Nine Catastrophes to Cost P/C Insurers $3 Billion in First Quarter

May 19, 2008

U.S. property/casualty insurers are expected to pay homeowners and businesses an estimated $3.35 billion for first-quarter property losses resulting from nine catastrophes.

The nine events identified as catastrophes by the Property Claim Services (PCS) unit of Insurance Services Office include an event PCS declared a catastrophe solely for the workers compensation loss associated with a February explosion at a sugar refinery in Georgia.

Currently, no estimate of the extent of the insured workers’ compensation loss has been determined.

PCS estimates that the remaining eight catastrophes of first-quarter 2008 generated 615,000 claims in 22 states. Seven of these were caused by severe weather — damaging wind, large hail, flooding, and tornadoes — and one was caused by a winter storm.

The remaining eight events still represent the greatest frequency in the first quarter since 1999 — tied with the eight events declared in 2005, said Gary Kerney, assistant vice president, PCS. The insured property loss, however, remains the largest in the last decade.

Of the 22 states, the five with the largest insured property losses were Georgia ($610 million), Tennessee ($535 million), California ($360 million), Texas ($270 million), and Arkansas ($223 million).

The costliest event of the quarter, at $955 million, was caused by an outbreak of severe weather that spread from Texas to Ohio in early February. That catastrophe caused about 120,000 losses in the eight affected states.

The first catastrophe of the year, a winter storm in January, affected 13 states and caused an estimated $745 million of insured property damage. It also inflicted damage to 177,000 personal and commercial properties and vehicles.

Claims in personal lines produced 56 percent of the total $3.35 billion loss for the quarter, or nearly $1.9 billion.

The commercial property loss was 31 percent of the total, or just over $1 billion.

The loss involving insured vehicles totaled almost $0.5 billion, or 13 percent of the total loss.

ISO’s PCS unit defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of policyholders and insurers.

Summary of first-quarter losses and frequency since 1999

Year Insured Loss ($) Frequency
1999 $1.87 billion 5
2000 $1.98 billion 7
2001 $680 million 3
2002 $615 million 3
2003 $1.48 billion 5
2004 $1.04 billion 5
2005 $2.14 billion 8
2006 $1.48 billion 7
2007 $1.26 billion 7
2008 $3.35 billion 9

From This Issue

Insurance Journal West May 19, 2008
May 19, 2008
Insurance Journal West Magazine

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