INSURERS TO PAY HOMEOWNERS AND BUSINESSES AN ESTIMATED $3.7 BILLION IN SECOND QUARTER CATASTROPHE CLAIMS

JERSEY CITY, N.J., July 21 — Property/casualty insurers are expected to pay homeowners, businesses and auto owners an estimated $3.7 billion in catastrophe claims for the second quarter of the year, according to ISO’s Property Claim Services (PCS) unit.

        This year’s second quarter ranks fourth highest in insured catastrophe claim payments for a second quarter over the past 10 years and brings total estimated catastrophe payments for the first half to $5.2 billion. 

At $6.2 billion, the second quarter of 2001 posted the greatest amount paid for catastrophe-driven property losses in the last 10 years.

        This year’s second-quarter losses resulted from 13 PCS-designated catastrophes. Second quarter catastrophes caused insured damage in 24 states and the District of Columbia. PCS estimates policyholders will file nearly 1 million claims as a result.

Personal property losses represent 61 percent of all second-quarter claims, while commercial property losses make up 15 percent with commercial and personal vehicle losses accounting for 24 percent.

While this year’s second quarter ranks fourth in cost of total claims paid in a second quarter over the last 10 years, it ranks second in frequency of catastrophic events with 13, tying 1999 and behind 1998 when 16 catastrophes were named. The second quarters of 2003 and 2005 had the fewest catastrophes among second quarters in the last ten years with four apiece.

Second-Quarter Catastrophe Losses in Severity and Frequency: 1997 — 2006

       

                        Year            Dollar Amount   No. of Events

                        2001            $6.2 billion                    9

                        2003            $5.0 billion                    4

                        1998            $4.5 billion                      16

                        2006            $3.7 billion                      13

                        1999            $3.5 billion                      13

                        2002            $2.8 billion                      10

                        2004            $2.3 billion                    6

                        2000            $1.5 billion                      10

                        1997            $0.9 billion                    9

                        2005            $0.9 billion                    4

                                        $31.5 billion                   94

Indiana suffered the greatest total insured loss of the second quarter with claims totaling an estimated $658.5 million. Tennessee followed with $655 million; Texas, $623.5 million; Kansas, $404 million; and Kentucky, $186.5 million.

All catastrophe events of the second quarter resulted from severe weather, including high winds, large hail, tornadoes and widespread flooding. 

At $5.2 billion, the first half of 2006 ranks fifth in first-half insured catastrophe losses over the last ten years. The worst first half was in 2001 with $6.9 billion in catastrophe losses, followed by the first half of 2003 with $6.5 billion.

First-Half Catastrophe Losses: 1997 — 2006

Year            Estimated Loss

                                2001            $6.9 Billion

                                2003            $6.5 Billion

                                1998            $5.5 Billion

                                1999            $5.4 Billion

                                2006            $5.2 Billion

                                2000            $3.4 Billion

                                2002            $3.4 Billion

                                2004            $3.3 Billion

                                2005            $3.1 Billion

                                1997            $1.8 Billion

                                Total           $44.6 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 policyholders and insurers.

        PCS estimates represent anticipated insured loss on an industrywide basis arising from catastrophes, reflecting the total insurance payment for personal and commercial property lines of business covering fixed property, personal property, vehicles, boats, related property items, business interruption and additional living expenses. The estimates exclude loss adjustment expenses.

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