NEW YORK, Oct. 19, 1998 — The U.S. property/casualty insurance industry is expected to pay homeowners and businesses $3.66 billion for this year's third-quarter catastrophe losses, compared with $510 million for the quarter a year ago, according to Insurance Services Office, Inc.'s (ISO) Property Claim Services (PCS) unit.
Combined with the $4.6-billion payments to policyholders for property damage in the first half of this year, the industry's catastrophe losses for the first nine months of the year total $8.3 billion, compared with $2.35 billion for the year-ago period.
This year's third-quarter catastrophe losses were the third-worst third-quarter losses in history. Surpassing this year's third-quarter losses were the $17.4 billion losses in third-quarter 1992, largely from Hurricanes Andrew and Iniki, and the $4.4 billion losses in third-quarter 1989, largely from Hurricanes Hugo and Chantal, according to PCS.
Insurers' catastrophe losses so far this year are more than three times greater than the total of $2.6 billion for all of last year.
More than two-thirds of this quarter's $3.66-billion catastrophe losses were racked up by Hurricane Georges, when it caused $2.5 billion in insured property damage in Puerto Rico, the U.S. Virgin Islands and four Gulf Coast states. The nearly 1.2 million claims from eight catastrophic events is a record for any third quarter.
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 property and casualty policyholders and insurers.
The PCS estimate represents anticipated insured loss on an industry-wide basis arising from the catastrophe, 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.