INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500; media@iii.org
NEW YORK, December 1, 2010 — The 2010 Atlantic hurricane season, which officially ended yesterday, featured a record-setting number of storms but had little impact on United States policyholders or property insurers as none of them made landfall in the U.S., according to the Insurance Information Institute (I.I.I.).
“The U.S. was largely spared in 2010, with only Hurricane Earl sideswiping the East Coast in September,” said Michael Barry, vice president, Media Relations, I.I.I. “By contrast, the season was devastating for Mexico and a number of other Caribbean and Central American nations, with numerous fatalities in those parts of the world attributed to the aftermath of either hurricanes Alex and Karl or tropical storms Hermine, Matthew and Nicole.”
Twenty-three deaths and $3.9 billion in economic losses, for instance, occurred after Hurricane Karl struck Mexico in mid-September, making it one of the most significant natural disasters of 2010,
Munich Re estimated.
The average Atlantic season produces 11 named storms, six hurricanes (defined as tropical storms having sustained winds in excess of 74 miles per hour), and two major hurricanes. The latter are instances in which storms achieve sustained wind speeds of 111 miles per hour, or higher, and are deemed either Category 3, 4 or 5 hurricanes.
The National Oceanic and Atmospheric Administration (NOAA) reported earlier this week that a total of 19 named storms formed in the Atlantic Basin between June 1, 2010 and November 30, 2010. Twelve of the 19 became hurricanes, leaving 2010 tied with 1969 for the second highest number of hurricanes on record. Breaking the NOAA figures down even further, five of the 12 hurricanes became major, a group that included hurricanes Danielle and Earl as well as hurricanes Igor, Julia and Karl. Tropical storms, the precursors to hurricanes, are more likely to form in the Atlantic Basin in September as compared to any other month, and all of the major hurricanes in 2010 with the exception of Danielle either originated or dissipated in September.
Meanwhile, very early in the season, Hurricane Alex, which developed in the Caribbean and struck Belize as a tropical storm, was the first June hurricane since 1995 and the first Category 2 June hurricane since 1966.
Historical perspective is important. Profits in an industry like the U.S. property insurance market must be seen over the long term. A single hurricane, or a string of large natural disaster related losses, can wipe out insurer profits from several previous years, or even decades. And insurers must be prepared to pay for these events, irrespective of the current economic conditions. This explains in part why some property insurers continue to reduce slightly their overall exposure in the hurricane-prone, coastal areas of the United States.
Wind damage from hurricanes is covered under standard U.S. homeowners and business insurance policies but may be subject to a percentage-based
windstorm deductible. Damage to cars from wind is covered under the comprehensive portion of a U.S. auto insurance policy, which is an optional coverage.
Flood damage is
excluded under standard homeowners and renters insurance policies. Flood insurance for homeowners and renters is available through the federal government’s
National Flood Insurance Program (NFIP), which is serviced by private carriers, and from a few specialty insurers. There is typically a 30-day waiting period, from the date of purchase, before a new NFIP policy goes into effect.
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