IN numbers

781 The number of U.S. data breaches tracked in 2015, representing the second highest year on record since the ITRC began tracking breaches in 2005. (Source: Identity Theft Resource Center (ITRC) Report, dated December 31, 2015)

170 million The number of private records compromised in the 781 data breaches in 2015. (Source: ITRC Report, dated December 31, 2015)

247 The number of U.S. data breaches tracked in 2016, as of April 12, 2016. (Source: ITRC Report, dated April 12, 2016)

11.3 million The number of private records compromised in the 246 data breaches, as of April 12, 2016. (Source: ITRC Report, dated April 12, 2016)

90 billion The financial losses, in U.S. dollars, from natural catastrophes in 2015, the lowest level since 2009, as reported by Munich Re.  Munich Re attributes this decrease to: 1) strong tropical cyclones frequently only hitting sparsely populated areas or not making landfall at all; and 2) in the North Atlantic, El Niño curtailing the development of heavy storms. (Source: Munich Re, January 4, 2016, El Niño curbs losses from natural catastrophes in 2015)

353 The disaster events in 2015, 198 of which were natural catastrophes, the highest ever recorded in one year. (Source: Swiss Re, Sigma: Insurance Research, 1/2016 Natural Catastrophes and Man-Made Disasters in 2015)

729 million The property value, in U.S. dollars, destroyed by arson in 2014, up 10 percent from $663 million in 2013, according to the National Fire Protection Association. This number included fires at factories, residential buildings and churches, as well as vehicles. (Source Insurance Information Institute, Arson, January 2016) 

IN now

• IoT.  A Q1 trend stands out among the rest – the ever increasing scope of the “Internet of Things”, or IoT, which manifests itself in the industry primarily as potential first-party and third-party risks resulting from a cyber-security or data breach event. While a limited amount of case law is developing to address third-party coverage issues from breach instances, courts have not yet addressed first-party coverage issues arising from a cyber-security incident. Potential first-party claims arising from a cyber-security incident include claims for the breach response expenses, business interruption, and cyber-extortion. Global insurance broker, Marsh LLC, cites a 27 percent increase in cyber-insurance purchases by its U.S.-based clients in 2015, which is the third consecutive year of strong growth. According to its March 24, 2016 report, “Benchmarking Trends: Operation Risks Drive Cyber Insurance Purchases,” the expansion of cyber-risk coincides with the rise of IoT and is no longer limited to the loss of personal information. Cyber-incidents also place physical assets, operations, and intellectual property at risk.  
• BIG DATA. A term that refers to the increasing amount of digital information generated, stored, and then available for thorough analysis.  Among the multitude of purposes Big Data will serve industry-wide, it is likely to have an increasing impact on an insurer’s ability to identify and address potential fraud. Through the use of Big Data, insurers will have the increasing ability to create models based on certain variables or characteristics of past known fraudulent claims to predict and flag future claims as potentially fraudulent and for further analysis. Source: "How Big Data Is Changing Insurance Forever,” Forbes, December 16, 2015.
• SHARING OR CROWDSOURCED ECONOMY. The sharing service WeGoLook provides a mobile “app” driven on-demand field inspection and verification service. Through its website or mobile app, users may order one of 20,000 “lookers” from around the world to inspect anything from a property or car, to heavy equipment and auction items. In a March 9, 2016, press release, WeGoLook reported a 300 percent revenue growth since 2014. Services such as this are likely to multiple and have an ongoing impact on the insurance industry, particularly in high-demand times when insurers are inundated with storm or CAT claims.
• DRONES.The increasing use of drones is not only the basis for the ongoing insurance risk analysis in both the first- and third-party liability contexts. Drone use is also a hot topic due to the potential functions and purposes a drone may serve in an insurer’s claims investigation processes, including the evaluation of the amount, type, and extent of loss. Recently, for example, a Munich Re subsidiary – an engineering and technical risk insurer, the Hartford Steam Boiler Inspection and Insurance Company (HSB) – received an exemption from the Federal Aviation Administration to allow HSB’s commercial operations of drones to assist in exposure identification; risk management; and loss prevention. With a property owner’s consent, HSB is able to use a drone – or, an unmanned aerial system (UAS) – to inspect locations that may be inaccessible or unsafe for a personal inspection and to support its insurance claim and underwriting activities. Source: Intelligent Insurer, “Munich Re subsidiary to use drones to map exposures,” April 4, 2015.

IN catastrophes

• April 25, 2015, the 7.8 magnitude earthquake in Nepal was the most devastating natural catastrophe of 2015.  Source: © 2016 Munich Re, NatCatSERVICE; Property Claim Services (PCS)*, a Verisk Analytics business. As of February 2016. 
• Loss events worldwide 2015

Loss events worldwide 2015 10 costliest events ordered by insured losses

_{© 2016 Münchener Rückversicherungs-Gesellschaft, Geo Risks Research, NatCatSERVICE}

IN weather

In preparation for the upcoming Atlantic hurricane season, June 1, through November 30, 2016, AccuWeather.com recently released a report that forecasted 14 named storms; eight hurricanes; four major hurricanes; and three U.S. Named Storm Landfalls. According to AccuWeather, the activity of the 2016 Atlantic hurricane system will largely depend on the potential movement of a large area of colder than normal sea-surface temperatures located east of Newfoundland and south of Greenland. The area of colder water appeared a few years ago, according to one Atlantic hurricane expert, and it has become larger over the past couple of years. 

Whether ocean currents draw cold water southward could determine the level of activity of the hurricane season. Essentially, if cooler water migrates southward across the eastern Atlantic, then westward over the region where 85 percent of Atlantic tropical systems develop, it will lower sea-surface temperatures over the region. Ultimately, the waters that have been, in effect, warming since 1995 will reverse into a cooling pattern and limit tropical development in the Atlantic. If, however, the cooler water does not migrate into the Atlantic, sea-surface temperatures will remain mostly warmer than normal, and a more active hurricane season is the likely result. 

There is also a possibility that El Niño could transition into La Niña, characterized by a cooler-than-normal ocean water temperatures in the Pacific Ocean near the equator. Under this circumstance, less wind shear would exist in the Atlantic’s developmental regions and ultimately increase the potential for a higher-than-normal amount of tropical systems. Historically speaking, hurricane seasons that follow transitions from El Niño to La Niña have been very active, according to Accuweather experts. Thus, if this transition takes place in 2016, this year’s Atlantic hurricane season could be significantly more active.  For the full article, click here.