According to the property claims services division of the Insurance Services Office (ISO), U.S. property insurers have received more than one million claims related to 15 weather related catastrophes since April 1 and paid a total of approximately $5.5 billion. The cost of catastrophe claims in the second quarter equals approximately 75 percent of the catastrophe claims paid during 2007 and could result in an underwriting loss for the industry. 

Insurers have continued to lower rates, so their resources for paying claims has declined.  Rich Halberg, a spokesman for Allstate Corp., said that the quarter has been busy. An event that results in more than $25 million in insured losses and causes a major disruption is defined as a catastrophe by ISO. This year’s catastrophes have included tornadoes, severe storms, hail, flooding and wildfires. The pricing cycle over the last two years has caused a double-digit decline in some policy premiums, putting pressure on insurers’ profit margins. The Property Casualty Insurers Association of America (PCI) reported a combined ratio of 99.9 percent for the industry in the first quarter.

July 2, 2008