Recent hurricane seasons pose challenge to insurance industry
Sunday, December 29th, 2019
The 2019 hurricane season officially ended on Nov. 30, and there’s good news: The damage from this year’s storms wasn’t as bad as the last two years. The overall cost in 2018 was $50 billion and in 2017, a staggering $220 billion.
But the news is not all good. The bad news is that the damage in 2019 was still pretty astronomical. The conservative estimate is about $12 billion. But Accuweather estimates it was more like $22 billion in the United States, plus another $5 billion in the Bahamas.
The biggest impact came from Dorian
That damage to the Bahamas was from the worst storm of the season, Hurricane Dorian, which was also the one major storm to hit the Carolinas.
That Category 5 Dorian was not only the strongest of the 18 named storms this year, but it tied a storm in 1935 at the most powerful ever to hit land in history, with sustained winds of 185 miles per hour and gusts up to 220.
Dorian even caused more than $100 million in insured damage in Canada – not the sort of place one usually associates with hurricanes.
2019 tied for 4th-most-active season
This year was tied with 1969 as the fourth-most active hurricane season on record in terms of named storms. And there were 20 tropical cyclones in addition to those 18 named.
That’s just hurricanes. When you broaden the scope to look at the impact of climate-related events overall – including floods, fires and droughts – in 2018, they led to insurance payouts of $2.4 trillion worldwide. Not million. Not billion. TRILLION.
Extreme events becoming the norm could force insurers to pay out even greater amounts.
Meeting the challenge
Regardless of what you consider to be the causes of climate change, insurers seek every day to mitigate potential losses through a process known as risk management. Insurers are also redoubling their efforts to raise awareness of extreme weather events, working to encourage more prudent land use, stronger building codes, and better planning.
That’s the big picture. What do all these climate events mean to you, in terms of your exposure to risk?
Now, you have time – five or six months – before the storms begin again. One of the first things you should do to make sure you’re ready is review your insurance coverage. Contact one of our experienced professional brokers, to make sure you are adequately covered before the winds begin to blow again.