AIR Worldwide has taken a look at the top ten U.S. hurricanes and earthquakes in history and worked out how much damage they would cause if they’d occurred today. This serves as a potent reminder to the reinsurance and risk financing communities of the power of natural catastrophes and the need to be prepared with adequate reserves and risk transfer in place. The industry has survived a recent event of magnitude in Hurricane Katrina, but imagine a number of events of this size in successive (or even the same) years and you can begin to see the predicament facing insurers and policymakers alike.
We’ve reproduced the events tables below but to read the full report including details of each event visit the AIR Worldwide website.
|Estimated Insured Losses for the Top 10 Historical Hurricanes Based on Current Exposures|
|Date||Event name||2009 Insured Loss*|
|September 18, 1926||Miami Hurricane||$101 billion|
|August 24, 1992||Hurricane Andrew||$57 billion|
|September 17, 1947||1947 Fort Lauderdale Hurricane||$55 billion|
|September 17, 1928||Great Okeechobee Hurricane||$51 billion|
|August 29, 2005||Hurricane Katrina||$42 billion|
|September 9, 1900||Galveston Hurricane of 1900||$40 billion|
|September 21, 1938||The Great New England Hurricane||$38 billion|
|September 9, 1965||Hurricane Betsy||$36 billion|
|September 10, 1960||Hurricane Donna||$31 billion|
|September 5, 1950||Hurricane Easy||$21 billion|
|*Modeled loss to property, contents, and business interruption and additional living expenses for residential, mobile home, commercial, and auto exposures as of December 31, 2008. Losses include demand surge.|
As you can see only Katrina and Andrew feature from recent years showing that although we’ve had some extremely large loss years from recent hurricane seasons, the storms themselves haven’t been of the magnitude of some experienced in history.
|Estimated Insured Losses for the Top 10 Historical Earthquakes Based on Current Exposures|
|Date||Event name||Magnitude||2009 Insured Loss**|
|February 7, 1812||New Madrid, MO||7.7||$100 billion|
|April 18, 1906||San Francisco, CA||7.8||$96 billion|
|August 31, 1886||Charleston, SC||7.3||$37 billion|
|June 1, 1838||San Francisco, CA||7.4||$27 billion|
|January 17, 1994||Northridge, CA||6.7||$21 billion|
|October 21, 1868||Hayward, CA||7.0||$21 billion|
|January 9, 1857||Fort Tejon, CA||7.9||$8 billion|
|October 17, 1989||Loma Prieta, CA||6.3||$6 billion|
|March 10, 1933||Long Beach, CA||6.4||$5 billion|
|July 1, 1911||Calaveras, CA||6.4||$4 billion|
|**Modeled loss to property, contents, and business interruption and additional living expenses for residential, mobile home, commercial, and auto exposures as of December 31, 2008. Losses include demand surge and fire following earthquake. Policy conditions and earthquake insurance take up rates are based on estimates by state insurance departments and client claims data.|
The concentration of events on California is really a good indicator of where the U.S. earthquake risk predominantly lies. The Northridge quake of 1994 is the only event in recent memory which features demonstrating that these events are not that frequent (at least not now, look at the number of major quakes experienced in the 1800’s).