One Week Brought Most of Alabama’s $3.2 Billion Losses

Almost $3 billion of the $3.2 billion Alabama insurers paid out to their auto, home and business policyholders in 2011 for catastrophe losses can be traced directly to the tornadoes, hail and thunderstorms that swept through the state between April 22 and April 28 of last year.

“These natural disasters were not only the deadliest in Alabama’s history, they were also the costliest in terms of the property damage and business interruption claims these severe weather events generated,” said Dr. Robert Hartwig, president of the Insurance Information Institute (III) and an economist.

An III analysis of data from ISO’s Property Claims Service (PCS) and other sources found that about 133,000 Alabama insurance claims were filed due to damages incurred between April 22 and April 28, 2011, leading to insurance policyholder payouts totaling $2.925 billion.

More than half (57 percent) of those monies were disbursed to the state’s homeowners, renters and condominium policyholders ($1.65 billion). Businesses received $1.12 billion, or 38 percent of the claim payouts, and auto insurance policyholders the remaining $150 million, or 5 percent of the total.

The most devastating tornadoes occurred in, or near, metropolitan areas of Alabama including Birmingham, Huntsville and Tuscaloosa.

“2011 was a record-setting year in Alabama for catastrophe-caused insurance claims payouts, and the United States has never had a month like April 2011, when more than 750 tornadoes touched down in various states,” said Renee Carter, state director of the Montgomery-based Alabama Insurance Information Service (AIIS). “Yet the insurance industry, in meeting its financial obligations to policyholders, has played a pivotal role in helping Alabama recover economically from the most significant insurance event to hit our state since Hurricane Ivan in 2004.”

Besides Alabama, the National Oceanic and Atmospheric Administration (NOAA) reported that 343 of the 700-plus tornadoes in April 2011 struck 12 other states-Arkansas, Louisiana, Mississippi, Georgia, Tennessee, Virginia, Kentucky, Illinois, Missouri, Ohio, Texas and Oklahoma-near the end of the month. The III found that the tornadoes that swept through the U.S. the week of April 22 to April 28, 2011 led to a cumulative total of $7.3 billion in insurance claims payouts, with Alabama ($2.925 billion) accounting for 40 percent of claims.

According to PCS data, the tornadoes, hail and thunderstorms were the single largest catastrophe event of 2011, exceeding even the $4.3 billion claims payout from Hurricane Irene.

Alabama was the site of 56 federal disaster declarations between 1953 and 2011; only six states had more federal disaster declarations during that time period, the III said.