I remember the May 1995 hail storm very well. That was 21 years ago. Has anyone adjusted the cost of the May 1995 hail storm for inflation. My guess is that the May 1995 hail storm that hit the metroplex (mainly Fort Worth during Mayfest) would still be the costliest hail storm after adjusting for inflation.
April and May are tough in the Spring storm season. People wonder why Texas has the highest HO rates. The center and west center of the state seem to have the most issues with weather.
When adjusted for inflation, the 1995 Mayfest storm is $1.63 billion, $250 million costlier than this event in San Antonio. The amazing this is, ICT has this figure on their website and still calls San Antonio the costliest. Anyone worth their salt in this industry knows it’s bad Economics/Statistics to look at storms over a period of time on a nominal basis.
Just saw an article on Property Casualty 360 and Katrina was the costliest weather event in history. In today’s dollars, it was $48.8 billion. Hail storms and Tornado’s are a mere blip by comparison even though they are costly when they happen.
I agree with what you are saying but, you are comparing apples to oranges. Which is more important in evaluating a risk: frequency or severity? Example: I have a customer that lost their beach house to Hurricane Ike but, it was the only claim they made in 28 years. However, their residence in Dallas probably had at least 50 hits from hail storms during the same period. Exposure to hurricanes is the coastal areas whereas hail is anywhere. The cost of reinsurance is probably effected most by frequency and not severity.
April 24, 2016 at 8:43 am
agent14 says:
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Yep, I can already hear the customers in Texas who were not affected by the hail, calling their agents again next year, complaining, “Why did my insurance rate go up, I did not have any claims?”
Some people think their rates should go down every year if they do not have claims. My retort to them is, “Did your health insurance rate go down since you did not go to the doctor last year?” That usually gets a crickets sound on a response.
The industry tends to spread it around even if they have events in other states. When Joplin happened, the rates in Texas went up even though there were few claims from weather then. Perhaps that is why the industry keeps optimizing rates they can’t justify in filings.
Insurance claims adjusters are going nuts. Such an opportunity to fix your roof. However, insurance companies don’t pay for tree damage. An insurance company will pay if a part of the tree falls off and damaged property but they will not pay for cutting down a tree even if the storm damaged a tree and the tree is unsafe.
I remember the May 1995 hail storm very well. That was 21 years ago. Has anyone adjusted the cost of the May 1995 hail storm for inflation. My guess is that the May 1995 hail storm that hit the metroplex (mainly Fort Worth during Mayfest) would still be the costliest hail storm after adjusting for inflation.
April and May are tough in the Spring storm season. People wonder why Texas has the highest HO rates. The center and west center of the state seem to have the most issues with weather.
Texas is number 4. Louisiana, Florida, and Oklahoma are now ahead of Texas in average premium.
When adjusted for inflation, the 1995 Mayfest storm is $1.63 billion, $250 million costlier than this event in San Antonio. The amazing this is, ICT has this figure on their website and still calls San Antonio the costliest. Anyone worth their salt in this industry knows it’s bad Economics/Statistics to look at storms over a period of time on a nominal basis.
How costly was Katrina in La, Miss? Same storm in today’s dollars would be far worse and it was bad enough back then.
Everyone expects hurricanes to be very expensive. This article relates to hail storms and reminds everyone that they can also be very expensive.
Just saw an article on Property Casualty 360 and Katrina was the costliest weather event in history. In today’s dollars, it was $48.8 billion. Hail storms and Tornado’s are a mere blip by comparison even though they are costly when they happen.
I agree with what you are saying but, you are comparing apples to oranges. Which is more important in evaluating a risk: frequency or severity? Example: I have a customer that lost their beach house to Hurricane Ike but, it was the only claim they made in 28 years. However, their residence in Dallas probably had at least 50 hits from hail storms during the same period. Exposure to hurricanes is the coastal areas whereas hail is anywhere. The cost of reinsurance is probably effected most by frequency and not severity.
Yep, I can already hear the customers in Texas who were not affected by the hail, calling their agents again next year, complaining, “Why did my insurance rate go up, I did not have any claims?”
Some people think their rates should go down every year if they do not have claims. My retort to them is, “Did your health insurance rate go down since you did not go to the doctor last year?” That usually gets a crickets sound on a response.
The industry tends to spread it around even if they have events in other states. When Joplin happened, the rates in Texas went up even though there were few claims from weather then. Perhaps that is why the industry keeps optimizing rates they can’t justify in filings.
Joplin had nothing to do with Texas rate increases. You need to read up on rate making.
Insurance claims adjusters are going nuts. Such an opportunity to fix your roof. However, insurance companies don’t pay for tree damage. An insurance company will pay if a part of the tree falls off and damaged property but they will not pay for cutting down a tree even if the storm damaged a tree and the tree is unsafe.