Batten down the hatches! Today marks the official launch of the Insurance Information InstituteÃ¢â‚¬â„¢s industry blog. An inauspicious start some might say, particularly following the upgraded forecast for the 2007 hurricane season from Colorado State UniversityÃ¢â‚¬â„¢s Tropical Meteorology Project. So what do we have to look forward to? In a nutshell: 17 named storms, 9 hurricanes, 5 of which will be intense (Category 3-4-5). The forecasters also put the probability of a major hurricane hitting the U.S. coastline at 74 percent; the probability of a major storm hitting the East Coast, including the Florida Peninsula at 50 percent; and the probability of the same at 49 percent for the Gulf Coast. We may have been spared in 2006, but flashback to April 2005 when the CSU team upped its forecast to 13 named storms, 7 hurricanes, 3 of them intense. Sound familiar? The 2005 season actually saw a record 26 named storms, 14 hurricanes, of which seven were intense. Check out the I.I.I.Ã¢â‚¬â„¢s catastrophe facts for more information.Ã‚
Much has been reported about the vulnerability of the Gulf coast states to hurricane risk, but with the start of the 2007 hurricane season just 62 days away, a new presentation from I.I.I. president and chief economist Dr. Robert Hartwig takes us to the Eastern seaboard, specifically South Carolina. The biggest hurricane to hit the state was Hurricane Hugo back in 1989. Since then, South Carolina has experienced enormous growth in coastal population and property. Latest available figures show the state has some $150 billion in insured coastal exposure, of whichÃ‚ about 56 percent is commercial and 44 percent residential. As Dr. Hartwig notes, a major storm could result in far higher commercial than residential losses,Ã‚ particularly if business interruption as well as property damage coverage is triggered.Ã‚
Industry eyes turn to Capitol Hill today, as a hearing before the House Financial Services Subcommittee on Oversight and Investigations gets underway to discuss the insurance claims payment processes in the Gulf coast after the 2005 hurricanes. Dr. Robert Hartwig, I.I.I. president and chief economist, will deliver testimony noting that insurance companies have settled, without dispute, nearly all of the 1.7 million claims totaling $40.6 billion from Hurricane Katrina, the most expensive disaster in the history of insurance. Insurers have also strengthened their catastrophe response capabilities to more quickly reach their customers following mega-catastrophes.Ã‚
ItÃ¢â‚¬â„¢s easy to forget that tornadoes, though not generally as destructive as hurricanes, are more frequent and can also cause severe damage. We got a stark reminder of this at the end of last week, when tornadoes and storms in Florida left 20 people dead and hundreds of homes and businesses damaged or destroyed. Each year about 1,000 tornadoes with wind speeds as high as 300 mph touch down in the U.S., according to I.I.I. research. Check out ourÃ‚ tornado statistics.Ã‚ Ã‚ Ã‚
As insurers, legislators and regulators grapple with how to maintain viable insurance markets in the post-Katrina and Rita era; we tip our hat to Illinois Sen. and presidential hopeful Barack Obama who addressed a Senate committee hearing on Gulf Coast rebuilding held in New Orleans Monday. Obama told the committee: Ã¢â‚¬Å“Rebuilding New Orleans is not just good for the Gulf or the state of Louisiana, itÃ¢â‚¬â„¢s good for our nation.Ã¢â‚¬ Good point. Some 18 months since the most costly disaster in U.S. history and of the billions of dollars of government aid promised for Hurricane Katrina reconstruction, only a fraction has reached the hands of those affected. For our industryÃ¢â‚¬â„¢s part, some 95 percent of the 1.2 million homeowners insurance claims in Louisiana and Mississippi had been settled by the stormÃ¢â‚¬â„¢s one-year anniversary on August 2006. With an above-average hurricane season forecast for 2007, and landfall probabilities and intensities up across all regions, the importance of the rebuilding effort in the Gulf cannot be underestimated. Indeed,Ã‚ insurers areÃ‚ not alone in pushing for stronger building codes across the country. Check out I.I.I.’s Louisiana insurance market overview. for the latest catastrophe info.