P/C Insurers to Pay $1.2 Billion in 1st Quarter Home, Business Catastrophe Claims

Severe tornadoes in several southern states helped push catastrophe losses to more than $1.2 billion during the first quarter of 2007, according to the industry’s Property Claim Services (PCS), a unit of Insurance Services Office.

U.S. property/casualty insurers are expected to pay an estimated $1.22 billion to homeowners and businesses in insured property losses from seven catastrophe events in first-quarter 2007, PCS reported.

PCS also estimated that the four winter storms and three severe weather events produced nearly 204,000 claims in 18 states from California to Florida during the period.

The quarter’s costliest event occurred in early March, when tornadoes raked areas of Alabama and Georgia. While the damage from this harsh weather outbreak cost insurers more than $450 million, a more serious impact was the loss of life associated with the severe tornado activity in areas such as Enterprise, Alabama, and Americus, Georgia.

Of the 18 states, the five with the largest insured property losses were Georgia ($285 million), Alabama ($175 million), Texas ($167 million), Missouri ($140 million), and Florida ($100 million).

Following is the breakdown of first-quarter catastrophe activity during the past decade:
Year Insured Loss ($) Frequency
1998 1.00 billion 10
1999 1.87 billion 5
2000 1.98 billion 7
2001 680 million 3
2002 615 million 3
2003 1.48 billion 5
2004 1.04 billion 5
2005 2.14 billion 8
2006 1.48 billion 7
2007 1.22 billion 7

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. Estimates reflect the total 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.

Source: ISO’s Property Claim Services (PCS)
www.iso.com