Notepad: Risk in Review – September

 
 

Wildfires Burn Throughout California

california wildfiresIn August, the Mendocino Complex fire in Northern California became the largest wildfire in the state’s history. By Aug. 12, it had burned 328,000 acres, destroyed more than 260 structures and was still only 67% contained. The blaze was one of thousands of fires to plague California during a wildfire season that has already been declared a major disaster by the federal government. The season also saw the sixth-most destructive wildfire in state history: The Carr fire, which was also still active as of mid-August, burned more than 190,000 acres and destroyed some 1,600 structures. Aon and Moody’s estimated the insured losses from that fire alone will exceed $1 billion. Coming on the heels of the most destructive wildfire season in state history in 2017, this year’s fires have prompted calls from California residents and lawmakers to improve the state’s emergency alert system, which many contend has thus far been inadequate. California Gov. Jerry Brown said he would consider such legislation later this year.

Japan Endures Deadly Floods and Heat Wave

japan floodingHeavy rains in June and July led to widespread floods and mudslides throughout Japan, killing at least 225 people and forcing millions to evacuate. In mid-July, Japanese authorities estimated that losses to small- and medium-sized business would reach up to 407.5 billion yen ($3.67 billion), while it is expected to cost 260.9 billion yen ($2.35 billion) to fix levees, bridges, roads and other public works. The agricultural, forestry and fishery industries also sustained at least 65 billion yen ($586.3 million) in damages. Moody’s predicted that the insurance impact would be relatively small due to flood exclusions in most standard policies. At the same time, Japan also faced an intense heat wave this summer with weeks of sustained temperatures over 35°C (95°F). Late July saw a new national record when temperatures reached 41.1°C (106°F) in Kumagaya. Between April 30 and Aug. 5, 138 people died and more than 71,000 were hospitalized for heat-related conditions.

DHS Unveils National Risk Management Center

The U.S. Department of Homeland Security recently announced the formation of the National Risk Management Center, an initiative focused on defending critical infrastructure from cyberattacks. According to DHS Secretary Kirstjen Nielsen, the center is intended to provide a single point of access to the full range of government activities to defend against cyber threats. The center’s mission will be to work with industry experts to identify, assess and prioritize risks to national critical functions, collaborate on the development of risk management strategies, and coordinate integrated cross-sector risk management activities. Initially, these efforts will be focused on the financial services, telecommunications and energy sectors.

Johnson & Johnson Hit with $4.7 Billion Talcum Powder Verdict

johnson and johnson talcum powderIn July, a St. Louis jury ordered Johnson & Johnson to pay $4.69 billion to 22 women who claimed that they developed ovarian cancer as a result of using asbestos-contaminated talcum powder products. The pharmaceutical giant is appealing the verdict. To date, some 9,000 talcum powder lawsuits have been filed against Johnson & Johnson, which has denied that its products cause cancer and that they contain asbestos. Over the past few years, the company has been hit with a number of multi-million dollar verdicts in ovarian cancer cases, including two notable examples last year: a $417 million judgment that was overturned in Los Angeles Superior Court and a $110 million jury award that was upheld on appeal in Missouri. Johnson & Johnson also faces similar lawsuits alleging that asbestos-containing talcum powder is responsible for instances of mesothelioma. In 2017, a New Jersey jury said that Johnson & Johnson and talc company Imerys had to pay $117 million to a plaintiff after he contracted the disease as a result of inhaling the powder.

Google Fined $5 Billion for Antitrust Violations

google antitrust fine euIn July, Google was fined a record €4.34 billion ($5 billion) by European Union regulators for violating antitrust laws. According to the European Commission, Google took advantage of its dominant market position by requiring mobile device manufacturers to pre-install Google Search and the Chrome browser apps as a condition for licensing its Google Play app store, paying manufacturers to exclusively pre-install Google Search, and blocking them from selling devices that run alternate versions of the Android system. The commission ordered Google to discontinue the practices within 90 days or face an additional penalty of up to 5% of parent company Alphabet’s average daily revenue for every day of noncompliance. Last year, Google was fined €2.42 billion ($2.8 billion) by the European Commission for illegally manipulating search results.

NFIP Extended Through November

Hours before it was scheduled to expire on Aug. 1, Congress voted to extend the National Flood Insurance Program (NFIP) through Nov. 30. Despite the extension, many critics still believe that substantial reforms are necessary. The NFIP currently has more than five million policies in force in the United States and collects more than $3 billion in premiums every year. However, a 2017 Congressional Budget Office report estimated that the program has an annual operating loss of $1.4 billion. The NFIP is also more than $20 billion in debt, even after Congress cancelled $16 billion of debt last year in order to avoid exceeding the program’s $30 billion borrowing authority cap. Not surprisingly, last year’s record-breaking storm season has strained the NFIP’s finances even further. More than 95,000 NFIP claims totaling over $8.7 billion have been filed for 2017 losses, making it one of the costliest years in the program’s 50-year history.

 
Morgan O'Rourke

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About the Author

Morgan O’Rourke is editor in chief of Risk Management and director of publications for the Risk & Insurance Management Society, Inc. (RIMS)

 
 
 

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