Archives for December, 2016

New Approach Calculates Benefits Of Building Hazard-Resistant Structures

Hazard-induced maintenance costs can be significant over the lifetime of a building.

Researchers at the MIT Concrete Sustainability Hub (CSHub) are developing new methods to calculate the benefits of investing in more hazard-resistant structures. Jeremy Gregory, executive director of the CSHub recently presented one metric, the CSHub’s Break-Even Hazard Mitigation Percentage (BEMP), to officials in Florida and Georgia — states that can see millions in property damage due to hurricanes.

“The BEMP evaluates the cost-effectiveness of mitigation features for a building in a particular location by factoring in the expected damage a conventional building designed to code would endure over its lifetime, and comparing it to a more resilient, enhanced building design,” says Gregory. “In areas prone to natural disasters, more spending on mitigation is justified — the BEMP helps to identify how much extra spending is recommended.”

The southeastern United States was hit hard by weather patterns resulting from Hurricane Matthew in October. Georgia has sustained some $90 million in insured losses to date, and total claims are expected to rise. Florida was spared Matthew’s worst effects, but the state is regularly witness to the destructive power of such storms and there’s a lot at stake: The insured value of residential and commercial properties in Florida’s coastal counties now exceeds $13 trillion.

Gregory spoke to officials and members of the building community in Atlanta, Georgia, and Tallahassee, Florida, this month during roundtable discussions about building resilience, the BEMP, and hazard mitigation. He also presented the topic to journalists and industry professionals during a recent webinar.

“Structures in coastal areas states like Florida and Georgia are prone to damage from high winds and hurricanes,” says Gregory. “Through previous case studies we’ve demonstrated that investing in more hazard-resistant residential construction in some locations can be very cost-effective, especially in costal states where the impact of hurricanes can have devastating economic effects.”

One case study showed a BEMP of 3.4 percent for in the coastal city Galveston, Texas, meaning for a $10 million midrise apartment building, $340,000 could be spent on mitigation, and costs would break even over the building life. The highest BEMP calculations are in cities in southeastern Florida, where the values are approximately 8 percent.

Too often, building developers make decisions about materials or building techniques to keep initial costs down. Although the resulting structures are built to code, those codes often fail to factor in the long-term costs or impacts on future owners and communities. One of the goals of this research is widespread adoption of codes and standards that incorporate hazard mitigation into building design.

“Hazard mitigation efforts offer benefits to society at large,” says Gregory. “Builders or short-term owners might have to invest more up front, but — by decreasing recovery costs and lessening the impact on lives — insurance agencies, taxpayers, and future occupants benefit in the long run. Because of these long-term benefits, this is a concept that it makes sense for state officials to get behind.”


Source: MIT News

Terror Coverage Back In Limelight As Christmas Market Carnage Appears To Be Deliberate

In an apparent terror attack in Berlin, a truck has repeatedly plowed through a Christmas market.

At least twelve people have been confirmed dead and at least 50 more have been injured, according to news reports.

The truck had Polish plates, according to reports. CNN is reporting that one of the vehicle’s passengers was killed at the scene. The driver was arrested near the Berlin Zoo, according to reports.

The attack took place in Berlin’s fashionable Breitscheidplatz in the city’s central Charlottenburg district.

“It wasn’t an accident,” one witness told Sky News. “It was going 40 miles per hour, it was in the middle of the market. This was the middle of the market – no way was it deviating off a road, and there was no sign of it slowing down.”

Germany dodged a terrorist attack earlier this month when a 12-year-old German-Iraqi boy tried to plant an explosive device at a Christmas market. the device failed to detonate, according to a Sky News report.

The incident is similar to an attack carried out in France in July. In that attack, Tunisian-born Mohamed Lahouaiej Bouhlel plowed along the beachfront in a 19-ton truck. The beach was packed with people who had gathered to watch Bastille Day fireworks, and Bouhlel killed 86 people. Police shot Bouhlel dead at the scene.


Source: Insurance Business

What Shippers Need To Know About New US Port Bill

US shippers using the ports of Charleston and Everglades in the coming years should be able to ship their goods via larger ships and avoid navigational hurdles after Congress passed a major port bill late last week.

More broadly, US ports seeking to deepen their channels to handle larger ships could also get additional help from the government through the recently passed water infrastructure bill President Barack Obama is expected to sign. After diving into the 728-page bill, covering water infrastructure from irrigation to drinking water projects, here’s what shippers, marine terminals, port authorities, and container lines need to know about the Water Infrastructure Improvements for the Nation, or WIIN, bill.

How does the bill help Charleton and Everglades?

