Related: Read the article “Comity in Congress?” by Ted Besesparis.

According to The Joplin Globe newspaper, in just the months of June and July the value of the permits for residential and commercial work issued by the city of Joplin exceeded the value of all permits issued in fiscal year 2010 by nearly $18.5 million. Prior to the tornado there had been 16 new homes started in the previous 6 month. In July alone, about 60 permits for new home construction were issued.

Comeback stories like those in Joplin, fueled by the insurance industry response to catastrophe, are being repeated countless times across the nation. This is particularly true this year as the U.S. has experienced an unprecedented string of natural disaster including winter storms, tornadoes, earthquakes, floods and hurricanes.

Direct insured losses from U.S. natural catastrophes in the second quarter of 2011 are estimated to be as much as 273 percent higher than the 8-year second-quarter average. Direct insured losses from global natural catastrophes in the first quarter of 2011 are estimated in the range of 618 percent to 1185 percent higher than the 10-year first-quarter average.

Insured loss estimates for the first half of 2011's U.S. storms are outpacing the previous 8-year average. AIR Worldwide estimates that the massive winter storm system impacting 30 U.S. states and Canada on Feb. 1 to 2, 2011, resulted in between $790 million and $1.4 billion in insured losses to homes, commercial structures and automobiles. Images of hundreds of vehicles stranded on Lake Shore Drive in Chicago made a lasting impression of the magnitude of this winter storm.

April and May saw severe weather activity in the Midwest, Southeast and the plains states. Notable severe weather activity included tornadoes in Raleigh, N.C. (April 16), St. Louis (April 22), Little Rock, Ark. (April 25), Tuscaloosa, Ala. (April 27), and Joplin, Mo. Estimated insured losses from these severe weather outbreaks ranged between $6 and $8 billion.

According to the National Weather Service, in the second half of May almost a year's worth of rain fell over the upper Missouri River basin, leading to flooding. Extensive flooding along the Missouri, Mississippi and Ohio Rivers has caused widespread flood damage to property owners in Arkansas, Illinois, Indiana, Louisiana, Mississippi, Missouri, Nebraska, North Dakota and South Dakota.

Wildfires this year have burned across the southern U.S. from Florida to Arizona. The Arizona Wallow fire was the largest in Arizona history. Exceptional drought conditions cover more than 75 percent of Texas (201,436 square miles). Drought conditions have been so harsh in some locations that at one time it would have taken as much as 20 inches of precipitation in one month to end the drought. In Oklahoma, 100 percent of the state has suffered from moderate-exceptional drought. The prolonged drought in Texas and Oklahoma, coupled with extreme heat (July was the warmest month ever on record), contributed to conditions being ripe for wildfires. Around Labor Day, wildfires east of Austin burned at least 700 homes, forcing local officials to issue evacuation orders. According to the National Oceanic and Atmospheric Administration (NOAA), drought and wildfires in the Southern Plains and Southwest regions have resulted in more than 2,000 homes and structures being lost so far in 2011. In addition, NOAA estimates direct losses to agriculture, cattle and structures at more than $5 billion.

In other notable news, Hurricane Irene made landfall near Cape Lookout, N.C., on Aug. 27 as a Category 1 storm with maximum sustained winds of 85 mph. Subsequent to making landfall, Irene proceeded northward up the East Coast, resulting in record flooding in New Jersey, New York and Vermont. Approximately 3.5 million households were left without power. Early estimates of insured losses from Hurricane Irene ranged from $3 billion to $6 billion.

Despite the significant impact natural disasters will have this year, the insurance industry continues to have the financial strength to settle claims and assist policyholders in their time of greatest need.

Related: Read the article “Legislature Wrap Up” by Neil Alldredge.

In each and every event, insurers activated quick response mobile claim units with specially trained employees dedicated to helping policyholders file claims and begin the recovery process.

