Two years ago this past October 1, in the face of Hurricane Joaquin’s 150-mph winds, 40-year-old cargo ship El Faro went down, sinking 15,000 feet of water to the sea floor near the Bahamas and killing 33 people on board. The worst maritime disaster for a U.S.-flagged vessel since 1983, the El Faro was one of two ships owned by TOTE Maritime Inc. that navigated in constant rotation between Jacksonville, Florida, and San Juan, Puerto Rico.

The Coast Guard recently released a 199-page report based on a Marine Board of Investigation and its recommendations that could eventually lead to changes in the shipping industry. The primary cause of the disaster, according to the report, was the captain underestimating the strength of the hurricane and overestimating the ship’s strength. Captain Michael Davidson, says the report, should have changed El Faro’s route to avoid the hurricane’s winds. Furthermore, when the 790-foot vessel got stuck, the captain, the report cites, should have taken more aggressive measures to save it.

The report, according to the Associated Press (AP), also said TOTE Maritime Inc., had not replaced a safety officer, instead spread out those duties among other managers, and had violated regulations regarding crew rest periods and working hours.

There were also problems with shipping safety inspections. Ships like the El Faro are inspected by surveyors who work for organizations called “classification societies” to ensure the vessels meet the Coast Guard’s safety standards under its Alternate Compliance Program (ACP), and certify whether they are seaworthy. The investigation report said the societies’ “surveyors are not held accountable for performing substandard ACP inspections that miss glaring safety deficiencies” and the Coast Guard doesn’t have a system for tracking which societies produced which below-par inspections. Moreover, the Coast Guard doesn’t produce yearly reports on ACP compliance or the work done by classification societies. The report says that this “the lack of transparency has enabled vessel compliance and surveyor performance issues to continue unabated.”

The investigation board in the report recommends a series of steps to make classification societies and surveyors more accountable and prepared for their role, but others feel only experienced Coast Guard inspectors should perform these shipping inspections.  For example, when senior Coast Guard inspectors in 2016 checked the El Faro’s sister ship, the El Yunque, and opened up a ventilation trunk on one of the cargo holds they “found enough rust and wastage of the metal trunk that an inspector hitting a hammer against the metal to check for decay accidentally punched a hole,” the report said. The same vents on El Faro were probably a way water spread from one hold to another as the ship gradually flooded before it sank 15,000 feet deep in the ocean, the report said.

Other findings in the report, according to the AP, include:

  • A few weeks before the accident, TOTE stopped employing in-port helpers who assisted its ships’ crews to safely load cargo. The Coast Guard said the El Faro’s crew had a hard time keeping up with the pace needed to get the ship out on schedule. A manager at the port took a photo of the El Faro the day before its final launch because unbalanced loading had caused it to lean heavily to one side, more than he had ever seen. He alerted stevedores, who added containers to the other side to rebalance the ship.
  • When the El Faro departed Jacksonville the oil level in its main engine was below the manufacturer’s recommendation although still within the range for operation. That became crucial when the El Faro began leaning in the storm, as the oil level no longer reached the pump. That starved the engine, shutting it down. The loss of propulsion left the El Faro helpless against Joaquin and its waves.
  • Four of the five Polish workers who had been temporarily assigned to the El Faro spoke little English and none of them had been briefed on safety procedures. The wife of one of the men told investigators “he had never seen or worked on a hulk like this” and that as he worked, rust would fall into his eyes.
  • A weather prediction system that would have sent emailed updates about Joaquin to Davidson had not been activated.
  • Less than six hours before the El Faro sank Second Mate Danielle Randolph, who was in charge of safety, was recorded telling another crewmember that drills were not taken seriously. She added that crewmembers rarely try on their survival suits to make sure they fit. As the ship was going down and Davidson ordered the ship abandoned, Randolph was heard leaving the bridge to find life vests either because none were stored there as required or she didn’t know where they were.

A comprehensive list of safety recommendations based on the findings of the report is covered here.

