Catastrophic Losses Fall Significantly
Insurance claims related to catastrophes such as hurricanes dropped sharply in 2007, reflecting a relatively mild hurricane season.
Catastrophe losses totaled $6.5 billion last year, according to the Insurance Information Institute. That compares to $61.2 billion in 2005, when 24 disasters - including Hurricane Katrina - pushed up the total. Katrina alone accounted for $41.1 billion of the 2005 total.
The unexpected lull in hurricanes hitting the U.S. coast is giving insurers an opportunity to bolster its policyholder surplus, the institute said.
But Katrina and lesser 2005 storms such as Wilma and Rita (both of which weakened from Category 5 storms before hitting land) have left the insurance industry and policymakers re-examining how the U.S. deals with massive property damage from natural and man-made disasters.
A Census Bureau report finds that 34.9 million people in the U.S. were seriously threatened by Atlantic hurricanes in 2006, more than three times the number of people whose homes and lives were seriously threatened by Atlantic storms in 1950.
In the aftermath of the devastating 2005 hurricane season, many insurers have scaled back coverage in areas most at risk from coastal storms and increased deductibles for wind damage.
Many insurers now have a percentage-loss deductible for wind damage instead of a dollar amount deductible. For instance, if the percentage deductible is 2% on a home valued at $100,000, the deductible would be $2,000.
The typical homeowners insurance policy covers damage from fire, windstorms, hail, riots and explosions. The typical policy also usually covers theft and the cost of living elsewhere while a home is being repaired or rebuilt after an insured event. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/