US Hurricane Losses
Hurricanes are the events most likely to cause insured losses large enough to breach the strike amounts of IFEX 'US Wind' Event Linked Futures (ELF) contracts. These are tropical storms and hurricanes that could affect US territories and possessions - all fifty US states (including Hawaii), the District of Columbia, Puerto Rico and the US Virgin Islands.
The North Atlantic basin (i.e. including the Caribbean) hurricane season runs each year from June 1st to November 30th, although activity is heavily concentrated in the three months of August, September and October.
The ten most destructive hurricanes since 1970 are listed in the Table below.
News
- CCFE to List IFEX US Tropical Wind ‘Second Event’ ELFs (Event Linked Futures)
- Hurricane Season Margin Model for CCFE IFEX US Tropical Wind Event Linked Futures
- Swiss Re to Make Markets in IFEX US Tropical Wind Event Linked Futures
- IFEX Event Linked Futures Maintenance Margin Cut to $500
- Climate Exchange Plc and Deutsche Bank To Launch Trading in Catastrophe Event-Linked Futures on the Chicago Climate Futures Exchange
- IFEX ELF Tick Size Reduced to 5 Cents
- IFEX Event Linked Futures
Ten Largest Wind Storm Losses 1970-2006
| Storm | Date (Start) | Affected Areas | Insured Losses PCS Current | Insured Losses PCS Revalued to 2006 |
|---|---|---|---|---|
| Hurricane Andrew | 23/08/1992 | US, Bahamas | $15.500bn | $22.272bn |
| Hurricane Wilma | 19/10/2005 | US, Mexico, Jamaica, Haiti et al. | $10.330bn | $10.663bn |
| Hurricane Ivan | 02/09/2004 | US,Caribbean, Barbados et al. | $7.110bn | $8.094bn |
| Hurricane Charley | 11/08/2004 | US, Cuba, Jamaica et al. | $7.475bn | $7.978bn |
| Hurricane Hugo | 15/09/1989 | US, Puerto Rico et al . | $4.195bn | $6.820bn |
| Hurricane Frances | 26/08/2004 | US, Bahamas | $5.595bn | $5.971bn |
| Hurricane Rita | 20/09/2005 | US, Gulf of Mexico, Cuba | $5.627bn | $5.809bn |
| Hurricane Georges | 20/09/1998 | US, Caribbean | $2.955bn | $3.655bn |
| Tropical Storm Allison | 05/06/2001 | US | $2.500bn | $2.846bn |
Source: PCS
Note: Insured losses are only shown for the area covered by PCS - US fifty states, Washington DC and Puerto Rico and the US Virgin Islands.
The hurricanes (and tropical storms) listed are the chief cause of catastrophe losses in the United States. The only non-hurricane catastrophes to have caused significant damage were the terrorist attacks and the Northridge earthquake.
Although, hurricanes form in the North Atlantic basin are most likely to cause insured losses, tropical storms forming in the eastern Pacific can also cause substantial losses. This Hurricane Iniki caused insured losses of $2.299bn (2006 values) in Hawaii in September 1992.
The storms of 2005 caused the most serious losses from windstorms in a single year besides - including the first, sixth and seventh largest insured losses and the first, fourth and fifth most damaging hurricanes. The Table below sets out the North Atlantic hurricanes storms which caused insured losses in the United States. Total damage amounted to $165.8bn of which $83.3bn was insured.
Hurricane Loses in 2005
| Hurricane | Date | Saffir-Simpson Category | Max Wind Speed MPH | Areas | Economic Loss $m | Insured Loss $m |
|---|---|---|---|---|---|---|
| Cindy | 3-7/7 | 1 | 75 | Mexico, AL, LA, MS, GA | 250 | 160 |
| Dennis | 5-13/7 | 4 | 149 | Jamaica, Haiti, Cuba, FL, AL, MS, GA | 3,100 | 1,200 |
| Emily | 11-21/7 | 4 | 152 | Caribbean, Mexico | 400 | 250 |
| Katrina | 23-31/8 | 5 | 174 | Al, FL, LA, MS | 125,000 | 60,000 |
| Ophelia | 6-18/9 | 1 | 87 | NC, SC | 50 | 35 |
| Rita | 18-26/9 | 5 | 174 | FL, LA, TX, MS | 16,000 | 11,000 |
| Stan | 1-5/10 | 1 | 81 | Mexico, Guatemala | 3,000 | 100 |
| Wilma | 15-25/10 | 5 | 174 | Mexico, FL | 18,000 | 10,500 |
| Total | 165,800 | 83,245 | ||||
Source: Munich Re
Note: The figures include losses outside the areas covered by IFEX Event Linked Futures.
