NU Online News Service, Aug. 13, 3:42 p.m. EDT
Ninety-eight percent of the 1.7 million Hurricane Katrina-related claims were settled within a year, a new white paper said.
The Property Casualty Insurers Association of America (PCI) released a white paper, titled "The Hurricane Katrina Experience–A Property Casualty Insurance Perspective: Five Years Later," that highlights the damage caused by Katrina and steps insurers are taking to manage catastrophic risks more effectively.
PCI said that insured losses resulting from Katrina and the New Orleans flood exceeded $45.9 billion (adjusted to 2010 dollars), which is nearly double the amount of insured losses caused by Hurricane Andrew in 1992–the second most costly natural disaster in the U.S.
But despite losses from Katrina, PCI said the p&c insurance industry has emerged on solid footing.
The industry policyholder surplus, or statutory net worth, used to measure insurance capacity reached its peak of $537.2 billion at year-end 2007.
During 2008, surplus dropped to $474.7 billion due to the financial crisis and natural catastrophes, such as Hurricane Ike, but rebounded to $531.6 billion at year-end 2009.
In addition, p&c incurred losses totaling $254.6 billion in 2009 were refunded to U.S. residents and businesses due to strong surplus levels.
PCI also noted that in 2009, the rate of return on average policyholder surplus–a measure of the industry's overall profitability–was 5.8 percent, up from 0.6 percent in 2008.
Because of their returns, PCI said p&c insurers invested $375.6 billion in municipal bonds in 2008, which will help build capital to finance affordable housing, education, health care facilities, and transportation authorities throughout the country.
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