III - HURRICANES

DEFRAYING THE ECONOMIC COSTS OF DISASTERS

THE 2007 AND 2008 ATLANTIC HURRICANE SEASONS

The 2007 hurricane season was relatively active, with 15 named storms. The average is 11. Six of the storms became hurricanes, which is the average number of hurricanes each year. Only one hurricane, Humberto, hit the United States in 2007, the first to strike the country since Hurricane Wilma in October 2005. Humberto struck Texas and Louisiana on September 13 and caused wind and rain damage in Texas but below catastrophe loss levels as defined by ISO.

As of November 10 there were 16 named storms in the 2008 season, including eight hurricanes. Hurricane Dolly made landfall in south Texas on July 23 as a Category 2 hurricane and caused $525 million in insured losses, according to ISO. Gustav, the second major hurricane of the 2008 season, made landfall about 70 miles southwest of New Orleans as a Category 2 hurricane. Losses for Gustav were estimated to be $2.1 billion by ISO. Hannah reached the border of South and North Carolina as a tropical storm on September 6 and caused $80 million in insured losses, according to ISO. Ike, the fourth and most costly hurricane, slammed into Texas as a Category 2 hurricane with winds just below Category 3. The third storm to hit Texas in 2008, Ike, a huge 260-mile wide storm, also caused insured losses in eight other states. Preliminary estimates for Ike's damage were $10.7 billion, according to ISO.

In 2006 and 2007, no hurricanes reached the $25 million catastrophe level defined by ISO. There were six catastrophic hurricanes in both 2005 and 1985, the highest annual tallies since 1949, the earliest year tracked by ISO.

YEARS WITH CATASTROPHIC HURRICANE
LOSSES IN THE UNITED STATES SINCE 1998 (1)

	1998	1999	2002	2003	2004	2005
Frequency	2	5	1	2	5	6
Claims	729,450	695,850	133,700	527,800	2,259,150	3,315,550
Personal (2)	72.8%	73.9%	83.8%	82.3%	73.6%	70.0%
Commercial (2)	15.7%	17.2%	3.0%	4.1%	13.4%	9.3%
Vehicles	11.5%	9.0%	13.2%	13.5%	12.9%	20.7%

Losses (3) ($ millions)	$3,315	$2,315	$430	$1,775	$22,900	$58,337
Personal (2)	34.9%	39.4%	66.5%	74.9%	65.7%	49.8%
Commercial (2)	59.8%	55.6%	26.7%	14.0%	29.6%	44.7%
Vehicles	5.4%	5.0%	6.7%	11.1%	4.6%	5.5%

Average claim severity
Personal (2)	$2,176	$1,773	$2,554	$3,061	$9,049	$12,515
Commercial (2)	$17,331	$10,769	$28,750	$11,376	$22,337	$84,953
Vehicles	$2,124	$1,856	$1,638	$2,755	$3,626	$4,698
(1) ISO's Property Claim Services Unit currently defines catastrophes as events causing at least $25 million in direct insured losses to property and affecting significant numbers of insurers and insureds. There were no catastrophic hurricanes in 2000, 2001, 2006 or 2007. Stated in dollars when occurred. (2) Property losses excluding vehicle losses. (3) Does not include flood damage covered by the federally administered National Flood Insurance Program. Source: ISO's Property Claim Services Unit.

CATASTROPHIC HURRICANE LOSSES IN THE UNITED STATES, 1998-2007

Year	Number of catastrophic hurricanes (1)	Insured loss (In 2007 dollars) (2)	Year	Number of catastrophic hurricanes (1)	Insured loss (In 2007 dollars) (2)
1998	2	$4.2 billion	2003	2	$2.0 billion
1999	5	2.9 billion	2004	5	25.1 billion
2000 (3)	0	NA	2005	6	61.9 billion
2001 (3)	0	NA	2006 (3)	0	NA
2002	1	496.0 million	2007 (3)	0	NA
(1) Major hurricanes as defined by ISO. (2) Adjusted to 2007 dollars by ISO. Does not include flood damage covered by the federally administered National Flood Insurance Program. (3) No wind event met ISO's Property Claim Services Unit catastrophe definition of a single incident or a series of related incidents, man-made or natural disasters that causes insured property losses of at least $25 million and affects a significant number of policyholders and insurers. NA=Not applicable. Source: ISO's Property Claim Services Unit.

