Claims News Service, Dec. 20, 9:20 a.m. EST -- Windstorm-exposed coastal and inland properties need to become better prepared for storms and hurricanes, according to members of the Casualty Actuarial Society.
The organization, which provides education and research to help its members better evaluate hazard risks, recently held their annual meeting in Baltimore, Md.
Panelists from the conference stated that they believe hurricane anomalies experienced in the 2004 and 2005 hurricane seasons are inevitable over the long term. They assert that actuarial models already include worse storms in their ultimate scenarios.
Michael A. Walters, Consulting Actuary, Tillinghast - Towers Perrin, said in a release that while the insurance industry will ultimately pay out record claims of some $50 billion from Hurricane Katrina alone, the solidity of the industry remains strong because of worldwide risk-transfer and risk-spreading measures put in place after the last two mega-catastrophes: Hurricane Andrew and the 9/11 terrorist attack.
Future challenges, said Walters, include deciding how best to apportion the pricing so that those most at risk are not overly subsidized by those who are not. Much more needs to be done to mitigate the hurricane risk through construction improvements and retrofitting, but without recognition of the true expected cost of hurricanes and a regulatory willingness to include this cost in the charged rates, insureds may find themselves without adequate incentive to invest in such upgrades.
In a press release from CAS, Laurie Johnson, Vice President, RMS, stated that catastrophe modelers have recognized changes in weather patterns that have helped produce record losses. She also said that the possibility of hurricane clusters, such as the four storms that struck Florida in 2004, must be accounted for in the catastrophe models although clusters of intense landfalling storms are relatively rare.
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