In 1992, the financial fallout from Hurricane Andrew made it clear to insurers and regulators that natural disasters have a significant impact on the industry’s ability to diversify and contain catastrophic risk. With 790,000 insurance claims and $26 billion in damage ($15.5 billion of it insured), Andrew became the costliest catastrophe in U.S. history.

Although catastrophe models are now used to spread the risk associated with catastrophes of that magnitude, there is still room for improvement.

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