Disaster insurance2011 natural disasters cost U.S. insurers more than $32 billion

Published 3 January 2012

2011 saw U.S. government set record for disaster declarations; the severity of the disasters set a record as well, with twelve separate billion-dollar weather/climate disasters in 2011, with an aggregate damage total of approximately $52 billion (this number reflects both insured and uninsured losses)

Tornadoes were the disaster stars of 2011, but there were many others // Source: 2012en.ro

Private sector insurance companies will pay more than $32 billion in claims to help people rebuild homes and businesses damaged or destroyed by natural disasters in 2011, a record year for federal disaster declarations, according to the Insurance Information Institute (I.I.I.). 

“Catastrophes striking the United States in the first nine months of 2011 caused $32.6 billion in direct insured losses, nearly double the $18.6 billion in catastrophe-caused direct insured losses insurers generally incur over the first nine months of any given year,” said Dr. Robert Hartwig, CPCU, the president of the I.I.I. and an economist, citing figures released earlier this month by ISO’s Property Claim Services. “The $32.6 billion figure doesn’t even include the significant insured losses which arose after the pre-Halloween snowstorm, which caused enormous damage to multiple states along the Atlantic seaboard. Coupled with other events in 2011’s fourth quarter, direct insured losses could exceed $35 billion this year.”

 Despite the frequency and severity of 2011’s natural catastrophes in the United States, policyholders’ surplus — insurers’ net worth measured according to Statutory Accounting Principles — fell only 4 percent to $538.6 billion as of 30 September 2011 as compared to $559.2 billion at year-end 2010.

 “The policyholders’ surplus number is a sure sign that U.S. property/casualty insurers remain well-capitalized, and capable of paying future claims,” Dr. Hartwig stated.

The federal government declared on ninety-nine separate occasions this year that a major disaster existed after a natural disaster had occurred, easily breaking the previous record (81), which was set in 2010, the I.I.I. said. The federal government’s designation makes federal funding available to individuals and businesses impacted adversely by the named disaster. The most recent declaration was on 22 December 2011, and had its origins in the severe snowstorms and flooding which occurred in Alaska between 8 and 10 November 2011. The ninety-nine disaster declarations are nearly triple the average of thirty-four per year dating back to 1953.

Moreover, the federal National Oceanic and Atmospheric Administration (NOAA) announced in December that the United States was the site of twelve separate weather/climate disasters, each of which caused at least $1 billion in aggregate damage in 2011. The previous record, set in 2008, was nine, according to NOAA.

To date, the U.S. set a record with twelve separate billion-dollar weather/climate disasters in 2011, with an aggregate damage total of approximately $52 billion (this number reflects both insured and uninsured losses). These events were:

  • The Groundhog Day Blizzard (29 January-3 February ): This large winter storm impacted numerous central, eastern and northeastern states and brought Chicago to a virtual standstill.
  • Midwest/Southeast Tornadoes (4-5 April): Forty-six tornadoes swept through a total of 10 central and southern states.
  • Southeast/Midwest Tornadoes (8-11 April): Fifty-nine tornadoes are believed to have formed within this timeframe, hitting nine central and southern states.
  • Midwest/Southeast Tornadoes (14-16 April): About 160 tornadoes are estimated to have hit 10 states in the central and southeastern portions of the United States.
  • Southeast/Ohio Valley/Midwest Tornadoes (25-30 April): More than 300 tornadoes caused 321 deaths in the United States in late April, with 240 of the fatalities occurring in Alabama.
  • Midwest/Southeast Tornadoes (22-27 May): The EF-5 tornado which struck Joplin, Missouri on 22 May was the single deadliest tornado (158 fatalities) to hit the United States in decades. Fourteen other central and southern states were hit by this tornado outbreak in late May.
  • Midwest/Southeast Tornadoes and Severe Weather (18-22 June): Eighty-one tornadoes tore through seven central U.S. states while wind and hail caused severe damage in four southeastern states.
  • Southern Plains/Southwest Drought, Heat Wave and Wildfires(Spring-Summer):Texas, Oklahoma, New Mexico, Arizona, southern Kansas, western Arkansas, and Louisiana were the regions of the United States hardest hit by these conditions.
  • Mississippi River Flooding (spring-summer): Unusually heavy rains, combined with a melting snowpack, caused severe flooding along the Mississippi River and its tributaries.
  • Upper Midwest Flooding (spring-summer): These floods prompted the evacuation of nearly 11,000 people in Minot, North Dakota, as the Souris River overflowed. Numerous levees were breached along the Missouri River, flooding thousands of acres of farmland as well.
  • Hurricane Irene (20-29 August): Irene made landfall in North Carolina as a Category 1 hurricane and moved northward, causing major flooding in New Jersey, upstate New York, and Vermont.
  • Wildfires in Texas, Arizona and New Mexico (spring-fall): The Bastrop Fire in Texas in early September was one of the most destructive wildfires in Texas’ history and destroyed more than 1,500 homes. Meanwhile, Arizona’s Wallow Fire burned more than 500,000 acres in June, making it the largest wildfire on record in the state’s history.
  • Finally, New Mexico’s Las Conchas Fire was also one for the record books, impacting more than 150,000 acres and coming close to Los Alamos National Laboratory in June.