Congressional Research Service (CRS) is hosting a seminar ar the U.S. Capitol Building today titled, “Insuring and Mitigating Risks of Large-Scale Disasters: Is Federal Disaster Insurance Needed?” There,
AIR Worldwide President and CEO Karen Clark plans to advise Members of Congress and their senior staff that hurricanes and earthquakes have the potential to cause insured losses in excess of $150 billion and total economic losses approaching $500 billion.
“There are many potential natural catastrophe scenarios resulting in insured property losses exceeding $100 billion,” Clark said. “Examples include a Category 5 hurricane making landfall in Miami, which could result in insured losses of more than $130 billion, and a large magnitude earthquake in the Central U.S., which could result in insured losses of more than $150 billion.”
Clark will provide an overview of the financial threat posed to insurers, policyholders, and the economy as a whole by increasing insured property values in high-risk areas. AIR estimates the total value of properties has roughly doubled over the past 10 years and expects this trend to continue in the foreseeable future.
“There is a one percent probability of an insured property loss exceeding $100 billion this year,” Clark said. “That may appear small to some, but the probability of experiencing this loss or greater over the next 10 years is almost 20 percent when the continual growth in the number and value of exposed properties is included.”
The CRS seminar will examine how insurance companies cope with large-scale natural disasters, and discuss the role of the government and private sectors in financing and managing catastrophe risk.
For more information on the insured value of coastal properties, see AIR’s recent report The Coastline at Risk at www.air-worldwide.com.