At the beginning of the second quarter, and as hurricane season begins, standing capital reserved for claims stands at $608 billion, a record high, according to the Insurance Information Institute (I.I.I.).
The growth in the industry’s capital base occurred despite the fact that insurers paid out nearly $70 billion in catastrophe-caused claims over the prior two years.
“Indeed, in both 2011 and 2012, catastrophe-caused claims were more than 40 percent higher than the $23.9 billion annual average over the past decade,” said Robert Hartwig, economist and president of the I.I.I. “The fact that the industry was able to meet its financial obligations after Sandy and enter 2013 in such a strong financial position is continued evidence of the property/casualty insurance industry’s remarkable resilience in the face of extreme adversity.”
The record-high amounts of capital reserved for claims are welcome as the National Oceanic and Atmospheric Administration forecasted an active hurricane season, anticipating 13 to 20 named storms, seven to 11 hurricanes and three to five major hurricanes.
The hurricane season forecasts provided by both the Colorado State University Department of Atmospheric Science and AccuWeather.com predict four major hurricanes and close to 20 total named tropical storms.
Despite Superstorm Sandy incurring estimated insured losses of $25 billion, overall losses in 2012 were below average, which provided insurers with a reprieve after a record-setting year for losses in 2011.
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