Fitch ratings points to multiple factors that may combine to make Katrina the worst insured loss in history. The levee break, business interruption controversies, looting impact, delays in adjusting losses due to extended flooding, coverage disputes and political sensitivity of denying claims under flood exclusions, the complication of interpreting environmental loss exclusions, all add to the likelihood that reserves will be underestimated initially and "develop" in subsequent years.
As Fitch points out, reinsurers are less regulated, so can increase prices faster than heavily regulated property insurers. Overall, the impact on insurance pricing is likely to be significant, long-term and unevenly distributed.
Fitch: Katrina May be Most Costly U.S. Insured Loss Ever
Thanks for this link to our friends at Specialty Insurance Blog: Katrina & Insurance Prices
Meanwhile, we are not yet past the midpoint of the Atlantic hurricane season. As Floridians can attest, the first hurricane to hit you may not be the last.
Colorado State University hurricane researcher William Gray predicts above-average activity for the coming two months. According to Reuters on September 2, "Gray and his colleagues calculated there was a 43 percent chance another major hurricane with top winds over 110 mph (177 kph) would strike somewhere along the U.S. coast in September." Strong chance another big hurricane will hit US - Yahoo! News
The rising outrage at the unfunded mandate for New Orleans' poor and infirm to evacuate the city must cause changes in the federal and state response to real homeland security needs. If this had been a terrorist bio-warfare attack, or a "dirty bomb" set off in a major city, would the homeland security response have been different?
Responsible government requires more than telling several hundred thousand people with no autos, no savings and no credit cards, with sick and infirm elders and babies to "Evacuate to somewhere else! You figure out where to go, how to get there and where you'll sleep and get food, shelter and medicine when you find it."
The exodus of Oklahomans during the Dust Bowl was the source of untold human misery and human nobility as those with nothing struggled to find a place that would accept a huge influx of refugees. They were met with resistance, sometimes armed and organized by the local government who didn't want "those Okies" in their community. John Steinbeck immortalized the human response to such conditions in "The Grapes of Wrath."
We look to the words he put in the mouth of Tom Joad, pushed to the limit of human endurance by a combination of natural disaster and social failure:
“Whenever they’s a fight so hungry people can eat, I’ll be there. Whenever they’s a cop beatin’ up a guy, I’ll be there . . . . I’ll be in the way guys yell when they’re mad an’—I’ll be in the way kids laugh when they’re hungry an’ they know supper’s ready. An’ when our folks eat the stuff they raise an’ live in the houses they build—why, I’ll be there.”
We're seeing Tom Joads emerge in the chaos of New Orleans. We need many more, and we need to get more of them in the government, because there are not enough in evidence there now.
Posted by dougsimpson at September 3, 2005 05:36 AM