Introduction

DEFRAYING THE ECONOMIC COSTS OF DISASTERS

The insurance industry plays a vital role in helping individuals and businesses prepare for and recover from the potentially devastating effects of a disaster such as a catastrophic hurricane or storm or wildfire.

NATURAL DISASTER LOSSES IN THE UNITED STATES, 2013

Source: © 2014 Munich Re, NatCatSERVICE. As of January 2014.

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CATASTROPHES IN THE UNITED STATES

Property Claim Services (PCS), a division of Verisk Analytics,  defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of property/casualty policyholders and insurers. The estimates in the following chart represent anticipated insured losses from catastrophes on an industrywide basis, reflecting the total net insurance payment for personal and commercial property lines of insurance covering fixed property, vehicles, boats, related-property items, business interruption and additional living expenses. They exclude loss-adjustment expenses. Property/casualty insurance industry catastrophes losses in the United States plummeted from $35.0 billion in 2012 to $12.9 billion in 2013, the lowest since 2009’s $10.6 billion in insured losses, according to PCS. While insured catastrophe losses and the number of claims fell well below the 10-year average in 2013, the number of catastrophes rose in 2013 to 29 from 26 in 2012.

THE TEN MOST COSTLY CATASTROPHES, UNITED STATES (1)

($ millions)

      Estimated insured property losses
Rank Date Peril Dollars when occurred In 2013 dollars (2)
1 Aug. 2005 Hurricane Katrina $41,100 $47,623
2 Sep. 2001 Fire, explosion: World Trade Center,
Pentagon terrorist attacks
18,779 23,895
3 Aug. 1992 Hurricane Andrew 15,500 23,387
4 Oct. 2012 Hurricane Sandy  18,750 19,034
5 Jan. 1994 Northridge, CA earthquake 12,500 18,038
6 Sep. 2008 Hurricane Ike 12,500 13,426
7 Oct. 2005 Hurricane Wilma 10,300 11,935
8 Aug. 2004 Hurricane Charley 7,475 8,939
9 Sep. 2004 Hurricane Ivan 7,110 8,503
10 Apr. 2011 Flooding, hail and wind including the tornadoes
that struck Tuscaloosa, AL and other locations
7,300 7,540

(1) Property coverage only. Does not include flood damage covered by the federally administered National Flood Insurance Program.
(2) Adjusted for inflation through 2013 by ISO using the GDP implicit price deflator.

Source: Property Claim Services (PCS), a division of Verisk Analytics.

ESTIMATED INSURED PROPERTY LOSSES, U.S. CATASTROPHES, 2004-2013 (1)

Year Number of
catastrophes
Number of claims
(millions)
Dollars when occurred
($ billions)
In 2012 dollars (2)
($ billions)
2004 22 3.4 $27.5 $32.8
2005 24 4.4 62.3 71.9
2006 33 2.3 9.2 10.3
2007 23 1.2 6.7 7.3
2008 37 4.1 27.0 28.7
2009 28 2.2 10.6 11.1
2010 34 2.4 14.3 14.9
2011 30 4.9 33.6 34.2
2012 26 4.0 35.0 35.0
2013 29 1.8 12.9 NA

(1) Includes catastrophes causing insured property losses of at least $25 million in 1997 dollars and affecting a significant number of policyholders and insurers. Excludes losses covered by the federally administered National Flood Insurance Program.
(2) Adjusted for inflation through 2012 by ISO using the GDP implicit price deflator.

NA=Data not available.

Source: Property Claim Services (PCS), a division of Verisk Analytics.

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INFLATION-ADJUSTED U.S. INSURED CATASTROPHE LOSSES BY CAUSE OF LOSS, 1994-2013 (1)

(2013 $ billions)

(1) Adjusted for inflation through 2013 by ISO using the GDP implicit price deflator. Excludes catastrophes causing direct losses less than $25 million in 1997 dollars. Excludes flood damage covered by the federally administered National Flood Insurance Program.
(2) Includes other wind, hail, and/or flood losses associated with catastrophes involving tornadoes.
(3) Includes wildland fires.
(4) Includes losses from civil disorders, water damage, utility service disruptions, and any workers compensation catastrophes generating losses in excess of PCS's threshold after adjusting for inflation.

Source: The Property Claim Services (PCS) unit of ISO, a Verisk Analytics company.

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