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; 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, the following are the states with the largest losses:

“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. The following is a table displaying annual insured property damage from catastrophe events for the past 11 years:

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.

Source: ISO

© Copyright 2007, National Association of Mutual Insurance Companies (NAMIC).