Insurers Retreat From Coasts

[JackDodge]

http://www.washingtonpost.com/wp-dyn/conte...42901364_2.html

Great article from the Washington Post. Lots of usable statistics. For example:

As a whole, the [insurance] industry is coming off some of its best years. It recorded a 12 percent increase in net income after taxes of $43 billion in 2005, despite the storms, according to the Insurance Services Office and Property Casualty Insurers.

What's more, up to half of the Katrina losses -- $38.1 billion -- were borne by overseas firms or reinsurers (insurers for the insurance companies), which say that growing capital markets are shouldering any growing burden.

"Our point is this industry has been very profitable and very resilient in the face of the most significant catastrophic losses -- both terrorist and natural disasters -- ever," said Frank Nutter, president of the Reinsurance Association of America, whose members would be supplanted by federal or state catastrophe funds or reinsurers. "We can't see why there's a case to be made for a government role."

But Allstate lost big due to Katrina and is behind the lobbying efforts to dump a lot of the cost of these disasters on to the taxpayer. They've poured $1,000,000 in to the effort so far. Most of the rest of the insurance industry doesn't need or want what Allstate is pushing for in it's own self-interests.

Analysts note that seven of the 12 costliest insured disasters in U.S. history occurred in the past two years. At $57.7 billion, private insured losses in 2005 were more than double those of 2004, according to the Insurance Services Office.

Hurricane forecasters predict five major storms of Category 3 or higher in the 2006 Atlantic season, with a chance of U.S. landfall at 81 percent, compared with a 100-year average of 52 percent.

Whether global warming is at work or not, damage costs will increase because of rising property values and development. For instance, a direct hit on Miami by Hurricane Andrew that would have cost $60 billion in 1992 would cause $120 billion in damage today because the market value has doubled, the Insurance Services Office estimates.

"In this environment, we think catastrophes that cost $100 billion in insured losses are not hard to envision," ISO spokesman Christopher Guidette said.