Wednesday, 8 August 2007
2 Years Later, 99% Of Katrina Claims Have Been Paid
It’s been 2 years since the category 5 hurricane Katrina ravaged the Gulf coast. Louisiana and other states are still feeling the effects today. Katrina is the American insurance industry’s most expensive natural disaster in history.
The total loss for the industry was $40.6 billion — the total paid out for the 1.7 million claims on homeowners, commercial business, and auto insurance policies. Now, roughly 99% of all claims have been paid and settled.
Even though insurers can finally begin to put Katrina behind them, they still must assess risk for future storms. It’s no comfort that experts estimate that the frequency and severity of hurricanes will only increase. As result, so will insurance premiums.
“While 2005 was by far the worst year ever for insured catastrophe losses in the U.S., future storms could prove even costlier, reaching upwards of $100 billion,” said Dr. Robert Hartwig, the president of the Insurance Information Institute (I.I.I.).
But insurance companies aren’t allowed to increase rates for any reason, explained Dr. Hartwig. They’re still subjected to state regulations governing insurance premiums.
“Insurers cannot increase rates to make up for past losses. Rates must be based on projections of future losses in a given state,” said Dr. Hartwig. “Companies must demonstrate that there is an increased risk in a specific state, and losses from one state cannot be used to raise rates in another.”
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