Look Out For Hurricane Sammy!

The National Weather Service finally got around to naming a storm system after me–Hurricane Sam, which would be the 18th such event of 2009. Let's hope we don't get that far down the list this year, because if we do, that means we're having a terrible catastrophe season, huge insured losses and the end of the soft market–at least for property risks.

The weather service predicts a “near-normal” hurricane season, citing a 70 percent chance there will be at least nine named storms.

If they are wrong, however, and we get past Ana, Bill, Claudette, Danny, Erika, Fred, Grace, Henri, Ida, Joaquin, Kate, Larry, Mindy, Nicholas, Odette, Peter and Rose to get to Sam, we're all in big trouble. (We'd be in an even deeper fix if we go beyond Hurricane Sammy to Teresa, Victor and Wanda!)

In commenting on the property and casualty insurance industry's first-quarter results earlier this week, Insurance Information Institute President Bob Hartwig cited lower cat losses as one of the few bright spots in an otherwise grim report–down $600 million (or 17 percent) from a year ago to $2.9 billion. He noted that the second quarter has been relatively quiet as well for disaster losses.

However, David Sampson, president of the Property Casualty Insurers Association of America, warned against “a genuine risk of complacency that could have disastrous consequences.”

Mr. Sampson is absolutely right in his calls for everyone to start preparing NOW for a potentially catastrophic storm.  

“The hurricane season has just started,” he pointed out, while reminding everyone that “it just takes one storm” like Hurricane Andrew, Ike or Katrina to “disrupt millions of lives and cause tens of billions of dollars in damages.”

He threw down the gauntlet, declaring that “now is the time for all of us–insurers, regulators, legislators, businesses and consumers–to take the steps that need to be taken to make sure we'll be prepared when the next big storm hits.”

While Mr. Sampson's logic should be self-evident and compelling, it amazes me how quickly we all fall back into old, bad habits when it comes to risk management, loss control and mitigation.

Lawmakers in particular have notoriously short memories. Just look at the mess in Florida in terms of cobbling together an effective cat insurance system, and the failure of Congress to address the need for a national cat fund of some sort.

In any case, as “cool” as it might be to have a monster storm named after me, I'll be glad if Hurricane Sam never takes shape, and if it does, that it steers clear of the U.S. shoreline.