Seven of the 10 most costly hurricanes in U.S. insurance history occurred in the 14 months from Aug. 2004 – Oct. 2005: Hurricanes Katrina, Rita, Wilma, Charley, Ivan, Frances and Jeanne. Insured losses for the seven storms totaled $79.1 billion.
Insurance companies have paid an estimated $40.6 billion on 1.7 million claims for damage to homes, businesses and vehicles in six states from Hurricane Katrina, the largest loss in the history of insurance. By contrast, Hurricane Andrew, the previous record holder, resulted in $15.5 billion in losses in 1992 ($22.2 billion in 2006 dollars) and 790,000 claims in three states.
There were 350,000 claims for damaged vehicles and some 156,000 commercial claims. The $20.5 billion in claims payments to businesses accounted for about one-half of the $40.6 billion in insured losses from Hurricane Katrina.
More than 95 percent of the 1.1 million homeowners insurance claims from Hurricane Katrina in Louisiana and Mississippi, totaling more than $15.5 billion, were settled within one year of the storm.
In Louisiana, more than 688,000 homeowners claims, totaling $10.8 billion, have been settled. In Mississippi, more than 350,000 homeowners claims, totaling $5.4 billion, have been settled.
Nearly all of the 350,000 Katrina-related claims from damaged vehicles, totaling $2.2 billion, have been settled.
The National Flood Insurance Program reported that it has paid approximately $15.7 billion in federal flood insurance claims, representing 99 percent of all flood claims received.
Despite the attention focused on lawsuits filed following this catastrophic storm, the number of claims in litigation accounts for a very small percentage of the total number of claims filed. The I.I.I. estimates that fewer than 2 percent of homeowners claims in Louisiana and Mississippi were disputed either through mediation or litigation.
As of July 27, 2007, 537 lawsuits in Mississippi were pending against insurers. U.S. District Court Judge L.T. Senter Jr. ordered 174 cases into mediation, with 84, or 49 percent settled.
Policyholders also continue to resolve their cases through mediation sponsored by the Mississippi Department of Insurance. Of 3,687 policyholder claims mediated through the program, 3,034 were settled—an 83 percent success rate as of July 27, 2007.
The American Arbitration Association oversees the mediation programs for Hurricane Katrina insurance claims. Results reported through July 27: U.S. District Court cases ordered to mediation: 174 cases mediated, 84 settled, 88 with no resolution—a 49 percent settlement rate Mississippi Insurance Department: 4,260 mediations requested, 3,687 mediations held, 3,034 claims settled, 643 with no resolution—an 83 percent settlement rate.
A poll conducted by IPSOS Public Affairs in 2006 found that 89 percent of homeowners in Louisiana and 93 percent in Mississippi are satisfied with their insurance company. The survey reported that four in five people (82 percent in Louisiana and 80 percent in Mississippi) who filed a hurricane-related claim are satisfied with the way it was managed by their insurer. While satisfaction numbers are slightly higher inland, most residents in the hardest-hit coastal areas describe themselves as satisfied with the way their claim was handled.
While significant problems with rebuilding persist along the Gulf Coast—including severe damage to public infrastructure, a shortage of contractors and reduced population—the billions of dollars in claims paid to date by insurance companies are helping fuel an increase in residential building. Building permits have risen by 4 percent in Louisiana and 32 percent in Mississippi, compared with a 4 percent decline nationally during the same period.
2005 was by far the worst year ever for insured catastrophe losses in the U.S., but the worst has yet to come. The $100 billion hurricane will not be unusual in the future, given the extent of insured coastal exposure in the U.S.
New York and Florida have the highest total insured coastal exposure, valued at more than $1.9 trillion each; Massachusetts has more than $662 billion.
Major hurricanes have affected the Northeast and will continue to pose an ongoing threat to the region.
The last major hurricane to devastate the Northeast was the 1938 Long Island Express, which crossed Long Island and moved into New England, killing approximately 600 people.
Scientists expect the continuation of warming in the Atlantic to increase the probability of hurricanes in the Northeast. Frequency in the Northeast is up 30 percent and severity 10-15 percent.
Data from the Census Bureau, collected by USA Today, show that in 2006 34.9 million people were seriously threatened by Atlantic hurricanes, compared with 10.2 million in 1950.