Losses Mount

If current projections prove accurate, U.S. P&C insurers will be digging deep into their pockets to pay third-quarter catastrophe losses.

According to a preliminary analysis by ISO's Property Claim Services (PCS) unit, insurers will dole out an estimated $11.5 billion to homeowners and businesses to cover third-quarter property losses. The losses stem from a total of 11 catastrophes in 22 states, which represents the fourth largest insured property loss in a third quarter since 1998.

PCS estimates the 11 catastrophes of third-quarter 2008 generated 1.7 million claims. Of the 11 catastrophes, six were caused by severe weather — wind, hail, tornadoes, and flooding. Five resulted from tropical systems and hurricanes.

The 22 affected states ranged from New Mexico to North Dakota to Virginia. The five states with the greatest insured losses were Texas ($6.4 billion), Louisiana ($1.9 billion), Ohio ($1.2 billion), Kentucky ($400 million), and Illinois ($370 million).

“These figures indicate that tropical systems can reach well inland and inflict extensive property damage, an often-overlooked fact,” said Gary Kerney, assistant vice president, PCS. “Although the current estimates of insured property damage are not record-setting, the frequency of events continues a trend that has occurred all year: a high number of events coupled with significant insured losses.”

Through the first three quarters of 2008, ISO's PCS unit has declared 36 catastrophes. Those catastrophes have caused an estimated $22.1 billion of insured property damage and resulted in approximately 3.7 million claims. 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.