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Still Cleaning Up Catastrophes
Re-printed with kind permission of the author, Claim Solutions Pty Ltd, Winter 2010 newsletter.
The Insurance Council of Australia's catastrophe disaster statistics currently record the 3 major losses in the last 18 months as the Perth and Melbourne storms in March and Victorian bushfires in February 2009. It is not surprising that clean up and claims continue.
The value of the 6 March hail storm in Melbourne is currently recorded as $1,044 million. The damage caused by the Perth storm only 2 weeks later on 22 March is $1,053 million and is reported as the most costly natural disaster in insurance terms in Western Australia. The Victorian bushfires around 7 February 2009 throughout the state caused damage estimated at $1,070 million.
The last of the commercial bushfire claims are finalising but this does not mean reinstatement has been achieved. Some businesses have accepted cash settlements. Ongoing issues include future rebuilding dates, rebuilding elsewhere, meeting bushfire attack level reinstatement requirements, rezoning, waiting for council development approval and waiting for trades people. These issues are not isolated to this disaster.
Notably motor vehicle hail damage repair dates of February 2011 and beyond, unmistakable evidence of temporary repairs including tarpaulined rooves, covered sky lights and the constant stream of trades„ vehicles in affected areas signal that the actual costs of the storm disasters will not be known for some time. For businesses, latent damage includes swelling fixtures, carpets shrinking, machinery seizing and rooves leaking in subsequent rains. The resultant Loss of Gross Profit claims continue.
Claim Solutions has been involved in a multitude of claims from all of these events.
Loss lesson - sandwich panel fire
Copied from Zurich Insurance News item to all Brokers by email - 20 July 2011
A large fire occurred at the site of a major food processing factory in January 2010, in a semi rural area some 50kms south of Melbourne. The fire started in a staging area for plastic packaging trays, and despite the area being attended and the presence of automatic smoke detection, the fire was able to quickly develop.
The cause of the fire could not be definitively determined. Suggestions were a failed fluorescent light fixture or a drive associated with an overhead conveyor. The fire was detected at an early stage by an operator who unsuccessfully discharged an extinguisher. Despite his best efforts, the fire quickly spread to the EPS (expanded polystyrene) sandwich panel ceiling.
An evacuation was initiated and the fire brigade called. By the time the volunteer fire brigade arrived with their first unit, some 10-15 minutes into the fire, flames were erupting through the steel deck roof over half the length of the building. Before the fire fighters could mount any first attack, the fire had spread the full length of the main production building, associated loading dock and cold store, overall a length of around 100 metres.
Over 100 fire fighters eventually attended and were able to contain the fire to the main building and protect the large ammonia receivers adjacent to the building. A total loss of the production building resulted in major business interruption requiring some nine months of expensive temporary outsourcing and some loss of business.
The key lessons coming out of this fire was a reinforcement of previous experience:
EPS panel ceilings are very susceptible to fires starting beneath them
fires under EPS panel ceilings spread very rapidly, the fire spreads across the ceiling as the panels progressively delaminate and the EPS melts and vapourises to fuel
fires can also spread inside wall and ceiling panels, before bursting out at the panel seams
the fire load from EPS wall and ceiling panels is enough on its own to cause deformation and collapse of major steel roof beams
fire brigades are unlikely to contain a developed EPS panel fire and they will not enter the building due to the risk of collapse.
An interesting footnote to this fire was the performance of approved PIR sandwich panels. A new extension to the existing EPS cold store had been constructed from PIR. The fire burnt up to the PIR wall but did not penetrate, the PIR section was left largely intact. This tends to confirm our (Zurich Insurance) recommendation of approved alternative panels, be they PIR or Phenolic resin matrix.
Japan quake wreaks $32 billion worth of havoc
Risk Management Solutions has released a paper estimating the total insured loss from the Japanese earthquake and tsunami at between US$21 billion and US$34 billion (A$19.8 billon-A$32.1 billion).
This means the earthquake and tsunami will reflect the largest insurance loss in more than five years, affecting many different lines of coverage in both the local and international markets.
This figure, according to the risk-modelling agency, is a combination of the estimated property losses and the expected health and life insurance payouts.
However, it does not include any impact from damage to the Fukushima Daichi nuclear power facilities, as nuclear risks are excluded from these policies.
“Insured exposure in Japan is a complex landscape of coverage, varying considerably by class of exposure and line of business,” said RMS Chief Research Officer Robert Muir-Wood.
“The biggest challenge to loss-modelling of the Tohoku event is not the details of the property damage itself, but rather sampling and modelling the underlying pattern of insurance take-up rates and restricted terms of coverage.
“Residential and commercial earthquake insurance was purchased in areas where people perceived the threat, but the Tohoku earthquake was not an event they were led to expect.”
RMS said the most uncertain aspect of the loss estimates relates to how successful corporations will be in claiming under contingent business interruption protection.
“The disruption in the global supply chain of critical parts for manufacturing is already leading to downstream interruption in key battery, flash memory, mircrochip and automotive production, both in Japan, as well as in the U.S. and Europe,” the company said.
To view the paper, click here.
La Niña: what is it, how does it occur and how long will it last?
Copied from CGU Newsletter....February 2011
Meteorologists say the recent flooding in Queensland, northern NSW and Victoria and Cyclone Yasi are all the result of a global weather pattern called La Niña.
