COLUMBUS, Ohio, Feb. 20, 2019 /PRNewswire/ -- Joseph Petrelli, President and co-founder, Demotech, Inc., wants to share his thoughts: "I began my insurance carrier in 1969. I was a work-study student at The College of Insurance. I worked for ISO before it was ISO, and well before it ever thought of becoming Verisk! However, I digress.
I regularly recall a comment from October 1969, heard at a CPCU luncheon in New York City. The speaker said something like 'For all the data and information that insurance companies collect and analyze, we are fond of anecdotes, not the data we have available for review and analysis.' Throughout my insurance career, these words have rung true - from 1969 to date."
A recent white paper observed that a $100 billion hurricane could be problematic to carriers writing property insurance in Florida. I respectfully suggest that any event creating $100 billion of insured losses would be problematic anywhere it occurred, whether earthquake, nuclear incident, flood, etc. This being the case, what would a $100 billion insured loss hurricane look like?
Reviewing the last few years of hurricane related losses, in addition to the human suffering and devastation associated with the natural catastrophes, insured losses have been as listed below:
Hurricane Florence (2018) |
$5 billion |
Hurricane Michael (2018) |
$5 billion |
Hurricane Harvey (2017) |
$15+ billion |
Hurricane Irma (2017) |
$20+ billion |
Hurricane Maria (2017) |
$25+ billion |
Going back further in the history of hurricane losses, the most expensive, famous, and devastating storms in US history, evaluated in 2017 dollars would be:
Hurricane Katrina (2005) in 2017 dollars |
$51 billion |
Hurricane Andrew (1992) in 2017 dollars |
$25 billion |
Hurricane Sandy (2012) in 2017 dollars |
$21 billion |
Petrelli added "Could a $100 billion hurricane be problematic? Yes, in large part because in recorded history, there has never been one! As long as we are spit balling, shall we discuss how problematic it would be if a meteor the size of the moon hit New York City, Paris, London, Beijing, or Moscow?
On a more serious note, in 2009, I contacted The Insurance Consumer Advocate at the State of Florida Office of Insurance Regulation and asked the Advocate to coordinate a summit of insurance and reinsurance professionals to discuss 'how much reinsurance is enough reinsurance?' Demotech and the insurance industry required this type of state action to mitigate antitrust issues. After consideration, the Advocate declined to do so."
"Today, although everyone seems to have an opinion on how much reinsurance is enough reinsurance, only Demotech has established a minimum acceptable amount that attempts to satisfy the various stakeholders while also having the temerity to request an industrywide summit," Petrelli added.
About Demotech, Inc.
Demotech, Inc. is a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers. Since 1985, Demotech has served the insurance industry by assigning accurate, reliable and proven Financial Stability Ratings® (FSRs) for Property & Casualty insurers and Title underwriters. FSRs are a leading indicator of financial stability, providing an objective baseline of the future solvency of an insurer. Demotech's philosophy is to review and evaluate insurers based on their area of focus and execution of their business model rather than solely on financial size. Visit www.demotech.com for more information.
SOURCE Demotech, Inc.
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