If I'm alive when the "really big one" hits, I'll know that we've done more than we ever thought possible to minimize the dangers. Here's why, I think, we're better prepared today than we were even five years ago against catastrophe.
Take terrorism. Whether it's through more "boots on the ground" in the form of Transportation Security Administration officers, or through better computer back-up system in cities faraway, or even via faster interagency communication among federal and state governments, we are safer today than we were at this time five years ago.
In conjunction with other governments and security services around the world, we've thwarted several attacks on home soil and abroad. True, we almost took it in the backside when the underwear bomber almost blew himself up and his fellow passengers over Detroit a few years back. Even then, it wasn't really our fault since he was allowed onto the airplane with a homemade device in an airport abroad.
Or take regulation. The checks and balances we've tried to reinstate by passing new laws, like the Dodd-Frank Wall Street Reform and Consumer Protection Act, introduces protections for us all. Institutions have to follow stricter disclosure rules, and if you've tried to refinance your mortgage lately, you'll be glad to know that lenders are going over your application with a fine-toothed comb.
With every new catastrophe, we gain a deeper understanding of what's come before. Our flood control initiatives provide no better example. The federal government spent $15 billion for a huge project to protect New Orleans from storm surge, and not one flood claim was filed in conjunction with heavy rains there last September, one broker reported recently.
The insurance industry survived just fine after record losses last year in Japan and Thailand. Companies today rely on models that many thought were not possible even five years ago. Underwriters have used those models to raise rates. Insureds weren't happy about it, but higher rates are allowing underwriters to collect more premium to stash away reserves to pay off future claims.
Fortune 500 companies are adopting enterprise risk management strategies and their boards are well aware of the importance of staving off or minimizing a loss before it happens. When companies make silly, costly mistakes, as JP Morgan Chase did in April, they always show up in the headlines. But seldom do we hear of the successful risk mitigation strategies. Yet, they are there and the results show up in lower claims frequencies, and faster claims triage.
No, I'm happy keeping my data on the cloud, moving my money via Internet banking, and evacuating the summer beach rental if the governor tells me a hurricane is on the way.
CYRIL TUOHY is managing editor of Risk & Insurance®. He can be reached at firstname.lastname@example.org.
August 22, 2012
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