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October/November 2007                                                                                            Volume 13 - Number 1/2

Perspectives...

Trends of domestic disaster costs in insured losses during the past three decades in 2000-2006, 90s, 80s
By Andrés López Esquerra

Out of the ten most costly world insurance losses in catastrophes, nine involve the United States of America (1) as shown in the following table:

Rank    Date    Country    Event    Insured Loss in 2006 US dollars
1    Aug. 25, 2005    U.S., Gulf of Mexico, Bahamas, North Atlantic    Hurricane Katrina; floods, dams burst, damage to oil rigs     $66,311
2    Aug. 23, 1992    U.S., Bahamas    Hurricane Andrew; flooding    22,987
3    Sep. 11, 2001    U.S.    Terrorist attacks on WTC, Pentagon and other buildings    21,379
4    Jan. 17, 1994    U.S.    Northridge earthquake (magnitude 6.6)    19,040
5    Sep. 2, 2004    U.S., Caribbean: Barbados, et al.    Hurricane Ivan; damage to oil rigs    13,651
6    Oct. 19, 2005    U.S., Mexico, Jamaica, Haiti, et al.     Hurricane Wilma; torrential rain and floods     12,953
7    Sep. 20, 2005    U.S., Gulf of Mexico, Cuba     Hurricane Rita; floods, damage to oil rigs    10,382
8    Aug. 11, 2004    U.S., Cuba, Jamaica, et al.    Hurricane Charley    8,590
10    Sep. 15, 1989    U.S., Puerto Rico, et al.    Hurricane Hugo    7,434

Even though catastrophes have had an impact on insurers the most devastating ones have happened over the last 15 years.  Between the 1970’s and the mid 1980’s, annual insured losses were in the $3 billion range, but in the late 1980’s and 1990’s the scale changed radically, some of the biggest numbers include the 1989 Hurricane Hugo, 1992 Hurricane Andrew and the 1994 Northridge earthquake.  This upward trend keeps continuing in the 2000’s with a new record of $49 billion worldwide, out of which almost $20 to $25 billion come from the United States.  In 2005 the record was broken once again with Hurricane Katrina with a loss of $67 billion dollars and a worldwide loss of $83 billion.

The trend that comes out of this is an upward trend that looks like a very linear before 1970, where the average is a constant number of $3 to $4 billion of dollars and that after that starts to look like an exponential graph where the average is over $20 billion dollars.  A trend like this is also watched in the global view of the insurance losses and follows the graph at a higher level.