P-C 2nd-Quarter Cat Losses Were Low

U.S. property-casualty insurers sustained $2.18 billion in second-quarter losses from six catastrophes–among the lowest number of such events in years, said Property Claim Services.

An industry representative said as a consequence property insurance availability should improve and rates should decline.

The estimated total losses were the third lowest insured losses over the past 10 years, according to PCS, the subsidiary of Insurance Services Office in Jersey City, N.J.

The loss frequency this quarter ties 2004, which experienced $2.33 billion in insured losses that period, PCS said.

The lowest loss frequency years were 2005 ($930 million in insured loss) and 2003 ($5.05 billion in insurance loss).

The six catastrophes in 25 states this year have generated 504,000 claims, bringing the estimated number of claims for the year so far to 709,000, PCS reported.

Texas topped the list of the five most severely affected states at $435 million. Minnesota was second at $322 million, with Kansas at $210 million, New Jersey at $160 million and New York at $130 million.

PCS said the costliest event of the quarter–involving strong winds, large hail, tornadoes and flooding–was in mid-April. The event affected 18 states and Washington, D.C., causing $1.23 billion of insured property damage.

PCS defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of policyholders and insurers.

So far this year, the industry has suffered $3.4 billion in catastrophe losses from a total of 13 events.

PCS explained that its estimates represent anticipated insured loss on an industrywide basis arising from catastrophes. Estimates reflect the total insurance payment for personal and commercial property lines of insurance covering fixed property, personal property, vehicles, boats, related property items, business interruption and additional living expenses. The estimates exclude loss adjustment expenses.

“Low catastrophic losses will almost certainly contribute to even more competitive conditions in many primary and reinsurance markets,” commented Joseph J. Annotti, senior vice president, public affairs for the Des Plaines, Ill.-based Property Casualty Insurers Association of America, in an e-mail. “This may help enhance the availability and affordability of property insurance in some areas that are currently experiencing tight market conditions.

“However, despite the drop in the number and severity of catastrophic events early in 2007, the potential for larger and more frequent events is a reality that our nation and the insurance industry must prepare for,” Mr. Annotti continued. “It takes only one major disaster to erase the relative quiet of the past year.”