Insurers Expected to Pay $4.9 Billion for Second-Quarter Catastrophe Losses, Second Highest Since 1994, Says ISO's PCS Unit

JERSEY CITY, N.J., July 28, 2003 — U.S. property/casualty insurers are expected to pay policyholders an estimated $4.9 billion for insured property-loss claims from four catastrophic events in the second-quarter — the second-highest second quarter in losses since 1994 — according to estimates by Insurance Services Office, Inc.'s (ISO) Property Claim Services (PCS) unit.

Second-quarter 2001 topped the list for insured property damage with $6.2 billion from nine events. Catastrophe losses during second-quarter 2002 were $2.8 billion from 10 events.

Catastrophe losses for first-half 2003 now stand at $6.3 billion, compared with $3.4 billion for the first six months of 2002 and $6.9 billion in first-half 2001.

At an estimated 1.1 million, the second quarter produced a near-record number of auto, residential and commercial policy claims, said PCS. Catastrophe claims frequency from policyholders in 23 affected states was the fourth highest for a second quarter since 1998, the year a severe hailstorm struck Minnesota.

The spike in second-quarter losses was caused by severe thunderstorms and tornadoes that ravaged 18 states from May 2 to 11. Insured losses from those storms now stand at $3.13 billion, up $1.58 billion following PCS's resurvey of its preliminary $1.55 billion estimate in May.

PCS resurveys catastrophe losses about 60 days after issuing its preliminary estimate whenever losses exceed $250 million or the specific circumstances relating to a catastrophe require additional analysis.

At $1.18 billion, Texas topped the list for insured losses in the quarter, followed by Oklahoma at $1.07 billion, Tennessee at $770 million, Missouri at $455 million and North Carolina at $205 million.

Following is a summary of second-quarter losses and frequency of events:

Year
Catastrophe Losses
Catastrophe Events
1994        $1.08 billion
10
1995        $3.02 billion
16
1996        $1.70 billion
12
1997        $ 980 million
9
1998        $4.52 billion
16
1999        $3.49 billion
13
2000        $1.46 billion
10
2001        $6.23 billion
9
2002        $2.79 billion
10

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, business interruption and additional living expenses. The estimates exclude loss-adjustment expenses.

About ISO
ISO is a leading source of information, products and services related to property and liability risk. For a broad spectrum of commercial and personal lines of insurance, ISO provides data, analytical and decision-support products; consulting; data processing; and technical, statistical and actuarial services. ISO field services include on-site rating and underwriting services and the evaluation of community loss-mitigation efforts. ISO's products help customers with sales and prospecting, underwriting, rating and quoting, customer management, policy administration, product development, claims administration and fraud detection. ISO's AIR Worldwide subsidiary provides technologies to assess and manage natural and man-made extreme-event risk. Through its ISO Claims Services, Inc. (iiX unit) and Intellicorp subsidiaries, ISO provides motor vehicle reports and criminal-records information and through its AscendantOne unit delivers rating, quoting and policy-administration solutions. In the United States and around the world, ISO serves insurers, reinsurers, agents, brokers, self-insureds, risk managers, insurance regulators and other government agencies.

Release: Immediate

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

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