Hurricane / Superstorm Sandy
2015 ASLRRA Conference
Hurricane / Superstorm Sandy
Effects of the storm: • Railroads were effected, but it was primarily passenger rail from Washington, DC to Boston. The key region for railroad losses was the NYC area. • The damage was widespread (locomotives, passenger cars, infrastructure and electrical) with the latter being associated with river crossing tunnels and subways. • Tidal surge and flood causing the most damage. People didn’t expect the water come inland as far as it did. • Litigation ensued over flood coverage • Paid insurance losses range from $20B to $30B.
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Hurricane / Superstorm Sandy
Effects on the Railroad Property Insurance Market: •
• •
• •
As an industry, the paid insured losses were not as bad as originally projected. Over the past couple decades the industry had been averaging around $10B in CAT losses annually. The industry continued to see an infusion of capital into the market place. Overall, the market stayed relatively soft, with some exceptions to the passenger rail markets. Sandy exposed an area of the country that as an industry we generally overlooked for this type of risk. Passenger rail may see changes in the form of coverage wording, capacity, deductibles and rate.
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Hurricane / Superstorm Sandy
Renewal Points for “Perceived” CAT Risks: • “Tell Your Story” • Know the exposures on your property and what contingency plans are in place to mitigate them. • Understand the markets: Appetites, Capacity & Hot Buttons • Know all aspects of your insurance program • Financials are good, but don’t spend a lot of time on them.
Revenue CapEx MoW Budget Operating Ratio
• What’s the business plan and strategy? • Plan your renewal meetings around your objectives
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Hurricane / Superstorm Sandy
Renewal Points for “Perceived” CAT Risks: • Invite your markets to come see your operation, it will pay dividends • Stay current on legislative matters • “Perception is Reality” – understand how the markets perceive your railroad. • Use both domestic and overseas markets to balance your program • Be honest, open, truthful and play to your strengths • Underwriters: Friend or Foe?
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Hurricane / Superstorm Sandy
Effects of the storm: • Railroads were effected, but it was primarily passenger rail from Washington, DC to Boston. The key region for railroad losses was the NYC area. • The damage was widespread (locomotives, passenger cars, infrastructure and electrical) with the latter being associated with river crossing tunnels and subways. • Tidal surge and flood causing the most damage. People didn’t expect the water come inland as far as it did. • Litigation ensued over flood coverage • Paid insurance losses range from $20B to $30B.
|2
Hurricane / Superstorm Sandy
Effects on the Railroad Property Insurance Market: •
• •
• •
As an industry, the paid insured losses were not as bad as originally projected. Over the past couple decades the industry had been averaging around $10B in CAT losses annually. The industry continued to see an infusion of capital into the market place. Overall, the market stayed relatively soft, with some exceptions to the passenger rail markets. Sandy exposed an area of the country that as an industry we generally overlooked for this type of risk. Passenger rail may see changes in the form of coverage wording, capacity, deductibles and rate.
|3
Hurricane / Superstorm Sandy
Renewal Points for “Perceived” CAT Risks: • “Tell Your Story” • Know the exposures on your property and what contingency plans are in place to mitigate them. • Understand the markets: Appetites, Capacity & Hot Buttons • Know all aspects of your insurance program • Financials are good, but don’t spend a lot of time on them.
Revenue CapEx MoW Budget Operating Ratio
• What’s the business plan and strategy? • Plan your renewal meetings around your objectives
|4
Hurricane / Superstorm Sandy
Renewal Points for “Perceived” CAT Risks: • Invite your markets to come see your operation, it will pay dividends • Stay current on legislative matters • “Perception is Reality” – understand how the markets perceive your railroad. • Use both domestic and overseas markets to balance your program • Be honest, open, truthful and play to your strengths • Underwriters: Friend or Foe?
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