Roanoke Underwriting specializes in helping agents and brokers secure commercial marine insurance solutions for global trade and logistics risks. For more information about our portfolio of products, please contact us at 1.855.213.4545.

Sources: The Florida Times Union, ABC, The Maritime Executive

Roanoke Insurance Group is pleased to announce that Karen Groff, Executive Vice President of Operations, will assume the role of President as of October 1. Current President, Bill Sterrett will remain as Chairman. Karen will be responsible for the ongoing leadership, management and directional planning of the organization; Bill will assume various strategic assignments and remain on Roanoke’s Board of Directors as Chairman.

Sterrett commented, “Karen is a strong leader, results-oriented and constantly seeks ways to improve our products, services and ways of working. I am both confident and excited about the future of the organization with Karen as my successor. I have worked closely with Karen for most of her career and she cares deeply about our employees, customers and partners. She is whole-heartedly dedicated to our industry.”

Karen has more than 24 years of experience with Roanoke working in the specialty insurance areas of marine cargo, liability, transportation-related bonds and ATA Carnets. Karen has held various management positions in Roanoke’s regional sales and corporate offices, and is a champion of automation and creative client solutions throughout.

Without question, Bill Sterrett will be a tough act to follow after 32 years as President,” Groff stated, “but I am looking forward to the opportunity knowing I have his full support.” Groff also remarked, “I am energized by knowing the talent in our organization runs deep, and grateful that our clients are the beneficiaries. By empowering employees we unleash the best solutions for our clients. The key is to focus in and really listen to our clients in order to help them achieve their objectives, then execute!”

We appreciate your business, and look forward to supporting you and your industry now and for many years to come!

Freight costs have spiked in the wake of Hurricane Harvey, which decimated Houston and the surrounding region. As businesses reopen and look to stock their shelves, many shippers are experiencing significantly higher rates. For example, according to online load board DAT Solutions LLC, the cost to hire a tractor-trailer to move freight from Dallas to Houston was an average 66% more in the week ending September 2 compared with the previous week.

The higher trucking rates are due to several factors: deliveries into Houston is slow going as the city makes it way back from the storm, trucks are struggling to find return loads from the city as so many businesses that export to other parts of the country remain shut, and fuel costs have risen. In a recent article in the Wall Street Journal (WSJ), estimates from Triple A show the national average rate for dry vans, the most common trucks, rose to $1.90 per mile including fuel surcharges for the week ending September 2, up 6.7% compared with the previous week. Average diesel prices hit $2.68, up from $2.55 a week ago, according to AAA.

Harvey has also affected transportation markets outside of Texas. For instance, hurricane relief efforts have diverted trucking capacity from other regions, and cargo has been rerouted to other distribution hubs, such as Denver.

The Port of Houston was also impacted by Harvey, shutting down for a week after the storm made landfall on August 25th. This was in the middle of the peak shipping season as manufacturers and retailers restock inventories and get ready for the holidays. The hurricane was also “a big disruption” for trucking operations that move cargo from the port to nearby rail lines, cites the WSJ article.

Harvey, Now Irma

On the heels of Harvey, Hurricane Irma has roared through the Caribbean and is now making its way to South Florida. The Federal Railroad Administration has already declared a rail emergency in Florida, and trucking capacity is also tightening up, with some truckers hesitate to accept loads that could leave them stranded in the region. According to Riskpulse, a supply chain risk analysis firm, all shipping and trucking interests along the East Coast, particularly Florida, should be closely monitoring the storm for potential impacts by this weekend.

Roanoke Underwriting specializes in helping agents and brokers secure commercial marine insurance solutions for global trade and logistics risks. For more information about our portfolio of products, please contact us at 1.855.213.4545.

Proper supply management is essential to the success of many large businesses. Part of the supply management process involves taking the time to carefully screen suppliers to meet client demands for on-time deliveries and competitive rates. It also involves, according to a recent article in Global Trade, suppliers offering a streamlined invoice-to-cash process that reduces or eliminates unnecessary manual processes for the customer.

