ISO's Property Claim Services Estimates 2001 Catastrophe Losses at $24 Billion; Uncertainty About September 11 Claims Complicates Tally

JERSEY CITY, NJ, March 11, 2002 — U.S. property/casualty insurers paid $24 billion in claims for insured-property damage last year, making 2001 the costliest year ever for catastrophe losses, according to estimates by the Property Claim Services (PCS) unit of Insurance Services Office, Inc. (ISO).

The 20 events in 2001 were the lowest number of catastrophes for any year since 1969, but the year topped the list for insured-property damage. Year-to-date claims totaled 1.5 million.

Much uncertainty still surrounds the dollar amount of loss and number of claims from the September 11 terrorist attacks on New York City and the Pentagon. According to PCS estimates, insured-property losses from the attacks stand at $16.6 billion, generating 74,000 personal and commercial property and vehicle claims. Losses from this event will take several months to compile with greater accuracy, and so the PCS estimate is likely to be revised further.

The PCS estimate of September 11 only applies to insured losses for property damage and related coverages, such as business-interruption insurance. The estimate represents only a portion of the total insured losses from the attack and does not include liability insurance; workers' compensation; aviation property/casualty losses; or life and health insurance from the World Trade Center complex, and the immediate surrounding area and locations near the Pentagon in Virginia.

Many policyholders are unsure of their losses and may have filed only partial or incomplete claims, while others may not yet have filed any claims with insurers because their records are missing or destroyed, PCS noted.

More precise insured-loss estimates from the September 11 terrorist attacks will take time to compile because of the complexity of the events which affect both residential and business customers and companies that have insured them, PCS reported.

The difficulty of loss estimation is compounded by potential litigation involving insurers, reinsurers and major property owners. That could significantly affect ultimate loss settlement.

The claims-estimating process by insurers in New York City is taking place building by building and tenant by tenant in those buildings. Claims adjusters' access to the World Trade Center and surrounding areas was inhibited by rescue operations, shutdown of much of downtown Manhattan and health concerns arising from debris in the area.

Final insured-property loss estimates will be significantly influenced by such issues as the cost of relocating businesses, replacing lost employees, rebuilding destroyed office space, adjusting claims for loss resulting from the order of civil authority or business-interruption losses from both within and outside New York City, and the resolution of personal property claims from the collapse of the Twin Towers.

By comparison, catastrophe losses during the three other quarters of 2001 were modest. The worst catastrophe prior to September 11 was Tropical Storm Allison, which caused insured damage of $2.5 billion, primarily in Texas.

Fourth-quarter 2001 insured losses were less than $500 million from four catastrophic events, making this quarter's losses among the lowest in the past 10 years.

Following is a recap of the top 10 catastrophes in the U.S.:

Year
Catastrophic Event Total Losses
2001
Fire and explosion $16.6 billion
1992
Hurricane Andrew $15.5 billion
1994
Northridge earthquake $12.5 billion
1989
Hurricane Hugo $ 4.2 billion
1998
Hurricane Georges $ 3.0 billion
2001
Tropical Storm Allison $ 2.5 billion
1995
Hurricane Opal $ 2.1 billion
1999
Hurricane Floyd $ 2.0 billion
2001
St. Louis hailstorm $ 1.9 billion
1993
Midwest blizzard $ 1.8 billion

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/casualty policyholders and insurers.

PCS estimates represent 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 and business-interruption losses. The estimates exclude loss-adjustment expenses.

Release: Immediate

Contacts:
Giuseppe Barone / Erica Helton
MWW Group (for ISO)
201-507-9500
gbarone@mww.com / ehelton@mww.com

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