This Year Could Bring Hurricanes Stronger Than Katrina
Meteorologists predict that the 2007 Atlantic hurricane season will be much more active than the average 1950-2000 seasons. It is estimated that 2007 will have about 9 hurricanes, 5 being intense (Category 3-4-5) hurricanes. This comes as no surprise to insurers as the number of natural and man-made catastrophes has been increasing on a global scale for 20 years.
In fact, tropical cyclone activity in the mid-1990s entered an active phase that could last well into the 2030s. There are already as many major storms in 2000-2005 as in all of the 1990s. Seven of the 10 most expensive hurricanes in U.S. history occurred in the 14 months from August 2004-October 2005. In 2005, hurricanes Katrina, Rita, Wilma and Dennis produced a record $61.2 billion in insured losses and 3.3 million in claims. While 2005 was by far the worst year ever for insured catastrophe losses in the U.S., future storms could prove even costlier, reaching upwards of $110 billion.
Disaster losses along the coast are likely to escalate in the coming years because of huge increases in development and soaring property values. One catastrophe modeling company predicts that losses will double every decade or so due to growing residential and commercial density and more expensive buildings. Total value of insured coastal exposure is more than $7 trillion. Florida and New York lead the way for insured coastal property at more than $1.9 trillion each. After Florida, many Northeast states (such as NY, MA, and CT) have among the highest coastal exposure as a share of all insured exposure in the state.