NEW YORK, July 12, 1999 – Hurricane season has begun and will peak between August and November. Tens of millions of residents living along the coastal regions of Florida, Louisiana, Texas, North Carolina, South Carolina, Long Island (N. Y.), and New England face the prospect of punishing storms over the coming months. Potential Atlantic hurricanes sport names such as Bret and Dennis, Harvey and Katrina, Maria and Philippe, and Stan and Wilma.
Faced with growing catastrophic losses from hurricanes and other tropical storms, insurers are looking to supplement traditional methods of financing risk. They are tapping the $28-trillion U.S. capital markets to securitize the risk of weather-related losses with new financing methods, such as "Act of God" bonds and catastrophe futures and options.
Sharply higher catastrophe losses in this decade have contributed significantly to growth in the U.S. property/casualty insurance industry's losses and loss-adjustment expenses. (See attached chart.)
At an inflation-adjusted total of $99.5 billion, catastrophe losses in the 10 years since 1989 are nearly twice as much as all catastrophe losses in the preceding 40 years going back to 1949 when record-keeping began.
Insurance Services Office, Inc. (ISO) estimates that through mid-1999 investors have committed about $3 billion in the capital markets to vehicles for securitizing catastrophe risk, most of it in catastrophe, or "Act of God," bonds. Catastrophe options indices based on insurers' loss information provided by ISO are traded on the Chicago Board of Trade (CBOT) and the Bermuda Commodities Exchange (BCOE).
ISO can assist you in your reporting on hurricanes and other catastrophes with information on insured property losses and number of claims filed with insurers including a comparison of past storms, losses, and claims data by date and state.
The attached two-page fact sheet is compiled from data in ISO's Property Claim Services (PCS) database the most comprehensive database in the property/casualty industry on property losses from weather-related disasters. It highlights some of the more significant information on past catastrophes, including hurricanes, and dollar value of property damage that may be useful to you as background. Experts in ISO's PCS unit can also provide analyses of catastrophe losses of special interest to you.
Insurance Services Office, Inc. (ISO) serves property/liability insurers with statistical, actuarial, underwriting, and claims information and analyses; consulting and technical services; and information about specific locations.
Editors Note: Please contact us if you'd like a camera-ready copy of this graph or if you'd like the plot points for your own graphic.
INSURANCE SERVICES OFFICE, INC. PROPERTY CLAIM SERVICES
HURRICANE FACT SHEET
Hurricane Losses by Year (1994-98):
Number of Hurricane Catastrophes and
Estimated Insured Losses (adjusted to 1998 dollars)*
|1998 2,||$3.3 billion|
|1997 1,||$60 million|
|1996 4,||$1.9 billion|
|1995 3,||$3.4 billion|
* ISO can provide information on dollar amounts of hurricane losses and number of claims, broken down by date, quarter, and state. ISO also can provide loss data on other natural disasters in the same format.
Ten Costliest Hurricanes and Estimated Insured Loss
(adjusted to 1998 dollars):
|Hurricane Andrew - August 1992||$18.0 billion|
|Hurricane Hugo - September 1989||$5.5 billion|
|Hurricane Georges - September 1998||$3.0 billion|
|Hurricane Betsy - September 1965||$2.7 billion|
|Hurricane Opal - October 1995||$2.2 billion|
|Hurricane Iniki - September 1992||$1.9 billion|
|Hurricane Frederic - September 1979||$1.7 billion|
|Hurricane Fran - September 1996||$1.7 billion|
|Hurricane Cecelia - August 1970||$1.3 billion|
|Hurricane Alicia - August 1983||$1.1 billion|
Ten Most Intense Hurricanes, Categories 5 and 4, 1900-1998
(measured by Saffir-Simpson Hurricane Disaster-Potential Scale):**
|Florida (Keys) - 1935||Category 5|
|Camille - 1969||Category 5|
|Andrew - 1992||Category 4|
|Florida (Keys)/So. Texas - 1919||Category 4|
|Florida - 1928||Category 4|
|Donna - 1960||Category 4|
|Texas (Galveston) - 1900||Category 4|
|Louisiana (Grand Isle) - 1909||Category 4|
|Louisiana (New Orleans) - 1915||Category 4|
|Carla - 1961||Category 4|
** Saffir-Simpson Hurricane Disaster-Potential Scale classifies hurricanes on their intensity and damage potential under five categories, with Categories 5, 4, and 3 being the most destructive. The scale does not measure insured property losses.
Catastrophes by Year (1989-98):
Number of Catastrophes and Estimated Insured Loss
(adjusted to 1998 dollars)***
|1999 (6 Mos.)||18,||$5.1 billion|
*** To insurers, a catastrophe is a single incident, or series of related incidents, that cause insured property losses totaling at least $25 million and affect a significant number of policyholders and insurers.