With June 1 marking the start of what is expected to be another busy Atlantic hurricane season, insurers are better prepared to handle claims should “The Big One” strike, one leading consultant says.

Indeed, since 2005, insurers have become more capable of absorbing a catastrophic event, thanks to better management of their risk concentration, as well as development of more efficient claims-handling capabilities, according to David Langdon, vice president with Towers Perrin's reinsurance business, based in Hartford. “They will be prepared,” he said.

The soft market will have no impact on companies meeting their obligations, he added, because there is an abundance of reinsurance capacity that is enabling insurers to pass on rate decreases to consumers.

Sophisticated modeling that allows insurers greater control over their concentration of catastrophic risk, coupled with stringent capitalization requirements laid down by rating agencies, combined to put underwriters in a strong position to handle disaster losses, he noted.

He said another Hurricane Katrina-level event would cause stress for many claims management systems, but added that mapping technology has increased claims-handling efficiency, enabling adjusters to inspect policyholder properties in an area hit by a catastrophe before a claim is filed.

The National Oceanic and Atmospheric Administration said there is a 60-to-70 percent chance of seeing 12-to-16 named storms this season, including six-to-nine hurricanes and two-to-five major hurricanes of Category 3 or higher on the Saffir-Simpson scale. An average year calls for 11 named storms–including six hurricanes, two of which reach major status, NOAA said.

The Federal Emergency Management Agency is warning the public–especially those in Alabama, Florida, Louisiana, Mississippi and Texas–that it only takes one storm to produce serious flooding, and that flood insurance does not go into effect for 30 days after a policy's purchase.

In Florida, FEMA noted that 850,000 flood policies come up for renewal this year, and that 95 percent of flood claims come during the hurricane season there.

Meanwhile, FEMA noted that Texas has incurred $75 million in insured flood damage over the past three seasons, while Mississippi has incurred $2.4 billion in such damage over the past five years, and Louisiana suffered $408 million in damages from Hurricane Rita in 2005.

On the commercial property side, prior catastrophes, such as Hurricane Katrina, have taught risk managers their companies can be out of business if they are not prepared for a catastrophic event, according to Ken Giambagno, global leader of Marsh Risk Consulting's Forensic Accounting and Claims Services practice.

Those with recovery plans in place recuperate quickly and have already figured out where their vulnerabilities lie, he said during a discussion on preparation for the 2008 hurricane season, sponsored by Marsh & McLennan Companies.

.He added that recovery planning is not limited to a company's direct impact from a catastrophe, but also how a catastrophe affecting a supplier's facility needs to be accounted for, and including development of alternative resources.

On May 31, the first named storm–Arthur–formed for the 2008 Atlantic Hurricane season, affecting the Southern Yucatan Peninsula, bringing heavy rains to parts of Belize and Mexico. The storm broke up by late night on June 1.

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