publication at The report dives into the topics above, and offers insight on changes in South Florida since Andrew, the impact of global sea level rise on storm surge, and Miami’s recent efforts to mitigate their ever-increasing flood and hurricane risk.

The 25th anniversary of Andrew’s landfall served as a wake-up call to the insurance industry, homeowners, small businesses, public officials and the private sector to better manage hurricane risk and remember it’s not a matter of if a major hurricane will barrel through South Florida, but when.

In an almost surreal turn of events, Florida Governor Rick Scott warned last week that Irma is “bigger, faster and stronger” than Hurricane Andrew. Harvey’s catastrophic flooding in Texas and Irma’s destruction throughout the Caribbean and US only serve to reiterate the importance of understanding and addressing hurricane risk. Over the last few weeks, as my eyes have been glued to news reports, hurricane forecasts and photos of devastation, I have been reminded of the importance of resiliency and how critical it is to plan better.


Marla Schwartz is an atmospheric perils specialist at Swiss Re, where she develops tools and techniques to assess risk due to wind-related perils, including hurricanes, tornadoes, hail, wildfire and winter storms. Prior to joining Swiss Re, Marla was a postdoctoral researcher at UCLA where she investigated impacts of climate change to snowpack accumulation and snowmelt in the Sierra Nevada Mountains. She obtained a PhD and MS in Atmospheric and Oceanic Sciences from UCLA, and a BA in mathematics from Columbia University.