A.M. Best: PC Insurers Lost $38.6 Billion in First Nine Months of 2011

Natural disasters during the first nine months of 2011 cost property and casualty insurance providers an estimated $38.6 billion in pretax, total net losses—nearly double the total for all of last year—according to a new analysis by A.M. Best.

The credit rating agency says the greatest losses for property casualty insurers, which include homeowner and car insurance companies, came in the form of tornadoes and hailstorms that struck the Midwest and Southeast in April and May.

Those disasters caused red ink to increase significantly from last year, when weather-related catastrophes cost insurers $16.1 billion for the first nine months and $19.6 billion for the year.

Other costly catastrophes through September included Hurricane Irene, the most destructive of an Atlantic hurricane season that featured 19 named storms, three of which were considered major. Analysts point out that Irene, which caused more than 40 fatalities along the East Coast, was the first hurricane to make landfall in the U.S. since 2008 and the first to hit New York City since 1985.

And while Irene caused a great deal of damage—$7.3 billion in insured losses, according to the National Oceanic and Atmospheric Administration—much of it was caused by flooding that was not covered by homeowner policies or the National Flood Insurance program, according to A.M. Best officials. Those losses are not factored into the company’s survey, which was based on data from more than 150 property-casualty insurers and groups.

The analysis is the latest in ongoing efforts to quantify the extent of damages that have resulted from natural disasters this year.

In October, ISO and the Property Casualty Insurers Association of America (PCI) announced that catastrophes in the first half of the year cut profits for property-casualty insurers from $16.8 billion during the first six months of 2010 to $4.8 billion for the same period this year.

ISO blamed reductions in net income largely on catastrophes, which caused $23 billion in direct insured losses for insurers, up $14.1 billion from 2010 and about three times the average for first-half losses over the past decade.

A long list of insurers has reported major losses as a result of severe weather, with Allstate ‘s $1.08 billion in catastrophe losses during the third quarter cutting its profits 55 percent and MetLife Auto & Home’s after-tax catastrophe losses for the period risking as high as $100 million, far exceeding the $38 million company officials had predicted.


About John Pirro
John Pirro is a licensed fire and casualty insurance agent specializing in various aspects of the auto insurance industry. He worked in the auto body repair industry before taking a reporting position at Online Auto Insurance News.

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