However, the sheer number of events this year has called attention to how few consumers regularly review or understand their insurance policies. This was particularly true for many in the Northeast who have experienced few hurricanes or tropic storms. Questions about flood insurance, deductibles and what exactly is and isn't covered highlighted what we all know: Too often consumers realize what their policy covers only after a catastrophic loss. While agents and brokers play an important role in answering the questions about coverage, the events of this year demonstrate the ongoing need to find more effective ways of educating consumers.

Disasters such as the nation has experienced this year often spur action by public policymakers. In the wake of the tornadoes that tore through Alabama this spring, Gov. Robert Bentley named 30 people to a commission whose goal is to examine and make recommendations on steps that can be taken to help make insurance more affordable. The Governor's Affordable Insurance Commission presents a real opportunity for a productive discussion of the Alabama homeowners' insurance market.

In the past, building codes and other insurance-related issues were largely viewed as coastal concern. Now there is the opportunity to demonstrate how implementing uniform statewide building codes, mitigation grants and income tax deductions for storm proofing homes, providing premium tax credits for insurers to encourage writing additional policies through the private market and combating insurance fraud can foster a healthy, vibrant, and attractive insurance market that benefits all Alabama consumers.

On the legislative front, lawmakers in Alabama this past session took several positive steps to assist homeowners. Republican State Sen. Ben Brooks' legislation (SB 389) to establish the “Strengthen Alabama Homes Program” within the insurance department became law. The program provides funding for retrofitting insurable property to resist future loss due to hurricanes or windstorms. Another Brooks-introduced bill (SB 395) that provides an income tax deduction for retrofit improvements to homes to help withstand hurricane and windstorm damage was enacted. The Legislature also passed Republican Sen. Slade Blackwell's bill (SB 269) which is intended to protect Alabamians from abuse and fraud by strengthening the standards and requirements for independent insurance adjusters.

In Florida, Gov. Rick Scott signed SB 408, a sweeping property insurance reform bill intended to address the rising cost of property coverage in the state. The bill, sponsored by Republican Sen. Garrett Richter and Republican Rep. John Wood is a major step toward restoring private, market-based solutions. The fact that the House supported the bill 85-33, and the Senate passed it 26-11, demonstrated broad support for moving Florida's insurance market forward.

SB 408 will protect insurance consumers by addressing many of the cost drivers that push rates higher. The bill will make it an unfair and deceptive trade practice for public adjusters to mislead people at a time when they need help the most. It also will cap public adjuster fees—meaning more settlement money in the hands of consumers—while taking measures to ensure that properties are properly repaired, meaning safer homes and better resale values.

Related: Read David Golden's article “Civil Justice Reforms.”

This law will help restore a healthy, stable and competitive insurance market that provides economic security and peace of mind to policyholders. It is an excellent example of how government, industry and the people of Florida can work together to stabilize and improve the state's insurance market. It is a common-sense approach that promotes long-term, market-based solutions.

In Mississippi, Republican Rep. Scott DeLano's bill (HB 1199), which creates the Mississippi Windstorm Mitigation Coordinating Council and corresponding fund to assist in the development of a comprehensive approach for windstorm mitigation, became law. It authorizes the use of the municipal fire protection fund for windstorm mitigation and authorizes the use of county insurance rebate monies to be used for windstorm mitigation.

These bills represent positive steps forward in dealing with the risk of natural disasters. Mitigation grants and income tax deductions create incentives for homeowners to protect one of their most valuable assets, their home. According to FEMA from a study by the National Institute for Building Sciences, a dollar spent on mitigation saves society an average of $4, with positive benefit-cost ratios for all hazard types studied. In addition to savings to society, the Federal Treasury can redirect an average of $3.65 for each dollar spent on mitigation resulting from disaster relief costs and tax losses avoided.

Over the long term, by making structures more resistant to damage, a property owner will have fewer insurance claims. Less property damage following a natural disaster speeds up the recovery process and causes less disruption for property owners. This also puts less pressure on the insurance marketplace and can minimize the impact that a natural disaster could have on premiums and the availability of insurance. PCI looks forward to working with state legislators on advancing legislation that will promote and protect the viability of the private insurance market.