2005 Hurricane Losses to Top $57 Billion, Advisen Reports
New York-based Advisen Ltd. has released an estimate that worldwide insurance and reinsurance losses related to the three major hurricanes that hit the United States this year would amount to $57.6 billion, making the cumulative catastrophe losses the largest on record.
Since mid-October, Advisen has continuously monitored the hurricane losses reported by insurers and reinsurers in response to the devastation caused by Hurricanes Katrina, Rita and Wilma. Based on reported property and business interruption losses to date, Advisen has calculated current after-tax totals per hurricane as follows: Katrina, $28 billion; Rita, $4.5 billion; and Wilma, $4.8 billion.
By predicting thus far unreported losses from State Farm, the largest personal lines insurer, unreported losses from regional mutual insurers and smaller global reinsurers, developing and as yet unfiled claims for damage from Hurricane Rita and Hurricane Wilma, and the impact of income taxes, Advisen projects pre-tax insured losses per hurricane to be $40.4 billion for Katrina, $6.4 billion for Rita, and $10.8 billion for Wilma.
The losses amount to more than twice the annual total for other U.S. natural disasters and one and a half times the losses from the 2001 terrorist attacks in New York and Washington.
“The devastation these storms caused has resulted in conflicting and confusing reports related to insurance claims and costs,” said David K. Bradford, executive vice president and editor-in-chief of Advisen. “Our research underscores the extent of the damage caused by these catastrophes, and offers comprehensive insight regarding how these storms will most likely impact the insurance industry based on information currently available.”
Several unsettled variables could cause estimates to increase dramatically, the company reports. Flood losses could elevate the company’s estimates by billions of dollars if the various lawsuits to force insurers to cover flood damage related to Hurricane Katrina are successful. Additionally, several hurricane-related pollution lawsuits could add hundreds of millions of dollars to the totals. Advisen anticipates it will be several months before these factors will be settled.
Source: Advisen Ltd.