Natural Catastrophe Insurance Payouts Accelerate

Natural catastrophe-related insurance claims payouts to U.S. P/C policyholders grew seven-fold as a share of total claims payouts between 1960 and 2010. The trend has accelerated over the past two decades, with hurricanes and tropical storms accounting for 44 percent of natural catastrophe-caused claims payouts dating back to the early 1990s through today. Tornadoes generate 30 percent of the payouts.

U.S. property/casualty insurers cumulatively paid $408 billion in catastrophe-related claims to their auto, homeowners and business policyholders between 1990 and 2011, yet the overwhelming majority of carriers remain well-capitalized in 2012, according to Dr. Robert Hartwig, an economist and president of the Insurance Information Institute (I.I.I.).

Besides causing significant losses of life, the Tuscaloosa/Birmingham tornadoes in April 2011, and the one that struck Joplin in May 2011, generated insurance claims totaling about $2 billion in each instance.

The extraordinary 2011 spring tornado season in the U.S., coupled with severe winter weather and Hurricane Irene, which hit the East Coast, reduced the industry’s cumulative policyholders’ surplus — the amount of money remaining after an insurer’s liabilities are subtracted from its assets — to $538.6 billion as of Sept. 30, 2011, 3.3 percent lower than the $556.9 billion policyholders’ surplus at year-end 2010, the I.I.I. reported.