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Natural Catastrophe Response

Last Updated 9/20/18

The economic cost of natural disasters has an immense impact on the U.S. economy. The cost is growing steadily, particularly as the frequency and severity of natural disasters has increased due to changing climatic conditions. In terms of insured losses, if one were to look at the ten costliest disasters in United States history, eight were hurricanes, six of which have taken place since 2000—Hurricane Katrina ($41.1 billion in 2005); Hurricane Ike ($12.5 billion in 2008); Hurricane Wilma ($10.3 billion in 2005); Hurricane Charley ($7.5 billion in 2004); Hurricane Ivan ($7.1 billion in 2004); and Hurricane Rita ($5.6 billion in 2005). Moreover, while the United States has not had a major land-falling hurricane since Wilma, or a major earthquake since Northridge ($12.5 billion in 1994), the rising likelihood of extreme and catastrophic weather events makes monitoring the frequency and impact of natural disasters a critical regulatory function.

The 2017 Atlantic hurricane season is now among the top 10 all-time most active seasons on record, thanks to a furious stretch of long-lived, destructive hurricanes occurring from mid-August through September. Final numbers are not in for 2017, however, economic losses in the U.S. are estimated to total $330 billion and insured losses are estimated to total $135 billion. These numbers are up substantially from the total insured losses occurring in 2016 totaling $23.8 billion and economic losses of $210 billion.

Hurricane Harvey was the costliest natural disaster in the U.S. in 2017, with overall losses of around $85 billion. Shortly following Hurricane Harvey was Hurricane Irma. While economic losses were lower for Hurricane Irma, it was the costliest natural disaster for insurers, with insured losses of $32 billion. Hurricane Maria followed Hurricane Irma causing extreme damage to the Caribbean Islands. Economic losses in Puerto Rico, the area hit the hardest by Hurricane Maria have numerous estimates. While RMS estimates insured losses to be between $15 and $30 billion, AIR Worldwide estimates insured losses resulting from Hurricane Maria to range from $40 to $85 billion, with Puerto Rico accounting for more than 85% of these losses. Significant amounts of property damage in Puerto Rico are not insured, limiting industry losses, as well as being the reason for significantly lower insured losses than overall.

During 2017, California experienced insured losses exceeding $9.4 billion. California continues to experience damage resulting from wildfires into 2018. California's October 2017 wildfires are now counted among the most deadly and costly in the state's history.

Insurance plays a large part in helping with the economic recovery following catastrophic events. The 2004 and 2005 hurricane seasons brought unprecedented devastation to the gulf coast causing over 1,200 deaths, seven million insurance claims, and almost $100 billion in insured losses. 2017 brought Hurricanes Harvey, Irma, and Maria causing even more damage in 2017.

NAIC members have taken an active role in educating Congress and providing technical feedback on various proposals regarding natural catastrophes. Over the last several years, NAIC members have met with members of Congress and have regularly testified on these important issues, stressing the important role of the states in effectively managing a natural disaster response. In addition, the NAIC has developed consumer resources specific to preparing for disaster. The Free Home Inventory app helps consumers create a home inventory, which is one of the best ways consumers can insure adequate coverage on their home and belongings, as well as to make filing an accurate claim easier.

 

Disaster response video thumbnail 2016
2016
Regulators Respond to Disasters – NAIC Fall National Meeting 2016

This video shows disasters and response to wildfires in Tennessee, a tornado in Alabama and earthquakes in Oklahoma. It features NAIC President-Elect and Tennessee Insurance Commissioner Julie Mix McPeak.
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Disaster response video thumbnail 2015
2015
Regulators Respond to Disasters – NAIC Fall National Meeting 2015

NAIC members representing South Carolina, California, Texas and Washington discuss devastating floods and fires in 2015.
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2013
Regulators Respond to Disasters in Arizona and Oklahoma

Arizona Insurance Director Germaine Marks and Oklahoma Insurance Commissioner John Doak discuss disasters impacting insurance consumers in their states and the response coordinated by their departments, fellow regulators and the National Association of Insurance Commissioners (NAIC).
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2012
Regulators Respond to Superstorm Sandy

Members of the NAIC discuss the impact of Superstorm Sandy in 2012. They describe efforts of state regulators to address the needs of insurance consumers and the market in the wake of historic losses.
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2011
Regulators Respond to Disasters

Members of the NAIC discuss the impacts of natural disasters in their states during 2011. They describe efforts of state regulators to address the needs of insurance consumers and the market in the wake of historic losses.
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