Q3 Insured Losses an All-Time Record:
Pummeled by Hurricane Katrina and six other natural catastrophes in the third quarter, U.S. property/casualty insurers paid an all-time record $40.8 billion to homeowners and businesses for insured property losses in 14 states, according to preliminary estimates by ISO’s Property Claim Services (PCS) unit. The loss tally already makes 2005 the costliest year for catastrophe damage.
The quarter’s catastrophe losses compare with the $23.7 billion loss in third-quarter 2004–the industry’s previous worst third quarter–and $3.7 billion in third-quarter 2003.
Insured losses during the first nine months of 2005 now stand at $43.8 billion from 19 catastrophic events in 37 states–the industry’s worst nine-month period ever–compared with $24.7 billion during the same period last year.
PCS estimates the quarter produced nearly 2.3 million claims for damage to personal and commercial property, vehicles, boats and yachts.
At $34.4 billion, Hurricane Katrina was the quarter” costliest event, followed by Hurricanes Rita ($4.7 billion) and Dennis ($1.1 billion).
Louisiana was the hardest-hit state, with $25.04 billion in insured losses, followed by Mississippi at $9.9 billion, Texas at $2.2 billion, Alabama at $1.5 billion and Florida at $1.3 billion.
AIG Sees Q3 Net of $1.72 Billion:
American International Group Inc. has filed its quarterly report on Form 10-Q for the period ended Sept. 30, 2005 with the Securities and Exchange Commission. Third quarter 2005 net income was $1.72 billion, compared to $2.69 billion in the third quarter of 2004. These results include after tax net catastrophe related losses of $1.57 billion in third quarter 2005 compared to $512 million last year.
Net income for the first nine months of 2005 was $10.02 billion, compared to $8.29 billion in the first nine months of 2004.
Commenting on third quarter results, AIG President and CEO Martin Sullivan said “AIG has achieved profitable results even as we sustained $1.57 billion in after tax net catastrophe related losses during the third quarter, which is the most costly quarter for catastrophes ever recorded to date by the property/casualty industry.”
Rep. Oxley to Retire at End of 2006:
Rep. Michael G. Oxley (R-Ohio), chairman of the U.S. House Financial Services Committee, announced he will retire from Congress at the end of his current term. Oxley served 25 years in Congress and a total of 33 years in elected office.
Oxley, currently serving his 12th term, has been at the forefront of many important pieces of insurance and financial services legislation over the years, including Sarbanes-Oxley, Gramm-Leach-Bliley, and the Terrorism Risk Insurance Act, and has actively worked with Subcommittee Chairman Richard Baker (R-La.) to craft the State Modernization and Regulatory Transparency (SMART) Act.
The Independent Insurance Agents and Brokers of America presented him with its Gerald Solomon Legislator of the Year Award in 2001.
Small Businesses Not Ready for Disaster:
Seventy-nine percent of American small businesses say they do not have a disaster recovery plan in place, according to a new study from the International Profit Associates Small Business Research Board. More than seven in 10 (71 percent) said that small business is the key to economic recovery. Only 6 percent said small business is not the key to economic recovery and 23 percent were uncertain.
“With small business making up the overwhelming majority of business in the United States, the nation looks to small business to lead economic revival after disasters,” said Gregg Steinberg, president of International Profit Associates. The International Profit Associates Small Business Research Board ascertains and reports the opinions of small business owners and managers on a wide variety of topics related to their own businesses as well as national and international issues that may impact their operations.
Problems with Insurers’ Exposure Data:
A recent analysis of insurers’ exposure data by AIR Worldwide Corporation determined that the quality and completeness of most insurers’ commercial policy data is insufficient for a detailed and accurate assessment of their catastrophe risk.
“Nine out of 10 commercial properties analyzed had replacement values significantly less than the amount estimated by our construction specialists,” said Karen Clark, president and CEO of AIR. “The variability in the quality of data among companies was also significant with insurers’ average replacement values ranging from 20 to 80 percent of values derived using a standard engineering-based cost estimation process.”
AIR’s analysis examined four data elements critical for accurate catastrophe loss estimates: replacement value, construction, occupancy, and location. The analysis reviewed exposure data from companies representing more than 50 percent of the total U.S. property market.
“Modeled loss estimates are only as accurate as the exposure data input into the catastrophe model,” continued Clark. “Insurers need to put more emphasis on improving the quality and completeness of their exposure data to improve the accuracy of the catastrophe risk information used by company management.”
For the full AIR report, visit www.air-worldwide.com.
Divorcees Pay Big for Health Insurance:
Divorced individuals pay 26 percent more for health insurance premiums on a monthly basis than married individuals, who pay 25 percent more than singles ($242, $180, $136 average per month, respectively), according to a new national study of more than 80,000 individual and family health insurance policies sold through http://www.ehealthinsurance.com in the last year.
Other findings include: Men pay less than women for Major Medical insurance–as much as $25 a month less; New Yorkers in this sample paid nearly 4 times as much as Michigan residents for their monthly premium on average, at $379 per month vs. $98 per month; Customers paid an average of $89 a month to insure one child, which dropped to $61 if a second child was also covered; and Short-Term health insurance coverage continued to be more affordable than Major Medical coverage, with families paying an average of $192 per month, and individuals paying an average of $78 per month.
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