2011 turning out to be one of the industry’s hardest hits

Insurance NewsThe frequency of calamitous events so far this year has insurance companies all over the nation and bracing themselves for massive losses. With destructive weather wreaking havoc throughout the Southeast and Central U.S., many insurers have already faced $10 billion in losses due to natural disasters.

According to EQECAT Inc., a disaster and risk modeling firm, the national average in weather-related losses is $4 billion. Insurers can expect to see higher than average losses as an unusually active hurricane season begins soon.

Disasters overseas are likely to have an effect on U.S. insurers as well. EQECAT estimates that losses from the major earthquakes in Japan and New Zealand could come in at $55 billion.

“This is not a black swan year – that is an absolute worst case – but it is very close to that,” says Jose Miranda, director of client advocacy for EQECAT. Miranda adds that 2011 is set to be the most costly year for the insurance history to date.

The looming hurricane season has insurers on edge. Last year’s hurricane season was ominously timid. While more than 11 major hurricanes formed in the Atlantic Ocean, none made landfall. This rare event is unlikely to happen again, as the National Weather Service forecasts as many as 18 major storms will be coming from the Atlantic.

The Weather Service cannot predict when or where hurricanes will make landfall until they do so. Should even one come ashore, insurers will be remembering 2011 as a fiscal nightmare.

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