Are You Prepared for Water Damage Inside your Home or Commercial Property? Risk Data and Questions

Published on October 19th, 2023 by Kyle Langan

What is the sentiment surrounding non-weather-related water damage from incidents like sudden and accidental leaks?

In a sample study, 61% of consumers never heard of an automatic water shutoff device, “despite how effective they can be at reducing water damage” (Hanover, 2023).

“One of the most common residential claims is from water” (Epps, 2004).  Risk is present because of high frequency. The source of water must be determined during the claim adjustment because not all causes are covered (Epps, 2004).

“A common source of damage is water from a plumbing, heating, air-conditioning system, or household appliance” (Epps, 2004). Perils may include burst water heaters, burst pipes, or broken water lines to a washing machine. “If there is policy coverage, it usually covers the damages caused by the water but does not pay to repair the damaged or broken water line or appliance. If a broken or leaking water line is inside a wall or ceiling or under a slab foundation, there may be coverage to access the water line but again no coverage to repair the water line itself” (Epps, 2004).

  • When is the last time your property’s plumbing system got upgraded?
  • Do you have a water sensor?
  • Are you familiar with an automatic water shutoff device?

Some convincing data points to take action and prepare (sourced from one of our partner carriers):

  • Plumbing leak = 7x more likely than a fire in a home
  • Water damage = 6x more common than burglaries (Hanover, 2023).

Please reach out to our risk manager, Kyle Langan ( to help proactively educate on the risks of non-weather-related water damage and find devices to install in homes or commercial properties to help cover contingencies.


2023 Home Water Damage Prevention Report. 2023 Home Water Damage Prevention Report | The Hanover Insurance Group. (n.d.).

Epps, G. (2004, July 1). Residential water claims. IRMI.

Celebrating National Recovery Month 2023

National Recovery Month 2023

National Recovery Month (Recovery Month) is a national observance held every September to educate Americans that substance use treatment and mental health services can enable those with a mental and/or substance use disorder to live a healthy and rewarding life.

Since 1989, Recovery Month has been held to promote and support new treatment and recovery practices, the nation’s vibrant and proud recovery community, and the dedication of service providers and communities who make recovery in all its forms possible.

Recovery Month has adopted the theme of “Every Person. Every Family. Every Community.” as its permanent tagline, indicating that every person can overcome the trials and tribulations associated with the ups and downs of life.

As an affiliate member of National Association of Addiction Treatment Providers (NAATP), we want to echo the belief that mental health and Substance Use Disorder (SUD) treatment IS health care. In the United States last year, more than 106,000 persons died from drug-involved overdoses. This is an important cause to celebrate because SUD affects families all over the world.

When is the Right Time to Mitigate Cyber Risk?

Published September 8th, 2023 by Kyle Langan

Organizations should consider hedging cyber tail risk with insurance. Traditional General Liability insurance contracts do not protect entities from cyber events. Conversely, an effective way to manage this risk is purchasing a specific contract with an agreed payout for covered causes of loss. At the close of 2023 Q2, data shows a correctional decline in the cost to mitigate cyber risk with insurance (Tokio Marine). Meanwhile, “ransomware appears to have returned to levels observed in 2020 and 2021 and concerns about cyberwar and systemic cyber events are at an all-time high” (Tokio Marine). This divergence indicates the balance of 2023 provides a timely opportunity for cyber risk mitigation. Widespread events can and will happen, while more sophisticated attacks develop (Tokio Marine). This is why many risk managers describe cyber events as the most dynamic or fastest emerging domain of risk.

Quarterly Cyber Rate Change

(Source: Marsh Global Insurance Market Index, Council of Insurance Agents and Brokers)


2023 Cyber Report. Tokio Marine HCC.

Council of Insurance Agents and Brokers P/C Market Survey Q1 2021 to Q1 2023. The Council of Insurance Agents & Brokers. (2023, August 11).

Global Insurance Market index 2023: Global Insurance Market index. Marsh.

Total Cost of Risk for a Treatment Provider

Article published by Kyle Langan August 25th, 2023

Executive Summary:

For financial health and longevity, it is vital to understand the costs of risk and their impact on surplus or profitability. This article provides analysis on cash flow for a treatment provider. It may point out factors that typically go unmeasured at times of stress.

Learn How to Measure:

Risks are inherent in an entity’s operations, and risk brings cost.

