The Shifting Natureof Catastrophic Riskin the United States

Casualty Actuaries Special Interest SeminarOctober 5, 2012 Baltimore, MD

Steven N. Weisbart, Ph.D., CLU, Senior Vice President & Chief EconomistInsurance Information Institute 110 William Street New York, NY 10038Office: 212.346.5540 Cell: (917) 494-5945 stevenw@iii.org www.iii.org

2

Until Recently (or so we thought),

Only Hurricanes Caused Disasters

Only a Small Part of the U.S. (the Gulf and South Atlantic Coasts) Was Vulnerable

Only June-November (Hurricane Season) Was Worrisome

Only Wind Damage Was Likely

3

Are More Catastrophes Occurring?

3

It Certainly Seems That Way

4

7 of the 10 Most Costly Disastersin U.S. History Were Hurricanes

(Insured Losses,2011 Dollars, $ Billions)

*Losses will actually be broken down into several “events” as determined by PCS. Includes losses for the period April 1 – June 30.Sources: PCS; Insurance Information Institute inflation adjustments.

$21.3$24.0 $25.0

$47.6

$19.1$13.1$11.9

$9.0$8.5$7.7

$0$5

$10$15$20$25$30$35$40$45$50

Hugo(1989)

Ivan (2004)Charley(2004)

Wilma(2005)

Ike (2008)Northridge(1994)

SpringTornadoes& Storms*

(2011)

9/11 Attack(2001)

Andrew(1992)

Katrina(2005)

Earthquake

There have been larger disasters in our history, but none more costly than these, due to growth of exposures and insurance coverage

Tornadoes

Terrorism

5

15 Costliest World Insurance Losses, 1970-2011*

Insured Losses, 2010 Dollars,$ Billions

*Through June 20, 2011. 2011 disaster figures are estimates; Figures include federally insured flood losses, where applicable.Sources: Swiss Re sigma 1/2011; AIR Worldwide, RMS, Eqecat; Insurance Information Institute.

$14.0 $14.9 $16.3$20.5 $20.8 $23.1 $24.9

$35.0

$72.3

$11.3$10.0$9.3$9.0$8.0$8.0

$0

$10

$20

$30

$40

$50

$60

$70

$80

ChileQuake(2010)

Hugo (1989)

TyphoonMirielle(1991)

Charley(2004)

NewZealandQuake(2011)

Rita (2005)

Wilma(2005)

Ivan (2004)

SpringTornadoes

(2011)

Ike (2008)

Northridge(1994)

WTCTerrorAttack(2001)

Andrew(1992)

JapanQuake,

Tsunami(2011)*

Katrina(2005)

Taken as a single event, the Spring 2011 tornado season

would be the 7th costliest event in global insurance

history

3 of the 11 most expensive

catastrophes in world history occurred in the past 9 months

6

$12.

3

$10.

7

$3.7

$14.

0

$11.

3

$6.0

$33.

9

$7.4 $1

5.9

$32.

9

$71.

7

$10.

3

$7.3

$28.

5

$11.

2

$14.

1

$32.

3

$9.3$1

3.7

$4.7 $7

.8

$36.

9

$8.6

$25.

8

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12*

US Insured Catastrophe Losses, Yearly, 1989-2011*

*Munich Re estimate for 2012 first half.Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01 ($25.9B 2011 dollars). Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B ($15.6B in 2011 dollars.) Sources: Property Claims Service/ISO; Insurance Information Institute.

US CAT losses in 2011 were the 5th highest in US historyon an inflation-adjusted basis

CAT Losses Surged on

Record Tornado Activity

$ Billions of 2011 dollars

2000s: A Decade of Disaster

2001-2010: $202B (up 122%)

1991-2000: $91B

Number of Federal Major Disaster Declarations, Yearly, 1953-2012*

13 1

7 18

16

16

7 71

21

22

22

02

52

51

11

11

92

91

71

74

84

64

63

83

02

2 25

42

23

15

24

21

34

27 28

23

11

31

38

45

32 3

63

27

54

46

55

04

54

5 49

56

69

48 5

26

37

55

98

19

92

7

43

0

10

20

30

40

50

60

70

80

90

100

53

55

57

59

61

63

65

67

69

71

73

75

77

79

81

83

85

87

89

91

93

95

97

99

01

03

05

07

09

11

*Through August 26, 2012. Sources: Federal Emergency Management Administration at http://www.fema.gov/disasters?field_state_tid=All&field_disaster_type_term_tid=All&field_disaster_declaration_type_value=All&items_per_page=60&=GO ; Insurance Information Institute.

