Low property losses leading to false sense of complacency

Leading up to the 2008 Atlantic hurricane season, Aon Corp is cautioning that although predictions of hurricane activity are important to consider, any storm can cause massive destruction regardless of whether it happens in a period of below-normal or above-normal storm activity. Hurricanes Felix and Dean, each of which caused massive destruction, both hit during periods of relatively light storm activity, Aon notes. “The low severity of property catastrophe losses since 2006 resulting in part from the relatively small number of land-falling hurricanes and tropical storms in the last two years is one driver of what Aon Re Global expects will be favorable pricing for traditional property catastrophe reinsurance programs for insurers’ mid-year renewals,” the company reports in a release. Still, the low-level of storm activity over the past two years may have created a false sense of security, the company cautioned. “Organizations may become complacent in their loss-mitigation planning if they haven’t experienced a property loss in some time,” Arnold Mascali, president of Aon Horizon and Aon Global Rapid Response, said in the release. “Such complacency can leave them vulnerable to significant losses if catastrophes strike their facilities while they’re not adequately prepared.”A 2007 Aon Global Risk Consulting study found that only 10% of the 1,500 global companies that participated in the poll had developed a fully-integrated risk management strategy.