Insurers to Pay $25.2 Billion in 2008 Catastrophe Claims, Says ISO’s Property Claim Services Unit

JERSEY CITY, N.J., January 20, 2009 — U.S. property/casualty insurers are expected to pay homeowners and businesses $25.2 billion for 2008 property losses from 37 catastrophes — the fourth highest cost in a decade and the highest frequency in a decade, according to preliminary analysis by ISO’s Property Claim Services Unit.

PCS estimates that insurers paid 3.9 million claims for damage in 40 states resulting from 2008’s 37 catastrophes. More than 2.7 million personal lines claims accounted for 64 percent of the $25.2 billion loss, while 340,000 commercial lines claims accounted for 27 percent of the total loss, and 876,000 vehicle losses accounted for 9 percent.

The 37 catastrophes in 2008 were the result of hurricanes, severe weather, winter storms, and tropical storms. Hurricanes caused the largest loss, currently estimated at $13.3 billion in insured damage. Severe weather events — those producing damaging winds, large hail, tornadoes, and flooding — caused an estimated $10.5 billion in losses. Winter storms resulted in more than $1 billion in losses, and two tropical storms cost insurers $300 million of the total $25.2 billion loss.

Among the 40 states experiencing insured losses from catastrophes in 2008, following are the states with the largest losses:

State

Loss ($)

Texas

$10.2 billion

Louisiana

$2.2 billion

Minnesota

$1.6 billion

Ohio

$1.3 billion

Georgia

$1.0 billion

“There are several extraordinary characteristics of the 2008 catastrophes,” said Gary Kerney, assistant vice president, PCS. “Foremost are the six consecutive tropical systems that made landfall on U.S. coastlines. Dolly, Eduoard, Fay, Hanna, Gustav, and Ike struck along the coastline stretching from southern Texas to Virginia. Unusually frequent tornado touchdowns and related insured property damage contributed to record-setting frequency and significant losses in the first six months of 2008. All of this activity was followed by a very quiet fourth quarter in which PCS declared only one catastrophe — a winter storm in mid-December.”

The 37 catastrophes in 2008 are the highest frequency in a decade, tying the number of catastrophes in 1998, 11 years ago. Following is a table displaying annual insured property damage from catastrophe events for the past 11 years:

Year

Insured Loss ($)

Frequency

1998

$10.1 billion

37

1999

$8.3 billion

27

2000

$4.6 billion

24

2001

$26.5 billion

20

2002

$5.9 billion

25

2003

$12.9 billion

21

2004

$27.5 billion

22

2005

$62.3 billion

24

2006

$9.2 billion

33

2007

$6.7 billion

23

2008

25.2 billion

37

Total

$199 billion

293

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 policyholders and insurers.

About PCS
ISO’s Property Claim Services (PCS) unit serves property/casualty insurers and reinsurers as an authoritative source of catastrophe loss information, providing estimates of anticipated industrywide insured losses arising from catastrophes. The estimates reflect the total insurance payment for personal and commercial property items, business interruption, terrorism, workers compensation, and additional living expenses. The estimates exclude loss adjustment expenses.

About ISO
A leading source of information about risk, ISO provides data, analytics, and decision-support services to professionals in many fields, including insurance, finance, real estate, health services, government, human resources, and risk management. Using advanced technologies to collect, analyze, develop, and deliver information, ISO helps customers evaluate and manage risk. The company draws on vast expertise in actuarial science, insurance coverages, fire protection, fraud prevention, catastrophe and weather risk, predictive modeling, data management, economic forecasting, social and technological trends, and many other fields. To meet the needs of diverse clients, ISO employs an experienced staff of business and technical specialists, analysts, and certified professionals. In the United States and around the world, ISO helps customers protect people, property, and financial assets.

Release: Immediate

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

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