There is nothing like experience to change perspective. Particularly individual and collective runs with disasters can change the way people and society react to the potential for future threats.
Sometimes, however, it takes several close meetings for the message to arrive. While living in London – a city not known for its exposure to intense windstorms – I managed to sleep through the hurricane winds of 87J, also known as the Great Storm of 1987. The next day, after going through the rubbish to work at. a financial newspaper, I was more focused on the tumult in the stock market than on the aftermath of what had been a deadly storm.
Eleven years later, when he stayed south of Miami while Hurricane Georges hit southern Florida, the power of a major storm was much more obvious. There was not much to do but stay away from the windows as torrential rain flooded the streets and pieces of palm flew around outside.
A few years earlier, Hurricane Andrew had a huge impact on many people̵
7;s understanding of storm risks and how they could be insured. As we report in our cover story, 30 years after Andrew, insurance companies and reinsurance companies are still operating in an environment shaped by the storm.
Improved building standards, the broad acceptance of computer models in the insurance process, the expansion of reinsurance capital and the beginning of an understanding of how climate change is changing risk management in real estate can be traced back to Andrew.
And the experience of other storms since, in particular Hurricane Katrina in 2005 and Superstorm Sandy in 2012, has led to even more changes in how the industry handles natural disaster risks and how insurance is formulated to cover or exclude the various losses associated with strong wind storms.
But there is still more to learn. As we report on page 4, security experts have significant concerns about the adequacy of organizations’ emergency response plans, and these concerns have only been exacerbated by the recent disasters involving tornadoes.
Less predictable and less effectively modeled than hurricanes, twisters require quick and flexible responses, but that does not mean that the different scenarios cannot be simulated in table exercises in organizations of all sizes.
The experience of increased disasters over the last three decades has led to permanent changes in risk management practices, but response plans must be constantly evolving as we enter a period of potentially even more uncertainty.
Insurers and reinsurers began talking about the effects of climate change on their operations long ago, and many in the industry must be frustrated that the evidence they see in their loss figures is still ignored or explained away by some who would rather just make the problem go away. Experience must triumph over hope when it comes to natural disasters.
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