Total Cost of Risk is money spent managing risks and incurring losses. It is the sum of all aspects of operations that relate to risk. [1] Costs usually include buying insurance. Policy types and claims history determine these costs. Other costs include retentions, uninsured losses, administrative work, risk control, and indirect costs. [2]

Losses set back cash flow, but with the right protection, most direct losses are covered by insurance. Indirect costs are unbudgeted expenses of events caused by business interruption or disruption. An indirect loss cost factor, specific to industry group and risk category, can help with the calculation. [3] With these indirect costs calculated, strategic opportunities arise to minimize Total Cost of Risk.


A litigated medical malpractice loss will incur significant costs, thereby increasing Total Cost of Risk for a treatment provider. This results from the losses in the settlement/judgement and attorney fees (direct costs). Separate, there are business disruptions, time for data gathering, strategy formation, and human capital expenditures (all indirect costs).

Scenario: Addiction Treatment Provider Faces Medical Malpractice Allegation

$50,000 = Cost of insurance purchased by Treatment Provider (Premiums, Taxes, Fees)

$250,000 = Medical Malpractice Loss

Insurance company provides a $250,000 payout and protection for the covered cause of loss as defined in the treatment provider’s human services professional liability policy.

$10,000 = Self-insured retention

Insurance company collects $10,000 from the treatment provider after the loss concludes, as it was the entity’s agreed portion of the loss, per the insurance contract.

Indirect Costs

An indirect loss cost factor measures wasted time, energy, and resources spent on a claim process and recovery from the loss. [4] Indirect losses erode cash flow.

A factor of 0.50 equals indirect losses totaling an additional $125,000

250,000 * (0.50) = 125,000

In conclusion, the Treatment Provider faces $125,000 of indirect costs, $240,000 in losses covered by insurance, and a $10,000 deductible.

$125,000 is the portion that may go unaccounted for on financial statements, unless it is quantified by the treatment provider’s risk manager or CFO.

Total Cost of Risk:

Indirect Costs = $125,000

Insurance Premium = $50,000

Self-insured retention = $10,000

Total Cost of Risk for the Treatment Provider this year = $185,000

This also illustrates the importance of insurance. Without the protection, Total Cost of Risk is $240,000 higher, totaling $425,000, plus interest expense, if the company used debt to finance the loss.




Cost of risk. Cost of Risk | Insurance Glossary Definition | (n.d.). Retrieved February 28, 2022, from

[2] — [4]

Data-driven client outcomes for the insurance industry. TCORCalc. (2019, July 28). Retrieved February 28, 2022, from

Cyber Risk Financing: Boom or Bust?

How would the cyber insurance market react to a catastrophic loss? If rare events play a disproportionately large role in determining the properties of the cyber market, one of these events could send capital providers “running for the hills” (Ayers, 2023). In its report, “Cyber Risk: On the Edge of Insurability,” Conning specifically mentions the potential of this as the next black swan event.

“Conning envisions several possible paths for the cyber industry, including one where pricing gains in recent years and improved claims experience successfully attract more capital from both traditional sources and new players; and another where a catastrophic loss occurs,” shaking out capital providers and “reversing recent progress” (Ayers, 2023).



Ayers, E. (2023, July 18). A “surprising” cyber cat could stymie future market growth: Conning. Zywave | Advisen Cyber Front Page News.

Taleb, N. N. (2020). Statistical consequences of fat tails: Real world preasymptotics, epistemology, and applications: Papers and commentary. STEM Academic Press.

Lessons from Deepwater Horizon Oil Spill: Embedding a Culture of Risk Management

Published June 20th, 2023 by Kyle Langan

Running a business involves speculative risk. A successful strategy brings an expectation of positive returns, while carrying a small but significant risk of catastrophic losses.

On April 20, 2010, “the inherent risks of decades of inadequate regulation, insufficient investment, and incomplete planning were realized in tragic fashion.” [1] This shows how errors develop into catastrophic loss. “The Deepwater Horizon rig sank on April 22, two days after the well blowout and explosion that tragically killed 11 workers in the Macondo Prospect.” [2] Roughly 4.9 million barrels spilled into the Gulf of Mexico, “based on flow-rate estimate, which ranged from 62,200 barrels per day on April 22 to 52,700 barrels per day on July 14, just before the capping stack stopped the flow.” [3]

The loss stemmed from roots of leadership’s culture of urgency and frugality. “Decision-making processes “did not adequately ensure that personnel fully considered the risks created by time- and money-saving decisions.” [4]

Source: (National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, 2011).