TOP 15 MOST COSTLY HURRICANES IN THE UNITED STATES

($ millions)

				Estimated insured loss (1)
Rank	Date	Location	Hurricane	Dollars when occurred	In 2007 dollars (2)
1	Aug. 25-30, 2005	AL, FL, GA, LA, MS, TN	Katrina	$41,100	$43,625
2	Aug. 24-26, 1992	FL, LA	Andrew	15,500	22,902
3	Oct. 24, 2005	FL	Wilma	10,300	10,933
4	Sep. 12-14, 2008	AR, IL, IN, KY, LA, MO, OH, PA, TX	Ike	10,655	10,655 (3)
5	Aug. 13-14, 2004	FL, NC, SC	Charley	7,475	8,203
6	Sep. 15-21, 2004	AL, DE, FL, GA, LA, MD, MS, NJ, NY, NC, OH, PA, TN, VA, WV	Ivan	7,110	7,803
7	Sep. 17-22, 1989	GA, NC, PR, SC, VA, U.S. Virgin Islands	Hugo	4,195	7,013
8	Sep. 20-26, 2005	AL, AR, FL, LA, MS, TN, TX	Rita	5,627	5,973
9	Sep. 3-9, 2004	FL, GA, NC, NY, SC	Frances	4,595	5,043
10	Sep. 15-29, 2004	DE, FL, GA, MD, NJ, NY, NC, PA, PR, SC, VA	Jeanne	3,655	4,011
11	Sept. 21-28, 1998	AL, FL, LA, MS, PR, U.S. Virgin Islands	Georges	2,955	3,758
12	Oct. 4, 1995	FL, AL, GA, NC, SC, TN	Opal	2,100	2,856
13	Sep. 14-17, 1999	NC, NJ, VA, FL, SC, PA, 10 other states	Floyd	1,960	2,439
14	Sep. 11, 1992	Kaui and Oahu, HI	Iniki	1,600	2,364
15	Sep. 5, 1996	NC, SC, VA, MD, WV, PA, OH	Fran	1,600	2,114
(1) Property coverage only. Does not include flood damage covered by the federally administered National Flood Insurance Program. (2) Adjusted to 2007 dollars by the Insurance Information Institute. (3) Estimated. Expressed in 2008 dollars. Source: ISO's Property Claim Services Unit; Insurance Information Institute.

The chart below ranks historic hurricanes based on their insured losses, adjusted for inflation. The second chart uses a computer model to estimate the losses that major hurricanes of the past would produce today according to current exposures.

ESTIMATED INSURED LOSSES FOR THE TOP TEN HISTORICAL
HURRICANES BASED ON CURRENT EXPOSURES (1)

($ billions)

Rank	Date	Event	Insured loss (current exposures)
1	Sep. 18, 1926	Miami Hurricane	$80
2	Aug. 24, 1992	Hurricane Andrew	42
3	Aug. 29, 2005	Hurricane Katrina	41 (2)
4	Sep. 21, 1938	1938 Long Island Express	35
5	Sep. 9, 1965	Hurricane Betsy	34
6	Sep. 9, 1900	Galveston Storm of 1900	33
7	Sep. 17, 1928	Great Okeechobee Hurricane	33
8	Sep. 10, 1960	Hurricane Donna	26
9	Sep. 17, 1947	1947 Fort Lauderdale Hurricane	24
10	Sep. 16, 1945	1945 Homestead Hurricane (#9)	20
(1) Modeled loss to property, contents and direct business interruption and additional living expenses for residential, mobile home, commercial and auto exposures as of December 31, 2005. (2) ISO estimate. Source: AIR Worldwide Corporation.