While 2009 will be remembered as an economic disaster for many insurers, U.S. P&C and global reinsurance industries can claim at least one minor victory. With a quiet 2009 hurricane season, they were able to rebuild balance sheets following an estimated $28.2 billion in catastrophe losses during 2008, according to an A.M. Best Co. special report.
But, they are bracing the 2010 hurricane season, which experts are predicting could be potentially as active as 2005—Hurricane Katrina, Hurricane Wilma and Hurricane Rita. In fact, according to the report:
• Three forecasters predict four intense hurricanes in the Atlantic Basin, well above the long-term average of two to three intense storms. Warmer sea-surface temperatures and a transition to neutral El Niño conditions are expected to enhance hurricane activity.
• State wind and beach plans and last-resort insurers saw in-force liabilities grow by double, and even triple-digit percentages from 2005 to 2009 in states such as North Carolina, Florida and Texas.
• Though still major writers of homeowners multiperil, Citizens in Florida and Louisiana Citizens Property Insurance Corp. have shifted market share to other carriers through takeout programs.
• A.M. Best data show insurers’ pullback from hurricane-prone states accelerated in the 2005-2009 period compared with homeowners multiperil business written earlier in the decade.
• The top 10 A.M. Best-rated writers' market share fell more than eight percentage points from 2005-2009 in Louisiana; about three percentage points in Mississippi; and more than nine percentage points in Texas.
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