Insurance and Catastrophes: It’s Shaping Up to be a Record Year
More Than $50 Billion in Catastrophe Losses So Far This Year
With tornadoes, floods, storms, and five weather disasters hitting the United States already this year, the nation is on track for setting a modern record for the most high-cost weather events early in the year. Each of the five events has cost more than $1 billion because they have hit highly populated areas and caused severe damages. While the damages are concentrated in certain regions, they could impact others across the nation by increasing insurance costs and depleting taxpayer-supported disaster-relief funds.
But that’s just the cost of disasters in the United States. Add in earthquakes, floods and tsunamis worldwide, and the price tag soars. Lloyds of London reported that its insurance markets face claims totaling $3.8 billion. And the industry as a whole stands to lose more than $50 billion for the first four months of this year, including the cost of the tornadoes that swept across the U.S. in April, according to one insurer’s estimate.
EQECAT Inc. reported that estimated insured losses from the March 11 earthquake in Japan would be between $22 billion and $39 billion, up from the initial estimate of $12 billion to $25 billion. The revised forecast accounts for disruptions caused by the Fukushima nuclear power plant’s radiation leakage and other factors.
“In the light of the more than $50 billion in natural catastrophe losses incurred since the beginning of this year – including the damage from tornadoes in the US in April – combined with the prolonged low investment return environment, it would be totally appropriate for rates to increase on a widespread basis,” said Stephen Catlin, chief executive of Lloyd’s syndicate insurer Catlin.
This information contributed by the the Professional Insurance Agents of Florida, courtesy of Ed Phillips.