Cats may cost US$150 billion

Hurricanes and earthquakes have the potential to cause insured losses in excess of US$150 billion and total economic losses approaching US$500 billion, AIR Worldwide president and CEO Karen Clark told Members of Congress and their senior staff.
The warning was revealed at a seminar titled “Insuring and Mitigating Risks of Large-Scale Disasters: Is Federal Disaster Insurance Needed?,” which was hosted by the Congressional Research Service (CRS)
“There are many potential natural catastrophe scenarios resulting in insured property losses exceeding (US)$100 billion,” Clark says. “Examples include a Category 5 hurricane making landfall in Miami, which could result in insured losses of more than (US)$130 billion, and a large magnitude earthquake in the Central U.S., which could result in insured losses of more than (US)$150 billion.”
Clark will provide 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 (US)$100 billion this year,” Clark says. “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.”