Concerned About Natural Disasters? Meet Helix, an Advisory Board Dedicated to Finding Solutions

In an effort to tackle severe weather and volatile storms, The Institutes has created Helix, an advisory board aimed at utilizing technology to assess natural disaster risk.

By: Kiara Taylor | February 21, 2021

It didn’t gain as much attention in the news, but the past year brought about a series of natural disasters around the world in addition to the pandemic. This continues a major trend we have been witnessing for the last two decades.

According to the United Nations Office for Disaster Risk Reductions, the number of climate-related disasters between 2000 and 2019 more than doubled over the number between 1980 and 1999.

This has made it more apparent than ever that we need a better way of assessing the risk of natural disasters as a whole.

This month, The Institutes moved to announce the formation of an advisory board, named Helix, which will spearhead the implementation of new technologies in the assessment and management of the risks of natural disasters.

Helix represents the insurance industry’s commitment to providing social resilience and economic stability in our increasingly dynamic and unpredictable world.

By bringing together experts from many fields, and articulating the work of research and development through four key pillars, the Helix board will work cooperatively toward solutions that not only improve the insurance industry, but also benefit the general public and society at large.

A Holistic Approach

At the broadest level, the work of Helix is based on the findings of The Institutes’ Catastrophe Modeling Operating Standards (CMOS) initiative.

This team completed exploratory research in 2020 that was aimed at testing an open common exposure data standard. The aim was to establish an approach for U.S. insurers, reinsurers, intermediaries and model providers, through which information could be shared about natural disaster resilience in a safe, secure and commercially sensitive way.

The development of these data sharing protocols has been informed, in turn, by an increasingly acute sense — both in the insurance industry and outside it — that emerging technologies provide an opportunity for insurers to greatly expand both their capabilities and their value to society.

Recent years have seen increased research interest in the impact of technology on risk and particular ways in which the industry may be able to automate the analysis of claims.

Helix seeks to integrate these new approaches into an overarching framework for the application of new and emerging technologies in natural disaster resilience.

The Helix vision is articulated through four main pillars: Climate and Resiliency, Data, Technology, and Operations.

The Institutes, as a provider of risk management and insurance knowledge solutions, education, research, networking and career resources for the insurance industry, is in a good position to coordinate this work.

According to Peter Miller, president and CEO of The Institutes, Helix is an opportunity “for The Institutes to facilitate bringing the industry together and to serve as a neutral third party in work on this important issue that ultimately benefits the general public. We are excited to help coordinate this effort focused on mitigating the adverse effects of natural disasters.”

Dynamic Technology for a Dynamic World

The formation of Helix represents a paradigm shift in the insurance industry, which is currently facing massive challenges, including climate hazards, economic resilience against shifting demographics and the consequential escalation in natural catastrophe loss volatility.

In this context, the development of an open, reliable and trusted data standard for sharing information on shared exposure has long been a strategic goal.

However, the formulation of such a standard has been held back by a variety of factors — not just the fundamental risk of sharing data, but also the fact that nonprofits are seeing increased cyber threat levels and concerns about the risks presented by emerging technologies such as artificial intelligence in the industry.

Simultaneously, however, there is an increased consciousness in the insurance industry that these emerging technologies offer opportunities as well as risks.

In just the last year, the rise of a new type of tech-focused insurance company that has come to be known as “Insurtechs” has provided a stark illustration of this. The work of the Helix board, facilitated and guided by The Institutes, will provide strategic guidance for companies, NGOs and other organizations seeking to deploy similar technologies in natural disaster risk assessment and management.

Building Together

At the time of writing, The Institutes is in the process of engaging with the founding members of Helix and of building out an appropriate governance structure for the board.

As these are put in place, Helix members will determine initial priorities in support of the four pillars and will begin to leverage the work performed under the CMOS initiative.

The further development of open data standards is envisaged to form just the beginning of a more holistic program of work.

There has long been a desire, within the insurance industry, for a more collaborative approach to managing shared exposure risks, especially when it comes to natural disaster resilience, and the formation of the Helix board will provide a starting point for a much wider program of work.

This was expressly noted by the founding members of the board.

“Based on the interest in and success of the CMOS, it is clear there is a desire for an industry-wide, cooperative effort focused on resilience from natural catastrophes,” said Sean Ringsted, chief risk officer at Chubb. “We’ve received strong interest in creation of Helix and look forward to welcoming the participation of additional organizations.”

A New Chapter

For The Institutes, Helix also represents a new chapter.

“We have long been at the forefront of technological and managerial innovation in the technology industry, whether this be through our leadership programs, continuing education courses, events and conferences, associations, custom solutions, publications, assessment tools, or more specific interventions such as our training program on blockchain in the insurance industry.

“Helix offers us the opportunity to take this work to the next level, and to contribute to global, communal efforts to improve fundamental operating issues in catastrophe risk analytics, and ultimately to build a safer, more resilient world,” Miller said.

Companies or individuals in search of additional information can contact The Institutes at [email protected]. &

Kiara Taylor has more than 10 years of experience in finance, ranging from fixed income to emerging markets. She enjoys writing on the impact of both micro and macro trends on global finance. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.