The number of federal disaster declarations set

a new record in 2011.

From 1953-71, the average number of declarations

per year was 16.5.

The average number from

1996-2010 was 58.4.

The average number from

1972-1995 was 31.7.

Some federal major disaster declarations cover the same storm in separate states; for example, there were 3 declarations for a “severe storm” that

struck DC, Virginia, and West Virginia on June 29-July 1, 2012

Nu

mb

er

Geophysical (earthquake, tsunami, volcanic activity)

Climatological (temperature extremes, drought, wildfire)

Meteorological (storm)

Hydrological (flood, mass movement)

Natural Disasters in the United States, 1980 – 2011 Number of Events (Annual Totals 1980 – 2011)

Source: MR NatCatSERVICE 8

37

8

51

2

50

100

150

200

250

300

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

We’ve had at least 150 natural disaster events every year since 2006.

Before 2006 the number of natural

disasters never topped 140 in a year; the 1990-

2005 average was about 100.

Natural Disasters in the United States, 1980 – 2012 Number of Events, January – June only

Meteorological events(Storm)

Hydrological events(Flood, mass movement)

Climatological events(Extreme temperature, drought, forest fire)

Geophysical events(Earthquake, tsunami, volcanic eruption)

© 2012 Munich ReSource: MR NatCatSERVICE

1

61

6

22

20

40

60

80

100

120

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

First Six Months 2012 90 Events

9

The new normal

The old normal

An Upward Trend: Losses Due to Natural Disasters in the US, 1980–2011

11

Overall losses (in 2011 values) Insured losses (in 2011 values)

Source: MR NatCatSERVICE © 2011 Munich Re

(2011 Dollars, $ Billions)

2011Overall Losses: $72.8 BInsured Losses: $35.9 B

2011 was the 5th most expensive year onrecord for insured US catastrophe losses.

Roughly half of the overall cost of catastrophes in the US was covered by insurance in 2011.

(Overall and Insured Losses)

12

What Happened in 2011and the 1st Half of 2012

Lately, Insured Claims from Tropical Storms in the US Have Decreased, but Other Causes of Catastrophes

Have Risen

12

Natural Disastersin the United States, 2011

13Source: MR NatCatSERVICE *Includes flood losses insured through the NFIP.

Natural Disastersin the United States, 2012 1st Half

14© 2012 Munich ReSource: MR NatCatSERVICE

15

US Natural Catastrophes 2012

US insured losses from the first half of 2012 totaled $9.3billion.

This was well below the $24.4b in the first half of 2011 (in 2012 Dollars).

Thunderstorms (including tornado/hail), account for almost all of this, estimated at $8.8b,

Even though claims in 2012 were 1/3 of those from 2011, the first half of 2012 was the third most costly spring thunderstorm season in US history

16

US Natural Catastrophes 2012

The Good News:Very mild winter over most of US caused only minor

winter storm losses.

Lack of heavy winter precipitation limited spring flooding.

The Bad News:

Lack of heavy winter precipitation has exacerbated drought conditions.

$500

$530

$830

$975

$980

$1,000

$1,200

$1,400

$1,510

$2,000

$5,000

$6,900

$7,300

$840

$0 $1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

Flooding, April*

Wildfire, Sep. 4-19

Thunderstorms, Apr. 19-20

Thunderstorms, Aug. 18-19

Winter Storm, Jan. 31-Feb. 3

Thunderstorms, Jul. 10-14

Texas Drought, 2011*

Thunderstorms, Jun. 16-22

Thunderstorms, Apr. 14-16

Thunderstorms, Apr. 8-11

Thunderstorms, Apr. 3-5

Hurricane Irene, Aug. 26-28**

Thunderstorms, May 20-27

Thunderstorms, Apr. 22-26

**Includes $700 million in flood losses insured through the National Flood Insurance Program.Source: PCS except as noted by “*” which are sourced to Munich Re; Insurance Information Institute.

