Costly Year in 2008

According to the 2008 Catastrophe Update, a report from Guy Carpenter & Company, LLC about the catastrophe reinsurance marketplace, the high frequency and severity of Atlantic hurricanes in 2008, coupled with other weather-related and man-made losses, placed 2008 among the costliest on record for insured catastrophe losses.

The company reported that the ten-year moving average of insured catastrophe loss costs continued to rise in 2008, increasing by seven percent over 2007 -- from $35.5 billion to $38 billion. Overall, the 2008 hurricane season produced a record number of consecutive storms striking the United States, ranking as one of the most active seasons in the 64 years since comprehensive recordkeeping began.

In addition to hurricane activity, flooding and wildfires triggered significant losses last year. Storms that hit the Midwest in May and June led to severe flooding, inundating up to 40,000 homes and businesses. The Insurance Services Office estimated insured losses from the floods at $725 million. Wildfires in Southern California destroyed around 980 homes, triggering an estimated total property loss of up to $500 million.

It was also an unusually active year for man-made catastrophe losses. Losses in the mining, energy, and steel industries were particularly large. Claims were exacerbated by the impact of record-high commodity prices on business interruption coverage.