According to Global Trade, understanding a supplier’s accounts receivable processes is important to buyers, as the way in which a supplier submits its invoices has a direct impact on the buying organization. While many buyers have implemented technologies to streamline processes to pay suppliers more efficiently, many of these same suppliers are not jumping on the same wagon. Basically, suppliers want the advantages of automated and electronic invoicing and payment but are still resistant to putting paper to bed.

In fact, according to a study cited in the Global Trade article,  2017 Perceptions Study – Analysis of Invoice-to-Cash Practices and Preferences of Supplier Organizations, of the nearly 500 supplier organizations surveyed on what methods they use to submit invoices to their customers, most (78%) indicate they submit invoices via email while 76% submit via paper. Thirty-eight percent use electronic methods such as electronic data interchange (EDI) or third-party e-invoicing networks (24%).

The survey also shows a real disconnect among suppliers’ responses. Nearly all respondents (90%) indicated that getting paid faster was the most important thing, 80% said getting the invoice delivered faster was important, and 78% said confirming the customer receipt of invoice was important. While suppliers want the benefits provided by automation, most of them still use methods that do not facilitate those benefits.

Additionally, when asked how suppliers are currently paid and how they prefer to be paid, the majority (87%) indicated that they currently receive payment via paper checks while 72% indicate they receive payment via Automated Clearing House (ACH). However, only 26% indicated they prefer payment via paper check and 59% had a preference for ACH.

The survey found that suppliers are still using paper checks for a number of reasons: “It’s how we’ve always done it,” because of their old-fashioned values, they have a bank courier, and checks are easier to handle. Those suppliers that prefer ACH payment, according to the survey, say: “because payments clear quickly and it’s affordable; it’s easier and faster; funds are available more quickly; it’s more efficient from a cash flow perspective; and there is less chance of errant or lost payments and a better record of remits.”

How does a buying organization get suppliers to move toward electronic and automated methods of invoicing and payment? Understand why a disconnect exists in the first – the comfort level old methodologies provide – and then take a comprehensive, layered approach to transition suppliers to newer technologies and more streamlined processes. For example, in lieu of asking suppliers to transition to newer processes within a three-to-six month window with a single, one-size-fits-all approach, identify three to five phases for bringing those suppliers along.  As the article reinforces, “if buying organizations take a comprehensive approach and slowly bring those suppliers into the 21st century, their organizations will ultimately reap the benefits of streamlined processes, greater efficiency and healthier cash flow.”

About Roanoke Underwriting

Roanoke Underwriting serves the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.

The recent WannaCry and NotPetya cyber attacks portend the extent and scope of the economic havoc these threats can wreak. Lloyd’s of London along with cyber risk analytics firm, Cyence, in fact, recently issued a report saying that a global cyber attack could trigger an average of $53 billion of economic losses. This figure represents nearly the cost of Super Storm Sandy, which hit the East Coast in 2012, and caused an estimated $62 billion in economic loss.

The report, “Counting the cost: Cyber exposure decoded”, reveals the potential economic impact of two scenarios: a malicious hack that takes down a cloud service provider with estimated losses of $53 billion, and attacks on computer operating systems run by a large number of businesses around the world which could cause losses of $28.7 billion.

In 2016, according to the Lloyd’s-Cyence report, cyber attacks were estimated to cost businesses as much as $450 billion a year globally. These cost typically include business interruption and computer repairs.  But it’s not hard to see that a single massive attack spread globally can aggregate to an economic loss similar to natural catastrophe losses. Economic costs in the hypothetical cloud provider attack by Lloyd’s-Cyence dwarf the $8 billion global cost of the WannaCry ransomware attack in May, which spread to more than 100 countries. NotPetya, which spread from infections in Ukraine to businesses around the globe, rendered systems inoperable and disrupted activity at ports, law firms and factories, causing $850 million in economic costs.

