Karen Clark, president and CEO of Boston-based AIR Worldwide Corp. told members of Congress and their senior staff in June that a single future hurricane or earthquake has the potential to cause insured losses in excess of $150 billion and total economic losses approaching $500 billion. Clark participated in a seminar at the U.S. Capitol Building hosted by the Congressional Research Service titled "Insuring and Mitigating Risks of Large-Scale Disasters: Is Federal Disaster Insurance Needed?""There are many potential natural catastrophe scenarios resulting in insured property losses exceeding $100 billion," says Clark. "Examples include a Category 5 hurricane making landfall in Miami, which could result in insured losses of more than $130 billion, and a large magnitude earthquake in the Central U.S., which could result in insured losses of more than $150 billion."
Clark provided an overview of the financial threat posed to insurers, policyholders and the economy as a whole by increasing insured property values in high-risk areas. AIR estimates the total value of properties has roughly doubled over the past 10 years and expects this trend to continue in the foreseeable future.
"There is a 1% probability of an insured property loss exceeding $100 billion this year," says Clark. "That may appear small to some, but the probability of experiencing this loss or greater over the next 10 years is almost 20% when the continual growth in the number and value of exposed properties is included."
