Multiple Hurricanes The Wave Of Florida Future?

The magnitude of Hurricane Andrew in 1992 encouraged insurers and reinsurers to focus on severity, rather than frequency in modeled loss scenarios.

"The abnormal sequence of four successive hurricanes and the unique nature of Charley is likely to encourage users to review a wider range of scenarios and the data from the unusual concentration of events in 2004, and will affect model results," the report noted.

But other experts have taken issue as to how abnormal these multiple storms are.

According to analysis conducted by Boston-based AIR Worldwide, insurers should expect to see four hurricanes make landfall in the United States in one season once every 12 years.

Even the industry's expectation of such an occurrence happening once every 150 years in one state is still within a range where most insurance companies can manage their catastrophic risk.

While most of the industry effort this year has been switching its focus from the impact of one giant event to that of a series of multiple smaller ones, AIR senior vice president Uday Virkud said the multiple scenarios are not that unusual "when compared to the long-term historical experience."

As for pricing, the Benfield report asserted that it is still too early to draw definite conclusions, as companies are still assessing their losses.

"But cumulative natural catastrophe losses for 2004 are already at the top of the historic range and this is likely to halt the decline in catastrophe pricing with upward pressure returning in loss affected areas," the report said.