Florida dodged Hurricane Irene this week, but much of the Eastern Seaboard will not. When the skies have cleared, the damage assessments will begin. Florida may not be so lucky when it comes to dodging the bills — maybe not directly, but through property insurance premiums.
As history has shown, a major weather event can have an adverse impact on reinsurance — that is, insurance for insurance companies (we wrote about reinsurance in November, 2010). The cost of reinsurance is passed on to consumers through premium rates. It’s hard to know how Florida’s property owners will take even higher rates or steeper hikes than they’ve experienced in the past few years.
The U.S. has had more than its share of expensive weather disasters this year. According to the National Weather Service, the combined costs have exceeded $35 billion. The estimate does not include Hurricane Irene, either — we still have all of hurricane season to look forward to.
The rash of weather disasters in 2011 is almost biblical. Some joke that we just need frogs to fall from the sky and the year will be complete. Floods, drought, tornados, crippling winter storms — each event, it seems, more costly than the last.
This is not to diminish the human cost associated with these events. It’s impossible to put a dollar value on the 160 lives lost in one town hit by a tornado this past May.
It is possible to estimate property loss and the cost of clean-up. So far this year, the U.S. has racked up nine weather disasters passing the $1 billion mark.
We’ll get into specifics in our next post.
Source: USA Today, “In 2011, record-tying nine $1B weather disasters,” Dan Vergano, Aug. 18, 2011Share