Insurers’ 1stQ Catastrophe Losses at $1.46B According to ISO

U.S. property/casualty insurers are expected to pay policyholders an estimated $1.46 billion for insured property-loss claims from five catastrophes in the first quarter — the fifth-highest first quarter in losses since 1994 — according to preliminary estimates by Insurance Services Office, Inc.’s (ISO) Property Claim Services (PCS) unit.

This compares with insured losses of $615 million in first-quarter 2002 and $680 million in first-quarter 2001.

PCS also revised its catastrophe loss estimate for 2002 to $5.85 billion, up $50 million from the original estimate of $5.8 billion.
PCS estimates insurers will receive more than 345,000 claims from homeowners and businesses for first-quarter losses — the fourth lowest in claims among first quarters since 1998.

The five events in the quarter affected 25 states. Three were winter storms that blanketed 15 states, causing $1.1 billion in insured property damage. The other two were wind and windstorm events, which together racked up $365 million in insured losses. At $315 million, Colorado sustained the highest insured loss in the quarter from a mid-March winter storm, followed by Maryland at $165 million and New Jersey at $130 million, while both New York and Pennsylvania each registered $105 million in property damage.

The following table summarizes first-quarter loss and frequency of events:

1994 $14.5 billion (8 events)
1995 $ 1.1 billion (6)
1996 $ 2.6 billion (11)
1997 $ 860 million (8)
1998 $ 1.0 billion (10)
1999 $ 1.9 billion (5)
2000 $ 1.9 billion (7)
2001 $ 680 million (3)
2002 $ 615 million (3)

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 property/casualty policyholders and insurers.

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