As seen in the chart above, an overriding sense of urgency to bring new wells on line without delay or marginal cost contributed to a risk-taking culture among the Macondo well-site workers and their managers. More time-consuming but safer alternatives were presently available in all the root causes of loss. Instead, “snap decision-making without supporting evidence, abandonment of procedural safeguards, ignoring of obvious safety-check warnings, and other dangerous behaviors took precedent.” [5]

Solution: A Culture of Risk Management

The findings of the Commission “highlight the importance of organizational culture and a consistent commitment to safety by industry, from the highest management levels on down.” Improved regulatory oversight aims to solve a culture of revenue maximization and complacency. The GPO recommends a “pervasive top-down safety culture.” [6] “The critical element is an unwavering commitment to safety at the top of an organization: the CEO and board of directors must create the culture and establish the conditions under which everyone in a company shares responsibility for maintaining a relentless focus on preventing accidents.” [7] For example, a company “rewards employees and contractors who take action when there is a safety concern even though such action costs the company time and money.” [8]

If a company “rigorously adheres to the best practices of a functioning safety culture”, it can prevent catastrophic losses. [9]



National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling. “Deep Water: The Gulf Oil Disaster and the Future of Offshore Drilling.” U.S. Government Publishing Office’s (GPO). (2011, January).


The Institutes Knowledge Group. The Institutes. (n.d.).

May is National Wildfire Awareness Month

By Tri Phan, CPCU, ARM

Wildfires are unplanned, uncontrolled, and unpredictable fires that result, typically, from either lightning strikes or human causes. According to the U.S. Department of the Interior, Bureau of Land Management, on average, 80% of all wildland fires on Bureau of Land Management-managed lands are caused by humans (Myslivy 2022).  Further, 16% of the U.S. population currently lives in wildfire-prone areas (Muyskens 2022). On average, more than 100,000 wildfires clear 4 to 5 million acres of land in the U.S. every year.

In our April Blog post, we published an article about 2023 U.S. Wildfire Forecast, Blog Article, with focus on ways to manage the risk of wildfire and reduce the likelihood of loss.  We are revisiting this subject matter because the month of May is National Wildfire Awareness Month.  We endeavor to provide you insight into how wildfires spread and destroy property, and what actions property owners can take to mitigate loss.

Examining the Devastating Consequences of Wildfires in California

In 2018, wildfires in the California caused $22 billion in damage, but the total economic impact, including indirect costs, was $148.5 billion. Would it surprise you to learn that the study revealed that California wildfires affected industry sectors and locations distant from the fires?  Data indicate that 31% of the total losses in 2018 were from outside of California (Wang 2021).

According to the California Department of Forestry and Fire Protection, the 2020 wildfire season was one of the most destructive in California’s history, with over 9,639 wildfires burning over 4.2 million acres of land, destroying over 10,000 structures, and claiming the lives of 33 people (2020).

Assessing the Risk of Catastrophic Wildfires in California for 2023

California is THE most wildfire-prone state in the United States.  From late 2022 through March of 2023, there were 31 atmospheric rivers that hit California and dumped record-setting rain and snow across the state (Toohey 2023). As a result, California is out of the most extreme categories of drought, that is the silver lining.  The additional risk then is that as the weather becomes warmer, and wildland plants begin to dry out, it results in significant fuel load increases and the risk of wildfire is now greater. Therefore, wildfires risk in California and the West Coast this year may be catastrophic, property owners must take precautions to minimize property loss and damage my considering and taking action on ways to mitigate exposure.

How Wildfires Spread and Destroy Property

There are three ways that wildfires and spread and cause damage to property.

  1. Direct flames: Actual flame coming into direct contact with a building/combustible material.
  2. Airborne embers: Flaming airborne embers can travel more than a mile from the active wildfire. 60% wildland interface home ignitions are from flaming embers landing on flammable roofs/objects. (Smith 2009)
  3. Radiant heat: A wildfire can raise the temperature of nearby combustible materials to the point of ignition

This house was ignited by flaming airborne embers landing on vulnerable spots. Notice the adjacent forest is not burning. Photo courtesy USFS-LTBMU.

Recommended Actions:

  1. Create a wildfire evacuation plan and train employees/inhabitants/family members how to use fire extinguishers
  2. Review and distribute a disaster communication plan
  3. Create and maintain a supply list
  4. Plan how property owners can restore critical operations during unplanned disruption in services
  5. Protect property by creating cleared zones that provide less fuel sources for the fire to spread
  6. Clean off the roof and gutters to minimize the risk of ignition
  7. Back up data to the internet cloud or an offsite drive
  8. Review Insurance coverage: Policy limits, time elements coverage should all be reviewed for adequacy
  9. If you need help with any of these recommended steps, email Tri Phan


“2020 Incident Archive.” CAL FIRE, Accessed 3 May 2023.

