Claims News Service, April 10, 4:43 p.m. EST — Preliminary financial results compiled by the Insurance Services Office (ISO) and the Property Casualty Insurers Association of America (PCI) indicate that the property/casualty insurance industry will report an increase in its capital base and an overall profitable performance in 2005. Insurers achieved these results despite catastrophe losses totaling a record $57.7 billion before reinsurance recoveries, according to ISO's Property Claims Services unit.
Still, experts cautioned that last year's catastrophe losses have had a significant effect on reinsurers and reinsurance markets — an impact likely to be felt by primary insurers, especially for catastrophe coverage in regions prone to natural disasters like hurricanes and earthquakes. According to PCI, one major broker reported last March that at least five Bermuda reinsurers had either stopped underwriting or re-oriented their business since Hurricane Katrina.
Analyses by AIR Worldwide, ISO's risk modeling subsidiary, indicate that insured losses from natural catastrophes will double roughly every 10 years because of exposure growth driven by increases in the number and size of structures and inflation in construction costs, among other factors. Because of exposure growth, a one-in-100-year loss increased from $60 billion in 1995 to $110 billion in 2005, and it will increase to over $200 billion by 2015.
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