Fact file: Alabama hurricane insurance

September 2018

  • Five of the 10 costliest hurricanes in U.S. history have impacted Alabama: Hurricanes Irma and Harvey in 2017, Hurricanes Katrina and Rita in 2005 and Hurricane Ivan in 2004.  
  • Hurricane Ivan resulted in $1.6 billion in total flood insurance losses paid for by the National Flood Insurance Program (NFIP) (in all states). Hurricane Katrina resulted in $16.3 billion in total flood insurance losses paid by the NFIP (in all states). The 2017 Hurricanes Irma and Harvey resulted in $1.0 billion and $8.7 billion in losses in all states.
  • There were 55,138 flood insurance policies in Alabama in 2017. Standard homeowners policies typically do not cover flood damage. Flood insurance is covered by the National Flood Insurance Program.
  • The number of people living in coastal areas in Alabama increased from 2010 to 2015 by 18,873 people, or 2.5 percent, to 784,657 people, according to the U.S. Census Bureau.
  • The total value of insured coastal property in Alabama was $128 billion in 2015, accounting for 13 percent of the state’s total insurance property exposure, according to AIR Worldwide.
  • Between 6,400 and 58,000 single-family homes are at risk of damage from storm surge in Alabama, according to Core Logic.  In terms of reconstruction costs, storm surge damage would range from $1.2 billion to $10.1 billion.  The ranges reflect the intensity of hurricanes, with the lower range corresponding to a weak hurricane and the highest range reflecting damage from a rare Category 5 hurricane.
  • The Alabama Insurance Underwriting Association (AIUA) was voluntarily formed in the early 1970s by the insurance industry in cooperation with the Alabama Department of Insurance as a market of last resort to provide property and windstorm and hail insurance in the coastal areas of Alabama.
  • The AIUA’s exposure base has expanded rapidly. The exposure to loss—insured value of all properties—was $5.8 billion in fiscal year 2017 up from about $3.3 billion for fiscal year 2010. The AIUA had 24,403 policies in force in fiscal year 2017 compared with 27,515 policies as of 2016.
  • AIUA policies have a hurricane deductible that applies only in the event of a hurricane. The standard deductible for all other perils is $500.

Top 10 Writers Of Commercial Insurance In Alabama By Direct Premiums Written, 2018 (1)

 

Rank Group/company Direct premiums written ($000) Market share
1 Travelers Companies Inc. $230,304 6.6%
2 Zurich 146,002 4.2
3 Liberty Mutual 143,981 4.2
4 Chubb 143,929 4.2
5 Auto-Owners Insurance 142,428 4.1
6 CNA 139,035 4.0
7  American International Group (AIG) 117,351 3.4
8 Nationwide Mutual Group 113,186 3.3
9 The Cincinnati Insurance Cos. 106,127 3.1
10 Progressive 86,526 2.5

(1) Before reinsurance transactions.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Homeowners Insurance In Alabama By Direct Premiums Written, 2018 (1)

Rank Group/company Direct premiums written ($000) Market share
1 State Farm $490,816 28.2%
2 Alfa Mutual Group 235,417 13.5
3 Allstate Corp. 205,513 11.8
4 USAA 143,294 8.2
5 Farmers Insurance Group of Companies 84,392 4.8
6 Travelers 72,923 4.2
7 Liberty Mutual 61,479 3.5
8 Nationwide 46,094 2.6
9 Auto-Owners Insurance 44,369 2.5
10 COUNTRY Financial 38,246 2.2

(1) Before reinsurance transactions.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Writers Of Private Passenger Auto Insurance In Alabama By Direct Premiums Written, 2018 (1)

 

Rank Group/company Direct premiums written ($000) Market share
1 State Farm $845,280 23.7%
2 Alfa Mutual Group 503,354 14.1
3 Berkshire Hathaway Inc. 386,216 10.8
4 Allstate Corp. 370,610 10.4
5 Progressive 283,343 8.0
6 USAA 263,029 7.4
7 National General Holdings Corp. 103,441 2.9
8 Nationwide 85,476 2.4
9 Liberty Mutual 83,695 2.3
10 Farmers Insurance 81,996 2.3

(1) Before reinsurance transactions.

Source: NAIC data, sourced from S&P Global Market Intelligence, Insurance Information Institute.

