Weather Disasters Cause Record Losses

Powerful tornadoes have ripped across the country this year,
as well as floods and other natural disasters, which are causing insurance
companies to face a record number in losses this year with billions of dollars
in damages.

Insurers may post as much as
$10 billion in weather-related losses this year–that’s about five times the
amount it usually is, according to EQECAT Inc.

“This is not a black swan year that is an absolute worst case, but it
is significant and it is close to that,” Jose Miranda, director of client
advocacy a EQECAT Inc., which provides disaster and risk models to insurance
companies, told Reuters News.

A big
portion of this year’s spike has been caused by tornadoes. During the spring,
tornadoes tore across Southeastern and Midwestern states. But experts are also
predicting a higher Atlantic hurricane season this year too, which could send
losses even higher.

Allstate Corp., the
nation’s largest home insurer, says it projects April storms alone cost $1.4
billion and the company processed more than 100,000 claims.

Internationally, U.S. and overseas insurers face up to $55
billion in losses, which includes the major earthquakes this year in Japan and
New Zealand.

The latest deadly tornado to
strike in the U.S. was on Sunday in Joplin, Mo., which practically leveled a
quarter of the city and has become the nation’s deadliest single tornado in
nearly 60 years with 116 deaths so far. On Monday, the federal government
offered additional assistance through the Federal Emergency Management Agency to
home owners with uninsured expenses, such as home repairs, replacement of
household items, or temporary housing needs.

Source: “U.S. Insurers Face Big Losses From
Weather Disasters,”
Reuters News (May
24, 2011) and
“Federal Disaster Aid Available for
Individuals, Public Entities Following Joplin, Mo., Tornado,”
Associated Press Newswires (May 23,