Muyskens, John , et al. “1 in 6 Americans Live in Areas with Significant Wildfire Risk.” The Washington Post, 17 May 2022, Accessed 3 May 2023.


Smith, Ed, Sistare, Sonya. “Be Ember Aware!”. University of Nevada, Reno. 2009,

Toohey, Grace. “Volcano? Climate change? Bad luck? Why California was hit with 31 atmospheric river storms” 11 April, 2023,

Wang, D., Guan, D., Zhu, S. et al. Economic footprint of California wildfires in 2018. Nat Sustain 4, 252–260 (2021),

AccuWeather’s 2023 US wildfire forecast: Impact on Property Risk Management

Fire Season Expectations

AccuWeather’s recently released a 2023 US Wildfire Forecast, which included data and analysis on 2023’s season. Forecasts expect this fire season to fall in line with average, with increased exposure in a few hot spots. [1]


Peak wildfire season should occur from August into September in Northern California; for those in Central and Southern California, they should expect a peak season of September to November. [2] During these time frames, “lightning from the North American monsoon can be a natural ignition source for fires, while the Santa Ana winds can fan the flames of ongoing blazes and cause them to evolve rapidly into massive wildfires.” [4] Something insurers will monitor is this wildfire season peak’s alignment with the peak of the Atlantic hurricane season. [5]

“California saw one of the deepest snowpacks in state history, which will delay the onset of wildfire season, but AccuWeather warns that it will not prevent fires from starting.” [6]  One of the concerns this season is the total amount of combustible material, also known as fuel load. [7] “The recent precipitation will lead to ‘intense growth’ during the spring and first part of the summer, resulting in more fuel for fires that ignite later in the summer and into autumn.” [8] “The winter storms also blew down an abundance of branches, limbs and entire trees.” [9] As a result, California now experiences elevated fuel load levels.

Danger Zone: Pacific Northwest, Rocky Mountains

“The interior Northwest and the northern Rockies face a high risk of wildfires this year.” [10] This is a result of a winter “that was drier than the historical average.” [11] Washington, Oregon, Idaho, Montana, Northern California and northern Nevada will confront elevated exposure because “significant fires could break out as early as June or the first half of July.” [12] However, the “region’s peak of wildfire activity is not anticipated until late July into early September.” [13] Property owners and managers should practice an abundance of caution and ensure their insurance or risk transfer treatment is proper. For a review of your program, email

Danger Zone: Florida

“The Florida Peninsula is running drier-than-historical averages in 2023. These conditions can lead to brush fires this spring.” [14]

The Leader

“Alaska leads the country in wildfire activity, with 3.08 million acres burned in 2022, nearly twice the amount of land in Delaware.” [15]


Lada, B. (2023, April 12). AccuWeather’s 2023 US wildfire forecast. Retrieved from

Term of the week: Fuel load. (n.d.). Retrieved from,materials%20into%20the%20fire%20area).

[1]-[6]; [8]-[15]

Lada, B. (2023)


Fuel load.

Snowpack Levels Up Over 250%: Severe Flood Risk?

Edited March 15th, 2023 by Kyle Langan

In December 2021, Conrey published an article about Sierra storm systems and the benefit to California’s then struggling mountain snowpack. Without these storms, a resulting decrease in the extent of alpine tundra ecosystems could have threatened wildlife.

At the start of February 2022, we revisited this prediction when the Sierra snowpack ballooned to more than double its usual size for that time of year.

Another month and a half later, and the Sierras are now seeing a “historic run of atmospheric rivers and punishing arctic blasts that have filled reservoirs, flooded cities and eased drought conditions across California” (Rodgers, 2023). With two weeks still left in March, the South Sierra Snow Water Content currently sits at 260% of average for April 1st, according to California Department of Water Resources (California Snow Water Content, 2023). In Southern Nevada, the Spring Mountains saw numbers as high as 410% over today’s median:

Check updated California / Nevada snowpack levels HERE.

Source: California Snow Water Content, March 15, 2023, percent of April 1 average (California Data Exchange Center)

As seen in the chart above, the snow water content previously hit its record size during the winter of 1982-83, as tracked by the green trend lines; 2022-23’s current blue trend lines show relief for California’s multiyear drought (California Snow Water Content, 2023). As of March 11th, “52 feet of snow had fallen at the UC Berkeley Central Sierra Snow Lab atop Donner Summit, tying the 1981-1982 season for the fourth-highest total since the lab was created in 1946, said Andrew Schwartz, lab manager and lead scientist. Schwartz expects this season to end up second only to the 1951-1952 winter season when nearly 68 feet of snow fell” (Rodgers, 2023).

