NEW YORK, April 9, 1998 — The U.S. property/casualty insurance industry incurred an estimated $1.005 billion in catastrophe losses in the first quarter of 1998, according to the Property Claim Services (PCS) unit of Insurance Services Office, Inc. (ISO).
Despite a near-record number of catastrophic events, this year's first quarter ranks sixth in total industry catastrophe losses compared with other first quarters in the past ten years. The 10 catastrophes recorded by ISO's property claims unit in 1998 totaled only one less than the 11 first-quarter catastrophes in 1996 — the highest first-quarter catastrophe frequency recorded since 1991.
For the business of insurance, a catastrophe is a single incident, or series of related incidents, causing insured property losses totaling more than $25 million. Examples of catastrophes are natural disasters such as earthquakes, hurricanes, tornadoes, ice storms and windstorms.
The two largest losses in 1998's first quarter totaled $200 million each: the January ice storm in New England, and the latest outbreak of tornadoes in the upper Midwest at the end of March.
The number of claims filed with insurers ranks as the fifth highest in the last decade. ISO's PCS unit estimates that the 1998's ten catastrophes produced nearly 498,000 claims. This is only one-third of the number of catastrophe losses insurers adjusted in 1996 and in 1994.
Personal lines losses, as usual, accounted for the vast majority, nearly 87 percent, of all claims in the first quarter of this year. As a percentage of the overall dollar loss, however, personal lines claims accounted for 70 percent of the total. Commercial lines losses made up 27 percent of the total dollar loss, with insured vehicle losses representing the remainder.
Catastrophes occurred in 25 states. Four states were named in three of the ten catastrophes: Florida, Georgia, Louisiana, and North Carolina. Though named in only one catastrophe — the late March outbreak of tornadoes and severe weather — Minnesota suffered the largest insured catastrophe losses of any state, $175 million. Florida was second at $165 million, followed by California at $160 million, and New York at $125 million.
With the exception of the El Nino-related storms in California, the catastrophes in this year's first quarter generally occurred in the eastern third of the country. The track of the southern jet stream has been considered a primary influence in bringing stormy conditions to the South and Southeast and then moving storms up the eastern seaboard.
Winter storms have had a major impact on insurer losses. Though the Northridge earthquake was the costliest first-quarter event ever, of the other top nine events, seven were winter storms. The top ten first-quarter events are:
|January 17, 1994||Northridge Earthquake||$12,500,000,000|
|March 11-14, 1993||Winter Storm (24 states)||1,750,000,000|
|January 17-20, 1994||Winter Storm (20 states)||800,000,000|
|Jan. 31-Feb. 6, 1996||Winter Storm (31 states)||735,000,000|
|March 24-25, 1992||Wind, Hail, Tornadoes (3 states)||610,000,000|
|January 6-9, 1996||Winter Storm (17 states)||600,000,000|
|February 26, 1993||World Trade Center Bombing||510,000,000|
|February 10-12, 1994||Winter Storm (20 states)||455,000,000|
|January 19-22, 1985||Winter Storm (29 states)||400,000,000|
|January 17-20, 1996||Winter Storm (16 states)||395,000,000|
These are the top ten states ranked by the total insured property losses
in the first quarter for the years 1994 to 1998:
|STATE||ESTIMATED INSURED LOSSES|
*Includes $12.5 billion Northridge Earthquake insured losses. Even without the Northridge Quake, California has sustained the highest first-quarter catastrophe loss total for the past five years.