In the hypothetical cloud service attack in the Lloyd’s-Cyence scenario, hackers inserted malicious code into a cloud provider’s software designed to trigger system crashes among users a year later. The malware would by then have spread among the provider’s customers, from financial services companies to hotels, causing all to lose income and incur other expenses. Average economic losses caused by such a disruption could range from $4.6 billion to $53 billion for large to extreme events. But actual losses could be as high as $121 billion, according to the report.

“This report gives a real sense of the scale of damage a cyber attack could cause the global economy,” said Inga Beale, CEO of Lloyd’s. “Just like some of the worst natural catastrophes, cyber events can cause a severe impact on businesses and economies, trigger multiple claims and dramatically increase insurers’ claims costs. Underwriters need to consider cyber cover in this way and ensure that premium calculations keep pace with the cyber threat reality.”

The report goes on to say that while insurers are increasingly securing more cyber coverage for policyholders and helping them manage cyber events – everything from individual breaches caused by malicious insiders and hackers, to wider losses such as breaches of retail point-of-sale devices and ransomware attacks – the threat of cyber is increasing and is expected to continue to do so as the world economy continues to digitize operations, supply chains and businesses transactions, as well as employee and customer services. The challenge for insurers is to gain a deeper of understanding of the cyber-risk liability and aggregation to forecast the potential for widespread losses and price coverage accordingly.

For instance, the report cites that in some other insurance classes insurers’ understanding of liability and risk aggregation is more developed. “It is widely accepted, for example, that natural catastrophes can trigger multiple claims from multiple policyholders, dramatically increasing insurers’ claims costs. Natural catastrophe insurance policies usually take this into account and reinsurance is commonly used to reduce the impact of risk aggregation.” The report’s findings suggest economic losses from cyber events have the potential to be as large as those caused by major hurricanes. “Insurers could benefit from thinking about cyber cover in these terms and make explicit allowance for aggregating cyber-related catastrophes. To achieve this, data collection and quality is important, especially as cyber risks are constantly changing.”

About Roanoke Underwriting

Roanoke Underwriting serves the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.

The shipping industry, which has faced several challenges over the last several years, including overcapacity, price wars and freight rates below break-even levels, is now showing signs of recovery, according to a recent article in the Wall Street Journal. Due to an improving global economy, industry executives and analysts indicate that the worse may behind container and dry-bulk operators. Additionally, early hints of a recovery in the oil-tanker business are starting to emerge, says the WSJ.

This is good news for the industry after South Korea’s Hanjin Shipping Company, one of the largest container-shipping lines in the world, filed for court receivership under heavy debt last year, and stranded billions of dollars worth of cargo at sea. Container shipping moves 95% of all manufactured goods, with the top 20 operators by capacity posted combined net losses in 2016 of $5 billion. As a result, big players have merged or formed alliances with most expecting to swing to a profit this year.

Moody’s outlook, in fact, for the industry is stable, per their statement in early May. “We expect that supply growth will exceed demand growth by less than 2%, or within our parameter for a stable view. Freight rates in these two segments will also gradually increase,” Moody’s said in its report issued out of Tokyo. 

The cost to transport a container in the benchmark Asia-to-Europe route indeed rose to $965 in May, up 55% from 2016. At the port of Singapore, which the industry uses to gauge trade flows, container volume rose 5% in the first quarter from a year earlier, according to WSJ. Further, container capacity cut the percentage of idle ships to 3.5% in the first three months of 2017, compared with 6.5% in the previous quarter.

China’s weak demand for the coal, iron ore and other commodities hit operators of the biggest dry-bulk cargo ships (capsize vessels) hard, causing dozens to suspends operations and restructure. The Baltic Dry Index, which tracks the cost of moving such products, fell to a record low of 290 points in February 2016 from its peak of 11,793 in May 2008. It’s now around 850 points. Experts now expect the market to do an about-face, forecasting growth at nearly 3% capacity due to Chinese iron-ore imports, which have risen significantly in the last year. Imports of thermal coal used in power plants also are up sharply.