Rain-on-Snow Events: Property Exposure

The flood risk is difficult to forecast, but property owners should prepare for atmospheric rivers. “Atmospheric rivers form when a long channel of wind transports water vapor from the tropics, and they produce heavy rain or snow when they make landfall” (Rodgers, 2023). Rain on top of snowpack could bring “rain-on-snow events, when runoff from rain combines with snowmelt to overwhelm watersheds” (Lee, 2023). For example, Kern River normally “runs at 600 cubic feet per second. During a ‘great’ summer river flow, it is around 7,000 cubic feet per second. In the climax of the storm on Friday, March 10th, the river was running at 45,000 cubic feet per second” (Garcia, 2023). Later this spring, uncertainty rises. The risk depends on whether the snowpack melts gradually or rapidly. A series of warm storms later in the spring will elevate property risk due to flooding (Lee, 2023). Property owners do not want a spring heatwave, which leads to more rain-on-snow and potential flooding or mudslides.


California Snow Water Content, March 14, 2023, percent of April 1 average. (n.d.). Retrieved March 14, 2023, from

Flores, J., & Lee, J. (2023, March 11). Map: These are the areas facing serious flood risks in California storm. San Francisco Chronicle. Retrieved March 14, 2023, from

Garcia, L. (2023, March 13). Kern River once again flowing through Bakersfield after Weekend Rain. KGET 17. Retrieved March 14, 2023, from

Lee, J. (2023, March 13). ‘whole hell of a lot of water up there’: This map shows the sierra snowpack’s record levels. San Francisco Chronicle. Retrieved March 14, 2023, from

Natural Resources Conservation Service. California/Nevada SNOTEL Snowpack Update Report. (n.d.). Retrieved March 14, 2023, from

Radde, K. (2023, March 13). A waterlogged California is bracing for yet another Atmospheric River. NPR. Retrieved March 14, 2023, from,snow%20when%20they%20make%20landfall.

Rodgers, J. (2023, March 12). 52 feet and counting: Lake Tahoe grapples with ‘ginormous’ snowpack. Stars and Stripes. Retrieved March 14, 2023, from

Philadelphia Eagle’s Overlooked Symptom Leads to $43.5M Loss for Medical Provider

Published on February 14th, 2022, by Kyle Langan

Jury’s award:

A jury in Philadelphia awarded former NFL player Chris Maragos $43.5 million after he sued the medical team in charge of treating a knee injury from his time playing as a Philadelphia Eagle. [1] “Maragos accused orthopedic surgeon James Bradley and Rothman Orthopaedics of neglecting to address a torn meniscus” he suffered in October 2017; this led to the “premature end of his NFL career” and caused “ongoing pain and physical limitations.” [2] Maragos endured a torn posterior cruciate ligament (PCL), which was surgically repaired by Bradley. [3] However, attorneys said the “medical team ignored damage to the meniscus, even after a May 2018 MRI exam showed the injury worsening.” [4]

Proven Negligence:

Members of the Maragos legal team said they “proved at trial that Rothman Orthopaedics created two separate medical charts for Maragos, one of which failed to include key notes about his injury and recovery.” [5] The jury assigned two thirds of the $43.5 million to Bradley, per reports, which made the remaining third the responsibility of Rothman Orthopaedics. [6]

The Medical Team’s Defense:

During the trial, “lawyers for the defendants argued Maragos suffered his meniscus injury in a weight-room incident several months after his surgery.” [7] Additionally, they highlighted age at the time of his surgery, 31, and eight years of experience in the NFL, suggesting that his career did not have much time left. [8] “Doctors who oversaw his rehabilitation knew of the meniscus issue, lawyers said, but deemed it ‘stable’ and unlikely to respond well to a surgical procedure.” [9]

Risk Management and Insurance Implications:

Medical Malpractice Insurance will defend and indemnify insureds with “coverage for the acts, errors, and omissions of physicians and surgeons, encompassing physicians’ professional liability insurance, hospital professional liability (HPL) insurance, and allied healthcare (e.g., nurses) professional liability insurance.” [10] If your company seeks in-depth knowledge of this protection and limit adequacy, contact me at


[1] — [9]

Bieler, D. (2023, February 14). Jury awards ex-eagles player $43.5 million for medical malpractice. The Washington Post. Retrieved February 14, 2023, from


Medical Malpractice Insurance. Medical Malpractice Insurance | Insurance Glossary Definition | (n.d.). Retrieved February 14, 2023, from