According to preliminary estimates from the Insurance Services Office Inc’s (ISO) Property Claim Services (PCS) unit, U.S. property/casualty insurers will pay homeowners and businesses $705 million for insured property losses in the first quarter of in 2001. The total is a result of three catastrophic events that occurred this year.
The three events, two severe thunderstorms affecting the country’s southern tier states and the earthquake in the Pacific Northwest, caused property damage in 12 states and generated 110,000 claims for personal and commercial property, and automobile losses. Washington incurred the largest insured-property loss. Due to earthquake, the current estimate is at $315 million. Mississippi is second incurring $135 million, Texas at $65 million; Alabama, $60 million; and Arkansas at $55 million.
It was an unusual quarter due to the fact that all three catastrophes occurred in February. For the first time since 1992, no catastrophes occurred in January. March was also free of catastrophes for the first time in about 30 years. 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 p/c policyholders and insurers.
Though this was one of the coldest and snowiest winters in recent memory, the first-quarter of 2001 ranks last in catastrophes for the past 10 years as far as total insured losses, number of claims and frequency of events.
First-quarter catastrophe losses this year were 64 percent lower than the $1.98 billion the industry paid out in first-quarter 2000, and almost 75 percent lower than the 10-year average of $2.8 billion in first-quarter catastrophe losses, according to the ISO unit.
The PCS estimate represents anticipated insured loss on an industrywide basis arising from catastrophes, reflecting the total net insurance payment for personal and commercial property lines of insurance covering fixed property, personal property, vehicles, boats, related property items, business interruption and additional living expenses. The estimates exclude loss-adjustment expenses.
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