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Catastrophes cost property/casualty insurers $5.8 billion in 2002

The Insurance Services Office (ISO) reports property/casualty insurers in the United States will pay an estimated $5.8 billion dollars to cover claims stemming from catastrophes in 2002.

2002 was the fourth-lowest year in losses in the last 10, according to preliminary estimates by ISO’s Property Claim Services (PCS) unit.

What is a catastrophe?

ISO's PCS unit defines a catastrophe as an event that causes $25 million or more in insured-property losses and affects a significant number of property/casualty policyholders and insurers.

Fourth quarter costly for insurers

ISO reports six catastrophes struck 23 states in the fourth quarter of 2002, causing an estimated $1.7 billion in losses.  ISO claims that’s the second-highest loss for any fourth quarter in the last 10 years.

PCS estimates insurers received nearly 540,000 claims from homeowners and businesses in the fourth quarter, which is the highest number of claims in any fourth quarter since 1998.

First three quarters of 2002

PCS claims catastrophe losses in 2002 were 50 percent below the 10-year average of $11.5 billion per year.  PCS also reports the 25 major catastrophes in 2002 were well below average of 32 events a year for the last 10 years.

ISO figures show insured-property losses from catastrophes were the lowest in 1997 at $2.6 billion, followed by $4.6 billion in 2000 and $5.6 billion in 1993.

Most states experienced catastrophes

PCS reports in 2002, 40 states sustained insured-property damage from catastrophes. Kentucky led with $885 million in losses, followed by Texas with $630 million, Louisiana with $555 million, Maryland with $289 million, and Ohio with $275 million.

ISO points out there were 25 natural disasters in the United States in 2002, generating 1.8 million claims.

The following chart lists the number of natural disasters, the number of claims generated by those events, and the amount insurance companies paid on those claims for each of the past 10 years:

Year

Total Number of Events

Losses ($)

No. of Claims

1993

36

$ 5.62 billion

1.2 million

1994

38

$17.01 billion

2.5 million

1995

34

$ 8.32 billion

2.7 million

1996

41

$ 7.37 billion

3.9 million

1997

25

$ 2.6 billion

1.6 million

1998

37

$10.07 billion

3.5 million

1999

27

$ 8.34 billion

3.3 million

2000

24

$ 4.6 billion

1.4 million

2001

20

$28.1 billion

1.6 million

2002

25

$ 5.8 billion

1.8 million

Source: Insurance Services Office, 2002

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