2011’s Most Expensive Catastrophes, Based on Insured Losses

Includes roughly $2B in losses for

May 22 Joplin tornado

17

Includes $1.65B in AL, mostly in the Tuscaloosa and

Birmingham areas

18

Shifting Patterns in Insured Catastrophe Losses

Lately, Insured Claims from Tropical Storms in the US Have Decreased, but Other Causes of Catastrophes

Have Risen

18

19

Historically Most of US Insured Catastrophe Losses Came From Hurricanes and Tropical StormsHurricanes still account for the majority of the Top 15

catastrophes, but other types of catastrophes are displacing hurricanes

Thunderstorms (including tornados, large and high winds) are the leading cause of insured loss from 2008-2011 and so far in 2012

A trend/pattern appears to be emerging: More frequent and more intense thunderstorm activity

It is unclear if the recent low level of landfalling tropical cyclones is part of a trend or a longer-term oscillation in activity

The Changing Nature of Insured Catastrophe Losses in the US

20

Inflation-Adjusted U.S. Catastrophe Losses by Cause of Loss, 1990–2011:H11

0.2%

2.4%

3.4%4.9%

6.6%

8.0%

31.8%

42.7%

1.Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2009 dollars.2.Excludes snow.3.Does not include NFIP flood losses4.Includes wildland fires5.Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation.Source: ISO’s Property Claim Services Unit.

Hurricanes & Tropical Storms, $160.5

Fires (4), $9.0

Tornadoes (2), $119.5

Winter Storms, $30.0

Terrorism, $24.9

Geological Events, $18.5

Wind/Hail/Flood (3), $12.7

Other (5), $0.6

Wind losses caused the most catastrophe losses (by far), even excluding

hurricanes/TS.

Tornado share of CAT losses is rising

Since 1990, tropical activity accounted

for 42.7% of insured catastrophe losses

21

U.S. Insured Catastrophe Lossesby Cause of Loss, 2011 ($ Millions)

2.8%

1.5%5.6%

72.1%

15.4%

.Source: ISO’s Property Claim Services Unit, Munich Re; Insurance Information Institute.

Hurricanes & Tropical Storms, $5,510

Wildfires, $855

Thunderstorms (Incl. Tornadoes , $25,813

Winter Storms, $2,017

Geological Events, $50, (0.1%)Flood , $535, (1.5%) Other, $1,000

2011’s insured loss distribution was unusual, with tornado and thunderstorm claims accounting for the vast majority of loss.

Thunderstorm/ Tornado losses were 2.5 times above the

30-year average

Tropical activity accounted for just 15.4% of insured

catastrophe losses in 2011

22

Since 2008, insured thunderstorm losses totaled roughly $60 billion vs. about $20 billion for tropical events This means that insured catastrophe losses over the past 4

years have occurred predominantly in non-coastal areas

Midwest, Plains, Mid-Atlantic regions have been hit hard

Inland sections of coastal states have also been hit hard (e.g., AL, MS, NC)

Higher Catastrophe Losses Are Pressuring Property Insurance Markets Rates are rising in many areas hit hard by catastrophe

losses in recent years.

The Changing Nature of Insured Catastrophe Losses in the US (cont’d)

23

Combined Ratio Points Associated with Catastrophe Losses: 1960 – 2011*

*Insurance Information Institute estimates for 2010 and 2011 based on A.M. Best data.Notes: Private carrier losses only. Excludes loss adjustment expenses and reinsurance reinstatement premiums. Figures are adjusted for losses ultimately paid by foreign insurers and reinsurers.Sources: ISO; Insurance Information Institute.

0.4

1.2

0.4 0.

8 1.3

0.3 0.4 0.

71.

51.

00.

40.

4 0.7

1.8

1.1

0.6

1.4 2.

