The US Insurance Market Will Hopefully Have a Quieter Year When It Comes to Hurricanes
After two very hectic seasons, the 2012 Atlantic hurricane season is predicted to only have average activity, which, if it transpires, will bring welcome relief for insurers, which should mean lower reinsurance and property insurance premiums longer term.
As I explain in my training sessions on insurance pricing, the North American market has a large influence on property insurance world-wide. The average for the period 1950 to 2000 was 9.6 tropical storms, 5.9 hurricanes and 2.3 major hurricanes.
In 2011, it was forecast as the most active season since 1995. The 2011 estimate was 12-18 tropical storms, 6-10 hurricanes and 3-6 major storms. In fact, there were 19 tropical storms, 7 hurricanes and 4 majors. The last Category 4 hurricane during 2011 was Hurricane Ophelia, which caused US$21 billion in damage.
The forecast for the 2012 Atlantic hurricane season currently estimate that the number of tropical storms will fall between the average number of storms witnessed in the 1950-2011 and 1995-2011 periods.
The early predictions indicate the potential for a quieter year in the Atlantic basin, particularly when compared to very active years of 2010 and 2011.
I hope the “weather people” have got it right and that our part of the world also has an average or below-average season after many years of back-to-back natural catastrophes.
My ongoing concern is that the increase in premiums caused by the spate of catastrophes in Australia, New Zealand and Asia coupled with the increase in government taxes in some jurisdictions, notably Victoria, will cause home and business owners to be under-insured. This, as I repeatedly say, is no good for them, their community or the economy.