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Insurers to Pay a Record $56.8 Billion in 2005 Catastrophe Claims

JERSEY CITY, N.J., Jan. 26 — U.S. property/casualty insurers are expected to pay homeowners and businesses a record $56.8 billion for 2005 insured property losses from 24 catastrophic events — more than twice the prior record set in 2004, when insurers paid $27.3 billion in catastrophe claims, according to preliminary estimates by ISO’s Property Claim Services (PCS) unit.

Five hurricanes — Katrina, Wilma, Rita, Ophelia and Dennis — accounted for $52.7 billion, nearly 93 percent of last year’s insured losses affecting nine states.

Policyholders in 39 states filed more than 4 million personal and commercial property and automobile claims. Five states accounted for more than 80 percent of those claims and almost half the dollar loss. They are:

Louisiana, $27.2 billion

Mississippi, $12.2 billion

Florida, $9.9 billion

Texas, $2.9 billion

Alabama, $1.5 billion

Catastrophic activity in the fourth quarter was also unusual with Tropical Storm Zeta developing in late December, well beyond the official end of hurricane season, Nov. 30. Five fourth-quarter events triggered $8.9 billion in insured losses — the costliest fourth quarter on record in the past 10 years. Wilma’s $8.4 billion loss produced the lion’s share of the quarter’s steep tally.

Policyholders filed an estimated 1.1 million claims for the quarter. The previous record for fourth-quarter catastrophe losses in the past decade were $2.6 billion in 2003, driven by two Southern California wildland fires.

Estimated damage from catastrophes has doubled every year since 2002, while claim volume has increased steadily since 2000. Twelve catastrophes on the PCS’s “Top 20” list occurred during the past five-year period. A dramatic increase in the number and value of exposed properties in high-risk areas is a major contributor to increasing catastrophe losses.

Insured U.S. catastrophe losses since 1996:

Year Number of Events Losses
1996 41 $7.4 billion
1997 25 $2.6 billion
1998 37 $10.1 billion
1999 27 $8.3 billion
2000 24 $4.6 billion
2001 20 $26.5 billion
2002 25 $5.9 billion
2003 21 $12.9 billion
2004 22 $27.3 billion
2005 24 $56.8 billion

ISO’s PCS unit defines a catastrophe as an event within a particular territory that causes $25 million or more in insured property losses and affects a significant number of property and casualty policyholders and insurers.

PCS estimates represent anticipated insured losses on an industrywide basis arising from catastrophes, reflecting the total insurance payment for personal and commercial property items, business interruption and additional living expenses. The estimates exclude loss adjustment expenses.

About ISO

ISO is a leading provider of products and services that help measure, manage and reduce risk. ISO provides data, analytics and decision-support solutions to professionals in many fields, including insurance, finance, real estate, health services, government and human resources. Professionals use ISO’s databases and services to classify and evaluate a variety of risks and detect potential fraud. In the U.S. and around the world, ISO’s services help customers protect people, property and financial assets.

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