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Top 10 Costliest Hurricanes In The United States (1)

($ millions)

        Estimated insured loss
Rank Date Location Hurricane Dollars when occurred In 2018 dollars (2)
1 Aug. 25-30, 2005 AL, FL, GA, LA, MS, TN Hurricane Katrina $41,100 $51,882
2 Sep. 19-22, 2017 PR, USVI Hurricane Maria (3) 25,000-30,000 25,600-30,700
3 Sep. 6-12, 2017 AL, FL, GA, NC, PR, SC, UV Hurricane Irma (3) 22,000-27,000 22,500-27,600
4 Aug. 25-Sep. 1, 2017 AL, LA, MS, NC, TN, TX Hurricane Harvey (3) 18,000-20,000 18,400-20,400
5 Oct. 28-31, 2012 CT, DC, DE, MA, MD, ME, NC, NH,
NJ, NY, OH, PA, RI, VA, VT, WV		 Hurricane Sandy 18,750 20,688
6 Aug. 24-26, 1992 FL, LA Hurricane Andrew 15,500 25,404
7 Sep. 12-14, 2008 AR, IL, IN, KY, LA, MO, OH, PA, TX Hurricane Ike 12,500 14,631
8 Oct. 10-12, 2018 AL, FL, GA, MD, NC, SC, VA Hurricane Michael (3) 8,000-13,000 8,000-13,000
9 Oct. 24, 2005 FL Hurricane Wilma 10,300 13,002
10 Aug. 13-14, 2004 FL, NC, SC Hurricane Charley 7,475 9,729

(1) Property losses only. Excludes flood damage covered by the federally administered National Flood Insurance Program. Ranked on dollars when occurred. As of November 20, 2019.
(2) Adjusted for inflation through 2018 by the Insurance Information Institute using the GDP implicit price deflator.
(3) Insurance Information Institute estimate based on data from catastrophe risk modelers, reinsurance companies, the Property Claims Services unit of Verisk Analytics, the Federal Emergency Management Agency of the U.S. Department of Homeland Security, and the Florida Office of Insurance Regulation. These estimates are preliminary because the organizations involved periodically resurvey the events, and the severity of losses and other factors create a high level of uncertainty surrounding the ultimate loss figures.

Source: Insurance Information Institute, catastrophe risk modelers, reinsurance companies, U.S. Department of Homeland Security, the Florida Office of Insurance Regulation, the Property Claim Services® (PCS®) unit of ISO®, a Verisk Analytics® company, and the U.S. Bureau of Economic Analysis.

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Estimated Value Of Insured Coastal Properties Vulnerable To Hurricanes By State, 2015 (1)

($ billions)

Rank State Commercial Residential Total Coastal Total exposure (2) Coastal as a percent of total
1 New York  $2,093 $1,272 $3,365 $5,571 68%
2 Florida  1,483 1,718 3,200 4,058 79
3 Virginia  92 106 1,993 2,078 10
4 Texas  725 638 1,363 5,358 28
5 Massachusetts  441 511 953 1,765 54
6 New Jersey  373 422 795 2,453 32
7 Connecticut  290 385 675 1,025 64
8 Louisiana  182 147 329 896 38
9 South Carolina  112 126 239 931 26
10 Maine  73 111 184 321 53
11 North Carolina  69 109 178 2,014 8
12 Alabama  63 65 128 1,014 13
13 Georgia  53 56 109 2,171 5
14 Delaware  34 59 93 241 29
15 New Hampshire  32 42 74 328 23
16 Mississippi  36 35 71 527 14
17 Rhode Island  25 46 71 241 22
18 Maryland  8 10 18 1,476 1
  All states above  $6,184 $5,858 $13,838 $32,468 38%
  Total, United States $6,184 $5,858 $13,838 NA 16%

(1) Includes residential and commercial Gulf and East Coast properties, as of December 31, 2015. Ranked by value of total insured coastal property.
(2) Total exposure is an estimate of the actual total value of all property in the state that is insured or can be insured, including the full replacement value of structures and their contents, additional living expenses and the time value of business interruption coverage.

NA=Data not available.

Source: AIR Worldwide.

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Other Resources

Alabama Insurance Underwriting Association

I.I.I. Facts & Stats: Flood Insurance

I.I.I. Facts & Stats: Hurricanes

I.I.I. Issues Updates: Catastrophes

I.I.I. Issues Updates: Hurricane and Windstorm Deductibles

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