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2011 Record Year for Natural Disasters

The United States set a record in 2011 in its declarations of federal disasters, and insurers are still playing catch-up with claims payouts. In fact, when all is said and done, insurers will have paid more than $32 billion in claims to help people rebuild homes and businesses damaged or destroyed by natural disasters in 2011, according to the Insurance Information Institute (I.I.I.).

"Catastrophes striking the United States in the first nine months of 2011 caused $32.6 billion in direct insured losses, nearly double the $18.6 billion in catastrophe-caused direct insured losses insurers generally incur over the first nine months of any given year," said Dr. Robert Hartwig, CPCU, the president of the I.I.I. and an economist, citing figures released earlier this month by ISO's Property Claim Services. "The $32.6 billion figure doesn't even include the significant insured losses which arose after the pre-Halloween snowstorm, which caused enormous damage to multiple states along the Atlantic seaboard. Coupled with other events in 2011's fourth quarter, direct insured losses could exceed $35 billion this year."

Hartwig emphasizes that the property/casualty industry is well-capitalized. In spite of the frequency and severity of 2011's natural catastrophes in the U.S., policyholders' surplus fell only four percent to $538.6 billion as of Sept. 30, 2011, as compared to $559.2 billion at year-end 2010.

"The policyholders' surplus number is a sure sign that U.S. property/casualty insurers remain well-capitalized, and capable of paying future claims," Hartwig stated.

On 99 separate occasions in 2011, the federal government declared natural disasters “a major disaster,” easily breaking the previous record (81), which was set in 2010, the I.I.I. said. The declaration makes federal funding available to individuals and businesses impacted adversely by the named disaster. The severe snowstorms and flooding which occurred in Alaska between November 8 and 10, 2011, resulted in a major disaster declaration on December 22, 2011. The 99 disaster declarations are nearly triple the average of 34 per year dating back to 1953.

Jim Brown's Weekly Column: Louisiana Property Owners Face ...

Merry Christmas Louisiana. Here’s your present from the public officials you sent to the state capitol. A big boost in your property insurance premiums! All from the same folks who have been sticking you with higher rates for years because of their poor oversight and downright incompetence. So get out your checkbook and enjoy your holidays. More increases are on the way.

Just two weeks ago, State Farm policy holders were blindsided with a whopping rate increase of as much as 14% in some parts of the state. Many customers are wondering why there was such a rate increase was implemented. The economy has stagnated, there is little inflation, and prices across the board are down. Insurance rates are dropping in many other states, but Louisiana continues to have the highest premium costs in the nation. There have been no recent serious weather related damages throughout the state. So how can an insurance company justify a rate increase during this troubling economic climate? Simply put, they did it because they can.

In the majority of states throughout the U.S., insurance companies have to file a request to raise rates before the insurance department. Actuaries and other insurance officials scrutinize these requests to be sure the rate request is justified. But not in Louisiana!

The insurance industry did some heavy lobbying a few years back and poured hundreds of thousands of dollars into the coffers of willing legislators and insurance regulators. And Voila! No more prior approval to raise rates required. Such “sweetheart deals” do not exist in Texas, Mississippi, Arkansas and in virtually no other state throughout the south. And guess what? Property insurance rates are much lower outside Louisiana.

So that was the bad news two weeks ago. But now, if you own a home, here’s your New Year’s present. Every property owner in the state is about to be stuck with yet another assessment on their property because of the incompetence and outright fraud on the part of those who both formed and have run the state created Citizens Property Insurance Company.

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