III Projects Insurers Will Pay over $32 Billion on Claims Filed in 2011

Insurers could wind up paying more than $35 billion to settle claims for damages suffered by vehicle, home and business owners this year as a result of natural disasters, according to new data from the Insurance Information Institute that paints a grim picture of the toll taken by catastrophes in 2011.

“Catastrophes striking the United States in the first nine months of 2011 caused $32.6 billion in direct insured losses, nearly double the $18.6 billion in catastrophe-caused direct insured losses insurers generally incur over the first nine months of any given year,” Robert Hartwig, an economist and president of III, said in a news release.

Hartwig noted that the figures did not include losses from a surprise late-October snow storm that struck the Northeast, killing more than two dozen people and knocking out electricity to a million residents. III has predicted that thousands of victims of that storm—the third to hit the region in several months—will file claims.

“The $32.6 billion figure doesn’t even include the significant insured losses which arose after the pre-Halloween snowstorm, which caused enormous damage to multiple states along the Atlantic seaboard. Coupled with other events in 2011’s fourth quarter, direct insured losses could exceed $35 billion this year.”

III officials pointed out that, despite the onslaught of natural disasters this year, policyholders’ surplus had declined by only 4 percent to $538.6 billion as of Sept. 30, a fact that Hartwig said shows property and casualty insurers “remain well-capitalized and capable of paying future claims.”

The report is just the latest to document the string of catastrophic events in 2011 that inflicted major damages on residents of regions throughout the country, forcing claims to be filed on everything from Maine auto insurance policies to homeowner coverage in Texas.

According to an analysis released late last month by ISO and the Property Casualty Insurers Association of America (PCI), insurers made a combined $8 billion in profits from January through September, a 70 percent decrease from the same period in 2010.

Experts blamed the decline largely on natural disasters, including Hurricane Irene, which caused an estimated $7.3 billion in insured losses when it swept along the East Coast in late August.

III points out that the federal government declared 99 disasters in 2011, easily surpassing the previous record of 81 set the previous year.

According to the National Oceanic and Atmospheric Administration (NOAA), a dozen weather-related catastrophes across the country in 2011 inflicted a combined $52 billion in economic damages. That eclipsed the previous record of nine major natural disasters set in 2008.

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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