Some had been predicting wet weather on the eastern coast of Australia since July 2010 when this weather pattern began to form over the Pacific, although no one predicted it would have such a severe impact as it has had.
Here’s a simple guide to what a La Niña is all about.
What is it?
La Niña translates from Spanish as “the girl-child” and is the meteorological term for the opposite of the better-known weather pattern El Niño, or “the boy-child”.
In Australia La Niña events are associated with wetter-than-normal conditions particularly on the eastern seaboard, rain, flooding, monsoons and sometimes cyclones, while an El Niño event generally triggers drier than normal conditions and sometimes drought.
How do they occur?
It’s all to do with changes in the surface temperature of the Pacific Ocean, the largest ocean on the planet.
The La Niña weather pattern appears when the surface temperature of the Eastern Central Pacific falls 3 to 5 degrees below normal, and an El Niño develops when the opposite occurs.
How does this affect the weather in Australia?
This surge in cooler water pushes the warmer waters of the western Pacific hard against the east coast of Australia, so the surface temperature of the Pacific Ocean near the Australian coastline rises.
Last year record sea surface temperatures were recorded along our coast.
This rise in temperature causes changes in atmospheric pressure resulting in heavier than normal rainfall, particularly across the eastern seaboard. It also makes the region more prone to cyclones.
How long does a La Niña usually last?
It varies, but generally around 12 months, on which basis the current La Niña is forecast to start to dissipate in March or April.
Has Australia been impacted by a La Niña before?
Absolutely, although the current La Niña has been particularly severe – reportedly the strongest since 1917.
There have been at least 14 La Niñas since 1950 and most notably there was one during 1973 to 1974, causing the last Brisbane flood on Australia Day 1974 and our wettest year on record.
So what happens next?
The current La Niña is expected to start to dissipate but whether it will mark a return to normal conditions, an El Niño or back to a La Niña, meteorologists are unlikely to know until June.
El Nino likely for later this year
13 August 2012
El Nino conditions will impact Australia’s east in late winter or spring, according to the Bureau of Meteorology (BOM).
“We’re right near the threshold of El Nino, and the models are predicting we’ll get there in the end,” BOM climatologist Catherine Ganter told insuranceNEWS.com.au.
El Nino events are associated with an increased probability of drier conditions and can be linked to the risk of heightened temperatures, drought, crop failures and bushfires.
During an El Nino event large parts of eastern Australia are drier than normal during winter and spring, while daytime temperatures in southern Australia tend to be warmer – and the likelihood of heatwaves and bushfire risk increases.
Ms Ganter says while the good rainfall of the past two years has provided some “buffering against drought”, it could also increase the risk of bushfire.
“Extra growth from the two wet years of 2010 and 2011 would also contribute to this higher risk for the coming southern bushfire season,” she said.
Various national fire services have also expressed concern about the oncoming fire season due to heavy rain and excessive grass growth, which have played havoc with scheduled hazard reduction burning.
Rob van den Honert of natural hazard research centre Risk Frontiers, based at Sydney’s Macquarie University, agrees.
“From a statistical viewpoint, an El Nino state tends to produce conditions more conducive to bushfires and heatwaves, and a lower likelihood of heavy rainfall and flooding,” he told insuranceNEWS.com.au.
“Insurance losses are likely to shift from ‘wet’ disasters [floods and tropical cyclones] to ‘dry’ disasters [bushfires],” he said.
Latest international reports mention similar conditions for the Northern Hemisphere, with the US Climate Prediction Centre predicting the onset of El Nino conditions for July-September this year.
Reported by AFP - Tuesday, March 6, 2012
Disasters led by the Japan earthquake cost the world a record figure of more than US$380 billion ($356 billion) last year, a UN official said Monday.
While countries are managing to control the disaster death toll, economic costs are increasing more than ever before, said Margareta Wahlstrom, the UN special envoy on disaster risk reduction.
She called the US$380 billion figure "the minimum" cost, two thirds higher than the last record in 2005 when the United States suffered huge losses from Hurricane Katrina.
This time, earthquakes in Japan and New Zealand, as well as floods in Thailand and other countries sent the cost skyrocketing. "Earthquakes are the costliest and the deadliest of disasters," Wahlstrom told a press conference to mark the first anniversary of the Japan quake on March 11 last year.
The quake, tsunami and nuclear explosion at Fukushima caused more than US$210 billion of damage, according to the UN disaster risk reduction agency headed by Walhstrom.
It has put the cost of the Thailand floods at more than US$40 billion.
New Zealand's central bank has estimated that the deadly earthquake on February 22 last year caused about US$25 billion in losses, just for rebuilding.
"The main message is that this is an increasing and very rapidly increasing trend, with increasingly economic losses," Wahlstrom said.
"Globally, the disaster mortalities are proportionally declining because countries are getting much better at early warning systems and preparedness," she said. "But the economics of disasters is becoming a major threat to a number of countries."
From 1999 to 2011, 73,000 kilometers of roads were ripped apart by disasters in just 19 countries in Africa, Asia and Latin America, Wahlstrom said. Almost 64,000 schools were destroyed in the same time.
Fifty percent of the world's seven billion people are now exposed to disaster risks because they live in vulnerable areas, according to the UN official.
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