01.

3 2.0

0.5

0.5 0.7

3.0

1.2

2.1

8.8

2.3

5.9

3.3

2.8

1.0

3.6

2.9

1.6

5.4

1.6

3.3

3.3

8.1

2.7

1.6

5.0

2.6

4.4

9.0

3.6

0.9

0.1

1.1

1.1

0.8

0

1

2

3

4

5

6

7

8

9

10

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

The Catastrophe Loss Component of Private Insurer Losses Has Increased Sharply in Recent Decades—Only in Part Due to Tropical Activity

Avg. CAT Loss Component of the Combined Ratio

by Decade

1960s: 1.04 1970s: 0.85 1980s: 1.31 1990s: 3.39 2000s: 3.52 2010s: 6.70*

Combined Ratio Points

24

2011-12: Nowhere to Run, Nowhere to Hide

24

Most of the Country East of the Rockies Suffered Severe

Weather in 2011

25

Tornadoes, Thunderstorms,and Large Hailstorms

2012 Is Off to a Worrisome Start, But a Repeat of 2011 Is Unlikely

25

US Thunderstorm Loss TrendsAnnual Totals 1980 – 2011 vs. First Six Months 2012

Average thunderstorm losses have increased over fivefold since 1980Average thunderstorm losses have increased over fivefold since 1980

26© 2012 Munich ReSources: Property Claims Service, MR NatCatSERVICE

First Six Months 2012

$8.8 bn

Thunderstorm losses in 2011 were $25.8 billion—a record

US Thunderstorm Loss TrendsJanuary – June Only, 1980 - 2012

Thunderstorm losses for January – June 2012 were much lower than 2011,but still the third worst spring thunderstorm season loss in history.

Thunderstorm losses for January – June 2012 were much lower than 2011,but still the third worst spring thunderstorm season loss in history.

Sources: Property Claims Service, MR NatCatSERVICE 27© 2012 Munich Re

First Six Months 2012

$8.8 bn

28

1,1

33

1,1

32

1,2

97

1,1

73

1,0

82 1

,23

4

1,1

73

1,1

48

1,4

24

1,3

45

1,0

71 1

,21

6

94

1

1,3

76

1,2

64

1,1

03

1,0

98

1,6

92

1,1

46 1

,28

2

72

4

1,8

19

1,6

91

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12*

Nu

mb

er

of

To

rna

do

es

*Through June 2012, latest data after adjusting sightings to actual, as of Sept 10, 2012Source: U.S. Department of Commerce, Storm Prediction Center, National Weather Service at http://www.spc.noaa.gov/climo/online/monthly/newm.html

Increasing Variability:Number of Tornadoes, 1990 – 2012*

Insurers Expect to Pay at Least $2 Billion for the April 2011 Tornadoes in Alabama and a Similar Amount for the May Storms in Joplin

Yearly Range1990-1997: 1,082 to 1,2971998-2003: 941 to 1,424 2004-2011: 1,098 to 1,819

798

1301

854

1398

724

304

384

292

293

831 451

0 300 600 900 1,200 1,500 1,800

2007

2008

2009

2010

2011

2012

1st six months rest of year

Source: http://www.spc.noaa.gov/climo/online/monthly/newm.html ; Insurance Information Institute.

Number of Tornadoes, 1st Six Monthsof the Year vs. Full Year, 2007 – 2012

29

1,685

1,146

1,282

1,691

???

1,102

Location of Tornadoes in the US, 2011

Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 30

1,894 tornadoes killed 552 people in 2011, including

at least 340 on April 26 mostly in the Tuscaloosa area, and 130 in

Joplin on May 22

Location of Tornadoes in the US, 2012*

*Through July 4, 2012.Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2012_annual_summary.html# 31

Tornadoes killed 68 people through

July 4

Source: Property Claims Service, MR NatCatSERVICE

U.S. Winter Storm Loss Trends, 1980 – 2011

32

Insured winter storm losses in 2011 totaled $2.0 billion. Average winter storm losses have nearly doubled

since the early 1980s

Slide 32

Location of Large Hail Reports in the US, 2011

Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 33

There were 9,417 “Large Hail”

reports in 2011, causing extensive damage to homes,

businesses and vehicles

Location of Large Hail Reports in the US, 2012*

34*Through July 4, 2012.Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2012_annual_summary.html#