WIIN authorizes funding for new US Army Corps of Engineers navigation projects, including projects to deepen harbors at the Port of Charleston in South Carolina and Port Everglades on Florida’s Atlantic coast: roughly $231.2 million for Charleston and $229.8 million for Everglades.

The inclusion of Charleston and Everglades in the bill will open the door for both projects to receive federal funds and begin construction, but — in a unique instance — the Charleston project was actually already cleared months ago by the Senate to begin construction with or without the WIIN bill.

Charleston is set to deepen its existing entrance channel from 47 feet to 54 feet and deepen the inner harbor from 45 feet to 52 feet, effectively making it the deepest harbor on the US East Coast. The state of South Carolina has already secured roughly $300 million for the $502.7 million project, and has been waiting on Congress to authorize and appropriate the remaining dollars and cents through a new WIIN bill before starting construction.

Farther south, however, Port Everglades will have to continue waiting for Congress to pass the WIIN bill before it can begin dredging. The $337 million Port Everglades project included in the WIIN bill is set to deepen the main navigational channel there from 42 feet to 48 feet, as well as deepen and widen the port’s entrance channel and parts of the Intracoastal Waterway so that cargo ships can pass safely by docked cruise ships.

Despite their differences, both harbor projects aim to prepare their respective ports for the arrival of mega-ships traversing a recently expanded Panama Canal, whose new locks can now handle ships with capacities of up to 14,000 twenty-foot-equivalent units, nearly triple the size of the ships that historically have transited the canal’s century-old waterway.

How will WIIN help future channel-deepening projects?

WIIN includes language from the Senate version of the Water Resources Development Act, or WRDA, which takes steps to modernize the cost-sharing formula for future channel-deepening projects — something that hasn’t been updated in 30 years.

WIIN increases the minimum depth required for a 50-50 federal-state funding split from 45 feet to 50 feet. The 45-foot depth was established in 1986, when vessels were smaller. Congress updated the cost-sharing formula for maintenance projects in 2014 to reflect the need for deeper 50-foot waterways. WIIN extends the same criteria to the initial dredging.

Will WIIN prevent money meant for harbor maintenance being used for other purposes?

No such luck. The latest waterway bill will not address the longstanding efforts to stop the siphoning of funding meant for ports in the Harbor Maintenance Trust Fund to other projects. WIIN, however, will protect ports from unexpected drops in annual dredging funds generated by the tax — a 0.125 percent levy on the value of imported cargo — that contributes to the fund. WIIN does this by ensuring that the harbor maintenance funding target will increase 3 percent every year, even if HMT revenue estimates decrease.

US port interests called the language guaranteeing the annual 3-percent hikes a “backstop” to continue progress toward eventual use of all HMT funds for their intended purpose.

“This fits with the intent of Congress in the 2014 bill,” Kurt Nagle, president and CEO of the Association of American Port Authorities, said at a Gulf Ports Association conference in Lake Charles, Louisiana earlier this year. “When the 2014 bill was passed, nobody was thinking about the possibility that the appropriation might go down.”

That guarantee received a warm welcome from ports, which were surprised to learn earlier in 2016 that during the next fiscal year dredging appropriations from the HMT are expected to decline by $82 million, even though the percentage of HMT collections allocated for dredging will rise from 69 percent to 71 percent.

The forecast decline is due to an expected drop in fiscal 2017 collections from the HMT, which is levied at the rate of 0.125 percent of the value of waterborne imports and domestic cargoes. That decline has been blamed mainly on the recent drop in the price of oil and other commodities.

How could future bills prevent that money from going elsewhere?

Although the latest waterway bill will not stop the siphoning of port funding from the Harbor Maintenance Trust Fund, a House version of WRDA this year did include language that would have taken the trust off budget. That law would have changed HMT spending from discretionary to mandatory in 11 years. That would mean the trust would not be subject to the appropriations process and would ensure every year that HMT revenues would be directed toward projects at the nation’s ports. The industry loses about $20 billion from raids on the Harbor Maintenance Trust Fund.

“Finally taking the Harbor Maintenance Trust Fund off budget guarantees that every year billions of dollars will go to keeping our nation’s ports efficient and globally competitive,” former Congresswoman Janice Hahn, D-Calif., said in a statement.

Hahn, who represented the constituency that is home to the Los Angeles-Long Beach port complex but now serves as a Los Angeles County supervisor, is an outspoken advocate for US ports. While Hahn was still in Washington, she refused to support the House WRDA bill, which she called “botched.” Hahn has expressed hope that language similar to the House version will reappear in future waterway bills.

When can another water infrastructure bill be expected?

WIIN’s passage returns Congress to the routine of passing a water infrastructure bill every two years. It’s something that lawmakers only briefly managed to accomplish in the late ‘80s and early ’90s.