Another sign of recovery for the shipping industry involves tankers that move the world’s crude oil. Although it was a rough start for these tankers over the last five months, most recently a combination of low tanker prices and old ones being retired to scrapyards has prompted a buying frenzy, says the WSJ. Sixty-nine (69) new and used tankers were bought so far this year, compared to eight for the entire year in 2016, a sign that prospective owners expect a recovery.

Roanoke Underwriting specializes in helping agents and brokers secure commercial marine insurance solutions for global trade and logistics risks. For more information about our portfolio of products, please contact us at 1.855.213.4545.

Source: WSJ, Moody’s

We’ve seen “uberization” – changing the market by introducing a new way of using or buying a service – in a number of industry sectors including the taxi business (think Uber, Lyft) and hospitality (Airbnb, HomeAway), among others. In addition, just as you can find and pay for a ride using your mobile device, business services can now also be sourced, purchased, managed, and delivered using a desktop, smartphone, or tablet – from anywhere in the world. The uberization of business services means that you can access the skills you need, at the price you want to pay, anytime, anywhere.

What does this all mean for the future of the container shipping industry and terminals? A recent article in The Maritime Executive took a look at the possibilities of uberization in the sector and believes that we could begin to see an impact in this area starting with parcel logistics, a market struggling to find enough trucks and drivers to deliver all their parcels at peak times in urban areas. Imagine, says the article, in lieu of contracting with Uber as a driver, an individual signs up as a parcel delivery agent. The driver would receive a notification from a company such as DHL on his or her mobile app, instructing package pick up and destination for a set fee.  

The next step would be to apply this Uber-type service for heavier logistics, says the article. Right now, truck transport is contracted by a single party (shipping line) to pick up certain specific containers and deliver them somewhere at a predetermined time. Typically, the truck on the return trip is empty of cargo. Now imagine you have a contract driver who could view a range of open orders on a consolidated system and choose one nearest to his/her delivery address. This could be done hours before delivering the previous container, as the end customer in the logistics chain naturally needs some certainty about their order. 

Also, what if, instead of waiting, trucks simply showed up at the terminal and picked up their containers, which were just ready for delivery? As shipping containers are already standardized, their truck transportation could be relatively easy to uberize, notes the article. The impact could be significant for all parties: Fewer (empty) trucks on the road resulting in fewer traffic jams; lower costs of last-mile transportation thanks to better fleet utilization and higher efficiency at terminal gates due to fewer trucks and shorter waiting times.

These ideas are not new but with advanced technology like cloud services and smart phones, the reality may not be too far in the future. There are skeptics, however, with a lot having to change to make this work, including contractual, business and earnings models. And, of course, picking up a passenger or a small parcel is not certainly nothing like handling a 30-ton shipping container.

About Roanoke Underwriting

Roanoke Underwriting serves the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.

Aon’s 2017 Risk Maps for Political Risk, Terrorism, and Political Violence was released recently, citing that companies with domestic and international operations, including global logistics service providers, face a rise in terrorism risk as attacks increased by 14% last year. In addition, the wave of populism in the United States and elsewhere is changing the political risk climate, according to the report.

Western countries saw the greatest percentage increase in the frequency of terrorist violence of all regions in 2016, with a 174% rise in incidents, although it’s important to note these countries still are the least affected by terrorist attacks worldwide. The risk level for the U.S. increased to medium due to terrorism and civil unrest. The rise in terrorist threats, says the report, impacts everything from loss of life to business interruption and disruption in the supply chain. Other violent risks are also evolving at the geopolitical level, leading to increased defense spending, greater authoritarian governments and a weakening consensus between states. These developments have underlined the importance of considering crisis management perils that not only result in property damage but also serve to disrupt industry sectors as oil and gas, transport and retail.

