NU Online News Service
U.S. insured losses from storms this year have a 5 percent chance of exceeding the Hurricane Katrina $38.1 billion total in 2005, a catastrophe modeling executive warned at an industry conference yesterday
That forecast came from Karen Clark, president and chief executive officer of AIR Worldwide Corp, according to a report of her remarks by the Insurance Services Office.
Ms. Clark spoke at a catastrophe conference in Baltimore, organized by Property Claim Services, a unit of Jersey City-based ISO.
In her talk, she also predicted catastrophe losses "will double about every 10 years due to increases in the numbers and values of properties at risk."
While there is debate whether warming sea surface temperatures that influence hurricane activity are cyclical or a long-term trend, the modeling expert noted that the continuing main driver of catastrophe losses is exposure growth.
The head of AIR said aggregated commercial and residential replacement costs have more than doubled in the United States over the past 10 years. "Changes in the cost per square foot of residential buildings are up 40 percent nationwide," she said.
A catastrophe event resulting in insured losses exceeding $100 billion "is not hard to imagine," said Ms. Clark. She cited the possibility of a major storm making a direct hit on Miami or sweeping through northern New Jersey, New York, Long Island and New England.
Andrew Castaldi, senior vice president, Swiss Re, said catastrophe modeling has helped the industry cope with record-setting catastrophe losses. Though relatively new, catastrophe modeling technology has proven itself an important tool in minimizing the economic impact of major hurricanes, he said.
PCS said some 300 catastrophe claims managers, adjusters, reinsurers and other property-casualty industry professionals are attending the three-day conference.
Other scheduled speakers include Mississippi Deputy Insurance Commissioner Lee Harold speaking on rebuilding in the aftermath of Katrina, and Nicholas K. Coch of the School of Earth and Environmental Sciences, Queens College, CUNY addressing northeastern U.S. unique vulnerability to hurricane destruction.
Conference organizer Gary Kerney, head of ISO's Property Claims Services unit, said the conference gives attendees know-how "to help prepare for the next 'big one,' which we all know is coming."
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