Hurricane loss could total $130 billion: forecast
NEW YORK (Reuters) - As the first of 2006's tropical storms came ashore in Florida on Tuesday, an catastrophe-loss forecaster made a gloomy prediction: a Category 5 hurricane could hit Miami and cost insurers $130 billion.
AIR Worldwide Chief Executive Karen Clark said scenarios developed by her Boston-based modeling group foresaw a 155-mile-per-hour storm banging into Southern Florida and a major earthquake in the central United States that could cost property casualty carriers $150 billion.
Clark was testifying before a congressional seminar on whether a federal disaster insurance program is needed as a backstop for insurers that experience major losses.
Such a fund is supported by carriers like Allstate Corp. and by states such as Florida, which has been hardest hit by hurricanes in recent years. Allstate and other insurers are trying to move out of areas with hurricane and earthquake exposure.
Clark said increasing insured property values in high-risk areas, such as coastal Florida, pose a financial threat to insurers, policyholders and the economy.
"There is 1 percent probability of an insured property loss exceeding $100 billion this year," said Clark. "That may appear small, but the probability of experiencing this loss -- or greater -- over the next 10 years is almost 20 percent when the continual growth in the number and value of exposed properties is included."
Florida officials have said that more than 100 people a day are moving into their state, and insurance costs in some areas have risen 90 percent since last year, when both Hurricanes Katrina and Wilma hit the state.