Insurers Well-Prepared to Pay Claims This Hurricane Season

July 16, 2013

The National Oceanic and Atmospheric Administration (NOAA) believes the 2013 hurricane season will be a busy one. Fortunately, insurers have the resources to cover the damages this year’s windstorms may cause to their policyholders, according to the Insurance Information Institute (I.I.I.).

Wind damage from both tropical storms and hurricanes is covered under standard homeowners, renters and business insurance policies. Flood damage resulting from storm surge caused by hurricanes is excluded under standard property insurance policies; flood coverage is available, however, from FEMA’s National Flood Insurance Program (NFIP) and a few private insurance companies.

Damage to cars from hurricanes is covered under the optional comprehensive portion of an auto insurance policy. This includes wind damage, flooding and even falling objects, such as tree limbs.

“The insurance industry is, and will remain, extremely well capitalized and financially prepared to pay the claims that may arise out of significant natural disasters in 2013, and beyond,” said Dr. Robert Hartwig, president of the I.I.I. and an economist, referring to U.S. auto, home and business insurers.

Dr. Hartwig noted that the industry’s claims paying capital stood at a record $608 billion at the start of the second quarter of 2013.

“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,” Dr. Hartwig stated. “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 (P/C) insurance industry’s remarkable resilience in the face of extreme adversity.”

Source: Insurance Information Institute (I.I.I.)

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