Oklahoma tornadoes further catastrophe losses

Arecent tornado that hit Oklahoma has become the worst insured catastrophe in the state’s history, according to preliminary information released by the Property Claim Services (PCS) unit of Insurance Services Office (ISO). The storm system caused $955 million in insured damage, exceeding the state’s previous worst, a June 1992 tornado totalling $150 million in damages.

The storm cost U.S. insurers a total of $1.485 billion — which comprises the Oklahoma losses as well as $100 million in Kansas, $75 million in Texas, $50 million in Tennessee and $40 million in Georgia.

Already, 1999 had begun on a turbulent note for catastrophe claims. ISO’s first quarter results noted a marked increase in cat losses over the first quarter of 1998. The industry paid out an estimated $1.85 billion in five catastrophe events, compared to 1998’s losses of $1.1 billion over ten events. January 1999 was one of the worst ever, with four winter storms resulting in property loss totals of $1.8 billion from nearly 800,000 claims. This marks the third-costliest January since PCS began compiling catastrophe loss information in 1949.

None of these results bode well for an insurance industry still reeling from 1998 results which severely affected industry net income. 1998 cat losses totaled $10.1 billion, up $7.5 billion from 1997’s $2.6 billion total. According to ISO’s Dave Dasgupta, the U.S. insurers are already bracing for a tough cat year ahead. “Part of the situation is we’re dealing with Mother Nature and all of the advances can’t make a pinpoint prediction on where things will stand. If there is any lesson from this for insurers it is that you have to wait and see how Mother Nature deals its cards,” he says. Noting second quarter losses had reached $1.5 billion by May, he adds 1999 cat losses will likely be similar or exceed 1998 figures.

Record Oklahoma Losses

DATE AMOUNT CAUSE OF LOSS

1.Apr. 1999$955 millionhail, tornadoes and wind

2.Jun. 1992$150 millionhail, tornadoes and wind

3. Apr. 1995$125 millionOklahoma City bombing

4. Mar. 1988$100 millionhail, tornadoes and wind

5. Apr. 1993$85 millionhail, tornadoes and wind