The Water Resources Reform and Development Act passed in 2014 was the first water infrastructure bill passed in nearly seven years.

“WIIN now enables the much-needed return to biennial legislation in order to authorize twenty-first century navigation channel improvements in a timely manner,” AAPA’s Nagle said in a statement.

It’s not a sure thing, though. WIIN is a testament to renewed support for trade and transportation infrastructure among Washington elites — who are floating such grandiose ideas as a $1 trillion revenue neutral infrastructure investment plan. Nevertheless, it has faced considerable challenges in the current Congress and more than once was threatened by short deadlines and gridlock over debates unrelated to water infrastructure.


Source: JOC

Insurers Forced To Grapple With Cyber-Attacks That Spill Over Into Physical Damage

As hackers wreak havoc with depressing regularity, the insurance industry finds itself forced to contemplate a whole new set of risks.

They range from the theft of millions of credit-card numbers from American retailers to the disabling of the power grid, as happened in Ukraine last December. The dedicated “cyber-insurance” policies that companies offer against data breaches have become relatively routine. But the risks they insure under other policies are also affected by cyber-risks—and they are still struggling to understand this so-called “silent” cyber-exposure.

Insurance that protects firms who suffer data breaches has been on offer for around 15 years. It is much harder to put a precise value on, for example, stolen health records than on a property or car. Insurers sidestep the problem by covering only the direct costs that a company incurs from a hack. Typically, these include hiring a specialized forensics firm to work out exactly what was stolen, notifying affected customers (which 47 American states currently require), short-term business interruption and fines.

The industry will be shaken up by new EU data-protection rules, which come into force in 2018 and will impose stricter notification requirements and stiffer fines for data breaches than firms have so far faced in America. Partly because of this, the market for cyber-insurance, which represented only $2.5bn in global premium revenue in 2014 (90% of which came from American companies), is expected to treble by 2020, according to PwC, a consultancy. That would still leave it tiny in comparison with, say, the $670bn global motor-insurance market.

Data breaches are, however, for the most part a manageable nuisance rather than a disaster. Despite the hundreds that take place annually, only 90 since 2010 have been reported by American companies to regulators as having had a “material” impact on their business.

The bigger concern is the “silent” exposure: cyber-attacks that cause physical damage or bodily injury and can end up triggering other policies, such as life, home or commercial-property insurance. Often, such policies, though not designed with cyber-risks in mind, do not specifically exclude them either. In some cases the difference may be minor; a burglar who enters a house by hacking a “smart” lock will not necessarily steal more than one who breaks a window. But cases such as the massive damage caused to a steelworks in Germany in 2014 by hackers who messed with a blast furnace, or the hacking of the Ukrainian power grid (blamed by many on Russia), give insurers pause. They have added urgency to efforts to understand, measure and calibrate their exposures to these new threats.

With real-world precedents still too rare to form the basis of any reliable estimates, the industry has turned to using hypothetical scenarios. At the end of last year, for the first time, Lloyd’s of London, an insurance market that specialises in niche and emerging risks, asked its syndicates (groups of insurers and brokers) to come up with “plausible but extreme” cyber-attack scenarios, and report back their estimated total exposure, in what is to be an annual requirement. The exercise follows a cyber-scenario report in May 2015 from the management of Lloyd’s itself on a hypothetical hacker-caused blackout of the entire power grid of the American north-east. It estimated this would cause direct losses to business revenues of $222bn, and a total dent in GDP of over $1trn over five years.

Many insurers are turning to outside expertise. Matt Webb of Hiscox, a specialist insurer, describes an “arms race” between analytics firms such as RMS and Symantec, offering their long-standing modelling prowess (RMS is already well-trusted on hurricane modelling, for example) to help insurers understand their cyber-liabilities.

But even if exposures are better understood, limiting them may prove tricky. Kevin Kalinich of Aon, an insurance-broker, points to the near-impossibility of drawing a line, for example, between cyber-war or cyberterrorism and “normal” hacking. Cyber-crime knows no geographical bounds, unlike, say, a Florida hurricane. Mr Webb reckons that insurance policies will at a minimum need explicitly to recognise that cyber-risks are covered or to exclude them—just as many policies already include exemptions for terrorism or war.

Although insurers are already helping companies with more humdrum data breaches, the industry still lacks a clearly formulated response to a larger-scale cyber-calamity. Inga Beale, CEO of Lloyd’s, is optimistic that the market, thanks to its exacting modelling exercises and its unique risk-sharing structure, is better equipped than most. But only a devastating, real-life cyber-attack would test how effective its preparations have been.


Source: Economist