“The shifting dynamics around terrorism and political violence, reflected in the global events seen in 2016, are presenting an increasing challenge for companies,” commented Scott Bolton, Director, Crisis Management. “Those with both domestic and international footprints have the potential to experience events that could impact their people, operations, and assets. If we can understand what might reasonably impact an organization and its people, then we are better able to apply ‘best fit’, consistent approaches to managing risk.”

The Spread of Populism

The rise of populism here and in Europe also has the potential to impact the political risk climate, according to the Aon report. For example, the policies being proposed by the U.S, Administration are expected to impact a range of policy areas important for political risk in the emerging world, including immigration, tax, exchange rates and international trade and investment. These will challenge the resilience of selected emerging and frontier markets, says the report. Although the scope and scale of the Trump administration’s policies are as yet unclear, proposed policies include trade and investment restrictions, greater government spending and lower taxes, resulting in wider fiscal deficits (and greater debt levels) and restrictions on immigration. Overall, these along with the potential for reactions from other major economies would likely lead to an increase in political risk in many of the countries that the Risk Map covers, according to the report.

“In the wake of policy uncertainty in developed economies such as the U.S. and Europe, major trading partners in Asia, as well as commodity producers in Sub-Saharan Africa and the Middle East and North Africa, seem most exposed,” said Rachel Ziemba, Managing Director Emerging Markets, Roubini Global Economics. “Given the focus on trade, currency and migration renegotiation, we are watching for increases in exchange transfer risk, supply chain disruption and government interference in the economy. Within these regions, we see meaningful differentiation, with the richer countries of the Gulf Cooperation Council outperforming regional peers.”

About Roanoke Underwriting

Roanoke Underwriting will continue to keep our agency partners abreast of changes that can impact trade, global logistics service providers, and trade. We serve the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.

The number-one risk for business continuity professionals is cyber attacks, according to the 2017 Horizon Scan Report published by the Business Continuity Institution (BCI), an association that provides insights into fast-changing threat landscapes, and the British Standards Institution (BSI). Data breaches come in second on the report’s top ten list, followed by unplanned IT and telecom outages, security incidents, adverse weather (climate change), utility service interruption, terrorism acts, supply chain disruption, availability of talent and skills and, for the first time, political uncertainty around the introduction of new laws and regulations. The report gathered data from 726 respondents in 79 countries.

Cyber attacks (malware, denial of service) and data breaches (loss or theft of confidential information) continue to cost organizations billions of dollars annually, cites the report, an amount that is only set to rise with increasing integration of new technology into daily operations and the resulting reliance on connectivity. Eighty-eight percent (88%) of organizations indicated that their “extremely concerned” or “concerned” about the possibility of a cyber attack; 81% are concerned about data breaches.

Emerging trends such as the onslaught of malicious attacks on the computer networking systems of organizations, the influence of social media on a company’s reputation as a result of a disruption and the prevalence and high adoption of Internet-dependent services (the cloud), among other issues all contribute to cyber as a top threat.

Howard Kerr, Chief Executive at BSI, stated, “2016 continued to see high-profile businesses affected by cyber attack and disruption, so it’s not surprising to see it remains as the top threat to business. However, we remain concerned to see that businesses are still not fully utilizing the information available to them to identify and remedy weaknesses in their organizational resilience. Ultimately, organizations must recognize that, while there is a risk, and plenty of it, there is also an opportunity. Taking advantage of this means that leaders can steer their businesses to not just survive, but thrive.”

Supply chain disruption also continues to remain a top concern for the third year running since the six years that BCI has conducted the survey. More than more than one-third (34%) report losing at least €1 million cumulatively on annual basis due to supply chain losses. Nine percent (9%) report at least €1 million of losses due to a single incident.

