Some interesting numbers on Katrina

The Insurance Information Institute did a briefing on Hurricane Katrina which had some very interesting numbers. Here are some of them. 70% of the losses will come from Louisiana and about half of those are from homeowners. (As opposed to auto or commercial or offshore energy covered losses.) In the case of catastrophic losses tropical cyclones account for about a third of the covered losses, tornadoes account for about another third and earthquakes account for about the same percentage of losses as terrorism (at least 1984-2004). Five of the ten most expensive hurricanes in history have occured in the last thirteen months (Katrina and the four in 2004 mostly in Florida). Six of the ten most expensive disasters occured in the past four years. And five of the eleven most expensive disasters in world history have affected the US in the past four years. Those are all remarkable statistics. One other stat that is useful - for each of the 500,000 families displaced in the storm, the proposed level of support would offer about $400,000 per family.

There is a lot of knashing of political teeth on this set of issues. Most policies limit coverage for things like water and fungus damage. Supplemental coverages may be available and the federal government does a flood policy - whose record is sort of mixed. It has an 85% retention rate - which is very low for the property/casualty industry. But some politicians have tried to claim that they can abrogate the contracts by fiat - simply by redefining the covered exposures after the fact. Along with the many other politicians who have put an oar in on this - that grandstanding is down right silly.