NU Online News Service, Aug. 21, 2:55 p.m.EDT

A new report by Karen Clark & Co. says storms capable ofmajor losses are not as infrequent as we might assume. Infact, the United States can anticipate insured losses of at least$10 billion from a hurricane an average of every four years, basedon an analysis of more than a century of hurricaneexperience.

Using a new methodology, Clark's firm ran nearly 180 U.Sland-falling hurricanes through a formula to determine which stormswould likely cause at least $10 billion of insured lossesif they were to strike today.

Karen Clark tells PC360 the report highlights theresults of a multi-month-long project on historical eventsrequested by clients.

“Clients like to know history,” she says. “'If a storm isrepeated, what would happen to my book of business today?' They canalso benchmark model results.”

The results shift the common perception of the worst storms interms of insured loss due to denser areas, especially onthe coast, as well as larger and more valuable buildings that existtoday.

For example, 2005's Hurricane Katrina—known as the costliesthurricane in U.S. history at about $40 billion—falls to the seventhposition on Clark's new list.

Downloadthe report here.

The top spot—by far—now belongs to an unnamed storm, the “GreatMiami Hurricane” of 1926. Clark's experts in catastrophe risk,models and risk management say the storm would cause a whopping$125 billion in losses today.

The second costliest storm would be the 1928 Okeechobee(Florida) Hurricane at about $65 billion, according to thereport.

Interestingly 1992's Hurricane Andrew would cause more damagethan Katrina if Andrew hit the same spot—just south of Miami—today.Clark says Andrew's insured loss tally would be about $50billion.

TOP 10 COSTLIEST HISTORICAL HURRICANES

Andrew caused about $15.5 billion in losses when it traveledover Florida 20 years ago. The losses were accurately predicted byClark, founder of what is now known as AIR Worldwide, backthen.

Among the findings some readers might discover surprising is thefact just two storms from the Southeast—Hazel and Hugo—would causemore than $10 billion in losses. There simply is not the kind ofconcentration of exposure here as there is along other portions ofthe coastline, such as in the Northeast, Clark says.

Karen Clark & Co. says the report “fills an important void”because it doesn't simply adjust original losses by the rate ofinflation. Instead, it takes into account population increases,valuations and construction costs using multiple sources ofinformation in the methodology.

Estimates were rounded to the nearest $5 billion “to avoid theillusion of accuracy and false precision given the uncertaintyaround the estimates.”