David Thorp, Executive Director at BCI, commented: “Given the diversity of the threats out there, it is absolutely essential to adopt agile and dynamic responses. Planning to recover from a data breach is very different from planning for the aftermath of a terrorist attack, and, as this year’s report highlights, the risk spectrum can be very broad. Malicious Internet actors, political shake-ups, and climate change are all amongst the main worries for societies around the world. As always, the key takeaway should be that with challenges come opportunities. Change does not have to mean less favorable environments, but the landscape may be different. As organizations venture into uncharted territory now is the time to identify and undertake the measures that will increase resilience within your organization by ensuring that effective business continuity planning is in place.

About Roanoke Underwriting

Roanoke Underwriting serves the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.

According to reinsurer Munich Re, Roanoke Underwriting’s parent company, earthquakes in Asia and Italy, flooding in the United States, Asia, and Europe, a deadly hurricane along with wildfires in Canada, made 2016 the costliest 12 months for natural catastrophe losses in the last four years. Losses totaled $175 billion, two-thirds more than 2015, and were nearly as high as in 2012, which saw losses of $180 billion. The share of uninsured losses – the so-called protection or insurance gap – remained substantial at around 70%. Almost 30% of the losses, some $50 billion, were insured, cites Munich Re.

“After three years of relatively low nat cat losses, the figures for 2016 are back in the mid-range, where they are expected to be. Losses in a single year are obviously random and cannot be seen as a trend”, said a member of the Munich Re Board of Management Torsten Jeworrek. “The high percentage of uninsured losses, especially in emerging markets and developing countries, remains a concern. Greater insurance density is important, as it helps to alleviate the financial consequences of a catastrophe for more people. With its risk knowledge, the insurance industry would, in fact, be able to bear a much greater portion of such unpredictable risks.”

Asia Tops Losses

The costliest losses for 2016 occurred in Asia with the Kumamoto earthquakes that shook the southern Japanese island of Kyushu last April, experiencing overall losses of $31 billion with insured losses at just under 20%; and the devastating floods in China in June and July with overall losses of $20 billion and only about 2% insured. The Kumamoto earthquakes caused plant closings at Toyota, Honda, and Nissan and production disruptions and damage at the following electronics plants: Renesas Electronics, Mitsubishi Electric, Sony, and SUMCO – reinforcing how major disasters have ripple effects on the global supply chain. The earthquakes were the strongest to hit Japan since the Tohoku quake that devastated the northeast coast of Japan near Sendai in 2011.

Imapct on North America

North America was hit by more natural disasters than in any year since 1980, with overall losses totaling $10.2 billion (with over one-third of this figure insured) and Hurricane Matthew the most serious event. The hurricane’s greatest impact was in Haiti, where it killed around 550 people.

According to the Munich Re report, North America was also impacted by other extreme weather hazards, including wildfires in the Canadian town of Fort McMurray in May, and major floods in the southern US states in summer. In Canada, the mild winter with less snow than usual, and the spring heatwaves and droughts which followed, were the principal causes of the devastating wildfires that hit the oil-sand-producing region of Alberta, generating overall losses of $4 billion. More than two-thirds of this figure was insured.

In August, floods in Louisiana and other U.S. states following persistent rain triggered losses totaling $10 billion, around a quarter of which was insured.

Series Of European Storms

There was a series of storms in Europe in late May and early June. Torrential rain triggered numerous flash floods, particularly in Germany, and there was major flooding on the River Seine in and around Paris. Overall losses totaled some $6 billion, around half of which was insured.
Globally, 8,700 people were killed by natural disasters in 2016, far fewer than the 25,400 fatalities in 2015 and the 10-year average of 60,600.

“There are now many indications that certain events – such as persistent weather systems or storms bringing torrential rain and hail – are more likely to occur in certain regions as a result of climate change,” said Peter Hoeppe, Head of Munich Re’s Geo Risks Research Unit.

About Roanoke Underwriting

Roanoke Underwriting serves the commercial marine insurance and customs bond needs of agents and brokers throughout North America working with supply chain risks and logistics service providers. For more information about our products, please contact us at 1.855.213.4545.