I.I.I. Testifies on Availability and Affordability of Insurance in the Gulf Coast and Other Coastal Regions
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Dr. Robert Hartwig, president and chief economist for the Insurance Information Institute, testified at a hearing before the United States Senate Committee on Banking, Housing and Urban Affairs on Wednesday, April 11, 2007.
Dr.Hartwig explains that the United States is arguably the most vulnerable country in the world to natural disaster risk. Hurricanes, earthquakes, tornados, wildfires, floods and severe winter storms on average cost insurers $14.5 billion annually over the 20-year period from 1986 through 2005. The cost to the overall economy was at least twice that amount. But the toll in recent years has begun to rise rapidly—to $20 billion annually since 2000, with virtually all of that increase due to hurricane damage. The hurricane seasons of 2004 and 2005 alone produced record insured losses exceeding $80 billion.
Already, leading meteorologists are predicting that the 2007 hurricane season will be 85 percent more severe than average. More ominous is the fact that we may only be on the leading edge of a prolonged period of elevated hurricane activity—lasting perhaps another 15 to 20 years—during which hurricanes will not only be more frequent but also more intense. Today, the active planning hurricane event scenario for insurers is $100 billion.
Dr. Hartwig’s testimony addressed four major issues: the recent history of catastrophic hurricane losses in the United States; drivers of the increase in insured losses in coastal regions exposed to tropical cyclones; implications of increased hurricane risk on the price and availability of insurance; and current regulatory, legislative, and litigation-related obstacles that are raising costs and reducing choices for insurance consumers in hurricane exposed areas.
 Download/View File: Testimony (PDF File) (1188 K) | |
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