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Insured loss from U.S. catastrophes in 2016 above ten-year average: PCS

2nd March 2017 - Author: Luke Gallin

The insurance and reinsurance industry loss from catastrophe events in the U.S. during 2016 reached $21 billion, with the frequency of events increasing to the highest level since 1980, according to data and analysis from Property Claims Services (PCS), a division of Verisk Analytics.

The $21 billion recorded by PCS comes from 43 PCS-designated events, and is roughly 9% higher than the ten-year average, of $19.1 billion. When compared with 2015’s total of $15.2 billion, insured losses from U.S. catastrophe events increased by approximately 38%.

The $21 billion recorded is just the second time in the last ten years, ending 2016, that insured losses has exceeded $20 billion, being the $21 billion in 2016 and $27 billion in 2008. PCS notes that during the ten-year period just two years, 2011 and 2012, have seen insured losses from PCS-designated events in the U.S. surpass $30 billion.

The overall cost to the insurance and reinsurance industry from U.S. catastrophe events has been on the rise since 2013, and so to has the frequency of events. In fact, PCS explains that the 43 events recorded in the U.S. during 2016 is actually the highest frequency since 1980, and roughly 34% above the annual average for the last ten years, of 32 events.

Catastrophe events in the U.S. impacted 44 states, so only slightly up on the 43 states affected in 2015. Perhaps unsurprisingly, PCS explains that Texas was again the most affected state in 2016, although the estimated insured loss in the state increased by 200%, from $2.9 billion to a huge $8 billion.

Colorado and Louisiana were the only other two U.S. states to experience insured losses of above $1 billion in 2016, according to PCS.

Importantly, PCS explains that it still has resurveys open on three events, which includes hurricane Matthew, suggesting that full-year 2016 insured loss estimates could change in the weeks/months ahead.

Personal losses accounted for 61% of catastrophe losses in 2016, with auto accounting for 23% and commercial 16%, says PCS.

PCS also provides a breakdown of the U.S. catastrophe experience in just the fourth-quarter of 2016, revealing that only four events were recorded, resulting in an insurance and reinsurance industry loss of $3.5 billion, compared with $2.1 billion in the final quarter of 2015 from 10 events.

“The fourth quarter of 2016 was in line with both the ten-year average of 3.6 events and insured loss of $3.3 billion,” said PCS.

Launched in 2010, PCS Canada provides a breakdown of the catastrophe activity in the region throughout 2016, which, the firm highlights as a very active period, driven by losses from the Fort McMurray wildfire. PCS designated nine events in Canada in 2016 resulting in an insured loss of roughly C$4.9 billion, which the firm says is nearly ten times more than seen in 2015, in terms of insured loss.

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