Alabama Homeowners Insurance: History and Trends for Catastrophic Loss and Impacts on Profitability

This PowerPoint report, presented by Robert Hartwig, president of the Insurance Information Institute, before the Alabama’s Governor’s Affordable Homeowners Insurance Commission in Montgomery, Alabama, on December 12, details the impact of catastrophe losses in Alabama on the state’s homeowners insurance market. Between 1998 and 2011, insured catastrophe losses across the state totaled $8.4 billion, with homeowners and renters insurance accounting for about 67 percent of the losses. 2011 was the worst year in Alabama history for catastrophe losses, with homeowners losses representing 66 percent of the $3.2 billion in cat losses. This record of catastrophes has taken a toll on the state’s insurers. The return on net worth (RNW) for the Alabama homeowners insurance market from 2000-2009 averaged negative 7.9 percent, ranking the state 43rd out the 50 states. Inclusion of the 2011 storms could make Alabama close to the least profitable state. In addition to data on catastrophe losses, the presentation includes information on the number of federal disaster declarations since 1953; tornadoes and severe storms in 2011; Alabama’ coastal exposure; profitability and performance in the state’s insurance market; the impact of Alabama catastrophes on world markets; a reinsurance overview; and catastrophic losses and insurance industry profitability, underwriting performance and financial strength.