Irene bookends expensive cat quarter

Hurricane Irene, which moved from the Caribbean into southwest Florida with winds gusting at 75 miles an hour, dumped more than 18 inches of rain and caused widespread flooding in mid-October. The damage inflicted by Irene to the U.S. eastern seaboard follows closely on the heels of Hurricane Floyd which also produced widespread flooding despite minimal insured wind-related losses.

According to preliminary loss estimates by the Insurance Services Office Inc. (ISO), U.S. insurers will likely pay Florida homeowners and businesses an estimated $100 million (all figures in U.S. dollars) for property damage resulting from Irene. The majority of the claims which have been filed involve water damage to homes, commercial structures and vehicles. Other claims filed include damage to structures from downed trees, wind damage to roofs and siding, and outdoor property.

The expected loss tally from Irene is modest when compared with other hurricane and tropical status storms of 1999, the ISO notes. However, in total, the office reckons that U.S. insurers will pay more than $2.1 billion in claims resulting from seven natural disasters to have occurred in the third quarter of 1999. This amount covers 831,000 claims, much of them resulting from Hurricane Floyd, which primarily hit North Carolina causing $1.3 billion in insured damages. The third quarter result is one of the worst in history. The most expensive third quarter cat experience took place in 1992 when insurers picked up the tab for one million claims totaling $17.4 billion, mostly due to Hurricane Andrew, the most costly hurricane loss in U.S. history.

The third quarter losses brings the year to date to $7.4 billion. The industry’s first quarter loss was $1.9 billion, with the second quarter tallying $3.5 billion. The most costly 1999 catastrophe to date came in the second quarter when a series of tornadoes and tropical storms hit 18 states in early May causing $1.5 billion in insured property damage.

Market Watch continues on page 38.