There were 5,452 “Large Hail”

reports through July 4, 2012,

causing extensive damage to homes,

businesses and vehicles

Location of Wind Damage Reports in the US, 2011

Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 35

There were 18,685 “Wind Damage” reports through Dec. 27, causing

extensive damage to homes and,

businesses

Location of Wind Damage Reports in the US, 2012*

36*Through July 4, 2012.Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2012_annual_summary.html#

There were 6,851 “Wind Damage” reports through July 4, causing

extensive damage to homes and,

businesses

Severe Weather Reports, 2011

37Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html#

There were 29,996 severe

weather reports in 2011;

including 1,894 tornadoes;

9,417 “Large Hail” reports

and 18,685 high wind events

Severe Weather Reports, 2012*

38*Through July 4, 2012.Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2012_annual_summary.html#

There were already 13,177 severe weather reports through

July 4; including 874

tornadoes; 5,452 “Large Hail” reports

and 6,851 high wind events

Large Hail, 9,417 , 31%

Wind Damage,

18,685 , 63%

Tornadoes, 1,894 , 6%

Tornadoes accounted for just 6% of all Severe

Weather Reports but more than 550

deaths in 2011, the most in 75 years

Number of Severe Weather Reportsin US, by Type, 2011

Source: NOAA Storm Prediction Center; http://www.spc.noaa.gov/climo/online/monthly/2011_annual_summary.html# 39

June 29, 2012 Derecho: Traveled 600 Miles from Midwest to Mid-Atlantic

40Source: National Weather Service: http://www.spc.noaa.gov/wcm/2012/20120629-derecho.png

The June 29 derecho traveled

600 miles in just 10 hours—an average speed of 60 MPH! Peak wind gusts

80-100 MPH.

Millions of people were without power

in sweltering heat for days, particularly in Mid-Atlantic states

10-HOUR RADAR COMPOSITE (2PM – MIDNIGHT)

41

Wildfires

41

42

Subhead: “Wildfires used to be seasonal.

They also used to be regional, pretty much

limited to the more fire-prone areas of the

country.

Today, wildfires no longer have either

characteristic—and that’s not a good thing.”

Callout: “At one point, wildfires were burning

continuously in…Texas over an 18-month

time span.”

Headline: “Growing Wildfire Risk Requires a More Granular, Nationwide Data Solution for P&C Industry”

Source: Risk & Insurance magazine, June 2012, p. 19

Number of Acres Burned in Wildfires, 1980 – 2012

Source: National Interagency Fire Center © 2012 Munich Re 43

2011: 8.3 million acres, the 4th worst year on record, causing $855 in insured losses

2012 First Half 1.7 million acres

Number of Federal Fire Management Assistance Declarations, 1953-2012*

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 30

92 1

7 52

72 3

0 2 49

17 5

15 6 7

20

47

53

54

40

63

44

70

48

43

39

86

60

51

49

18

11

42

3

2

0

20

40

60

80

100

120

53

55

57

59

61

63

65

67

69

71

73

75

77

79

81

83

85

87

89

91

93

95

97

99

01

03

05

07

09

11

*Through July 31, 2012. Sources: Federal Emergency Management Administration at http://www.fema.gov/disasters?field_state_tid=All&field_disaster_type_term_tid=All&field_disaster_declaration_type_value=All&items_per_page=60&=GO ; Insurance Information Institute.

Some fire management assistance declarations cover separate fires in a single state; for example, there were 3 declarations in 2012 for the “Oil

Creek,” “Squirrel Creek,” and “Arapahoe” fires in Wyoming

From 1953-69, there were no fire

management assistance

declarations

The average number from

1994-2010 was 48.9.

The average number from

1970-1993 was 3.75.

