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Natural Disasters

Background on: Hurricane and windstorm deductibles

The Topic

After Hurricane Andrew in 1992, insurers realized that losses from hurricanes could be much higher than they had previously thought. Hurricane Katrina, in 2005, which cost insurers more than $41 billion at the time, confirmed their fears. After these extraordinary losses, reinsurance companies, insurers that share the cost of claims with primary companies, such as homeowners insurers, said that they could not assume so much risk and that primary companies must reduce their potential losses.

Background on: Climate change and insurance issues

The topic

Climate change is a long-term shift in global or regional climate patterns. Often climate change refers specifically to the rise in global temperatures from the mid-20th century to present.

Facts + Statistics: Hurricanes

The official Atlantic hurricane season runs from June through November, but occasionally storms form outside those months. Seasonal hurricane forecasting from Colorado State University is available here.

Facts + Statistics: Flood insurance

Flood damage is excluded under standard homeowners and renters insurance policies. However, flood coverage is available as a separate policy from the National Flood Insurance Program (NFIP), administered by the Federal Emergency Management Agency (FEMA), and from many private insurers. Industry observers note that many properties that should have flood coverage do not.

Facts + Statistics: Earthquakes and tsunamis

Top 10 Costliest U.S. Earthquakes By Inflation-Adjusted Insured Losses (1)

Facts + Statistics: Winter storms

Winter storms caused nearly $6 billion in insured losses in 2022, the second-highest year on record for winter storm insured losses in the last ten years, according to Aon. The third costliest winter event since 1950 occurred in December 2022, amounting to $3.5 billion insured losses. Winter storms include snow, ice, freezing and flooding.

Hurricane Andrew and Insurance: The Enduring Impact of an Historic Storm

Hurricane Andrew struck Florida on August 24, 1992, and the tumult it created for the property insurance market in the state has not ceased in the 20 years since, according to an analysis by the Insurance Information Institute (.I.I.). The I.I.I. white paper outlines  six key insurance market changes attributed to the costliest Florida disaster. Insurance claims payouts for Andrew totaled $15.5 billion at the time ($25 billion in 2011 dollars), and it remains the second costliest U.S. natural disaster, after Hurricane Katrina, which hit in 2005.

 

Please click on the file name below to view the white paper in PDF format. You will need Adobe Acrobat Reader to view the file.

Download Hurricane Andrew and Insurance PDF

You can download Adobe Acrobat Reader, free of charge, from the Adobe website (http://www.adobe.com/products/acrobat/readstep.html).

Note: Printer fonts may vary by browser and version of Adobe Reader.

The San Francisco earthquake of 1906: An insurance perspective

The earthquake and fire that devastated San Francisco on April 18, 1906 was one of the most significant natural disasters in the United States, as well as in the history of insurance. It produced insured losses of $235 million at the time, equivalent to $6.3 billion in 2018 dollars. In 1906, just as today, shake damage from earthquakes was excluded from standard property insurance policies. Damage from the fire which followed the earthquake was covered and constituted the vast majority of insured losses.

Catastrophe modeling: A vital tool in the risk management box

By Claire Wilkinson, Vice-President - Global Issues

Introduction

Catastrophe modeling is a risk management tool that uses computer technology to help insurers and reinsurers as well as business and government agencies better assess the potential losses caused by natural and man-made catastrophes.

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