45

Let’s not forget about hurricanes

45

Whether they make landfall,or not

46

Number of Major & Minor HurricanesMaking US Landfall, 1983-2012

*Through August 31, 2011.Sources: NOAA, at http://www.aoml.noaa.gov/hrd/tcfaq/E23.html ; Munich Re; Insurance Information Institute.

0

1

2

3

4

5

6

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

*

Major Hurricanes (3-5) Minor Hurricanes (1-2)

No hurricane has made US landfall as a

category 3-5 since Wilma in Oct 2005.

Highest category while on land

47

And did you notice—it’s getting hotter (and,in some places, drier)?

47

Land/Ocean Average Temperatures vs. 20th Century Baseline*

*Northern Hemisphere, month of June each year, through 2012Source: NOAA, National Climatic Data Center, accessed at http://www.ncdc.noaa.gov/ghcnm/time-series/index.php?surface=land_ocean&region=90S.90N&month=6&trend=true&beg_trend_year=1880&end_trend_year=2012&submitted=Submit

By this measure, June 2012 was over 1 degree (F) hotter

than during the average of the middle of the 20th century.

US Drought Conditions, June 26, 2012

49© 2012 Munich ReSource: National Drought Mitigation Center

US Drought Conditions, July 31, 2012

50© 2012 Munich ReSource: National Drought Mitigation Center

2012 US Drought: Implications for Crop (Re)Insurers

51*Credit Suisse, P&C Sector Forecast, Sept. 12, 2012.Source: US Drought Monitor: http://droughtmonitor.unl.edu/

The drought has diminished

in intensity over the past month. Crop

insurance combined ratios are

expected to be in the 100-110

range.

52

And don’t forget the flood risk (even though it’s currently mostly federally insured)

52

53

Number of Significant Flood Events,* 1978-2012

*As determined by the NFIP, measured as an event with 1,500 or more paid losses “or occasionally one added for other reasons.”**Through July 31, 2012Sources: FEMA, at http://www.fema.gov/policy-claim-statistics-flood-insurance/policy-claim-statistics-flood-insurance/policy-claim-13 ; Insurance Information Institute.

3

4

1

0

1

5

0

3

4

2

1

3

8

2

9

2

1

2

4

1

4

5

2

1

3 3

2

5

0

2

5

2

3

7

3

0

1

2

3

4

5

6

7

8

9

10

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

**

We appear to have had at least one “significant” flood every year since 1978, averaging about 3 per year.

Avg. Yearly Numberby Decade

1981-1990: 2.3 1991-2000: 3.5

2001-2010: 2.7

Numberof Events

54

Upward Trend of Inflation-AdjustedFlood Loss Payments*, 1978-2012

*Excluding 2005 (which was $20.4 billion in 2011 dollars).**Through July 31, 2012Sources: FEMA, at http://www.fema.gov/policy-claim-statistics-flood-insurance/policy-claim-statistics-flood-insurance/policy-claim-13 ; Insurance Information Institute.

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2006

2007

2008

2009

2010

2011

0

1

2

3

4

5

6

Inflation-adjusted total flood payments, millions number of policies in force, millions$ Millions, 2011 dollars

Millions in force

55

Adjusted* Flood Loss Payments, 1978-2011**: No Discernible Trend

*per million policies in force, in 2011 dollars**Excluding 2005 (which was $4,118 in 2011 dollars).Sources: FEMA, at http://www.fema.gov/policy-claim-statistics-flood-insurance/policy-claim-statistics-flood-insurance/policy-claim-13 ; Insurance Information Institute.

$286

$381

$122

$99

$45

$523

$117

$231

$434

$363

$205

$550

$321

$177

$289

$235

$75

$364

$120

$209

$570

$130

$118

$638

$143

$140

$327

$501

$243

$164

$299

$812

$353

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2007

2009

2011

Some of the increase shown here is due to growth in the number of policies

2011 dollars

56

Summary and Conclusions

The frequency and severity of most catastrophes seems to be increasing

In recent years, thunderstorms and other severe weather has caused most insured damage, supplanting tropical storms/ hurricanes

2011 was an especially expensive year for insured losses, and 2012 appears directionally similar

Q&A

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