The insured loss was the equivalent of a significant fraction of the capital and surplus of the US property casualty insurance industry. In 2005, the capital and surplus of the US insurance industry was
The threat to the US insurance industry as a result of hurricanes is increasing. Between 1980 and 2003, the coastal population of Florida increased by 75% (US Dep of Com Census Bureau), and in 2004 the total value of insured coastal property in Florida vulnerable to hurricanes was estimated to be $1.937 trillion and the equivalent figure for New York was $1.901 trillion (AIR Worldwide).
Of course no single hurricane is likely to damage more than a small fraction of all Florida coastal insured property. And Hurricane Katrina which caused insured losses of over $60bn is far from being the worst case. Lloyd's specifies two Florida Realistic Disaster Scenarios which both anticipate losses of $100bn. These are the Miami Dade Hurricane Event and the Pinellas Hurricane Event which strikes the Tampa St Petersburg area. Both events are estimated to have 'return periods' of approximately 100 years.
Losses Triggering Payments by IFEX US Wind ELFs
IFEX uses the non-life insurance industry estimates of Property Claims Services, part of the Insurance Services Organisation which provides services to the insurance industry. PCS's estimates of insured losses in excess of $500m since 2000 are set out below.
| Date | Cat No Storm | Perils | States | Estimated Loss |
|---|---|---|---|---|
| Jan 22-24, 2000 | 13/2000 Winter Storm | Freezing, Hail, Ice, Wind | AL GA LA NC SC TN VA | $550m |
| Mar 28-29, 2000 | 17/2000 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | LA TX | $520m |
| Apr 6-12, 2001 | 38/2001 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | AR CO IA IL IN KS MI MN MO NE OH PA TX | $2,200m |
| Jun 5-17, 2001 | 44/2001 Tropical Storm Allison | Flooding, Tropical Storm, Wind | LA TX | $2,500m |
| Apr 27 - May 3, 2002 | 61/2002 Wind & Thunderstorm | Flooding, Hail, Tornadoes Wind | GA IL IN KS KY MD MO NY OH PA TN VA WV | $1,675m |
| Nov 9-10, 2002 | 75/2002 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | AL GA KY MS OH PA TN | $520m |
| Jan 13-25, 2003 | 81/2003 Winter Storm | Freezing, Ice, Snow, Wind | AL CT DE FL GA KY MA MD ME NC NH NJ NY PA RI SC TN VT WV | $500m |
| Apr 4-8, 2003 | 85/2003 Winter Storm | Flooding, Freezing, Hail, Ice, Snow, Tornadoes, Wind | AL IL IN LA MO MS NY TN TX | $1,605m |
| May 2-11, 2003 | 88/2003 Wind & Thunderstorm | Flood, Hail, Tornadoes, Wind | AL AR CO GA IA IL IN KS KY MO MS NC NE OH OK SC SD TN | $3,205m |
| July 4-10, 2003 | 89/2003 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | IA IL IN MI MN NE OH PA VA WV | $680m |
| July 21-23, 2003 | 91/2003 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | AL AR GA KY MI MS NY OH PA SC TN | $815m |
| Sep 18-18, 2003 | 95/2003 Hurricane Isabel | Flooding, Hurricane, Wind | DE MD NC NJ PA VA WV | $1,685m |
| May 21-27, 2004 | 19/2004 Wind & Thunderstorm | , Hail, Tornadoes, Wind | IA IL IN KY MI MO NC NE NY OH OK PA SC WI WV | $805m |
| May 29 - June, 2004 | 20/2004 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | AR ILIN KS KY LA MO NE OK SD TN TX | $525m |
| Jun 8-9, 2004 | 21/2004 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | CO MI NY PA VT | $545m |
| Aug 13-14, 2004 | 26/2004 Hurricane Charley | Flooding, Hurricane, Tornadoes, Wind | FL NC SC | $7,475m |
| Sep 3-9, 2004 | 28/2004 Hurricane Frances | Flooding, Hurricane, Tornadoes, Wind | FL GA NC NY SC | $4,595m |
| Sep 15-21, 2004 | 29/2004 Hurricane Jeanne | Flooding, Hurricane, Tornados, Tropical Storm, Wind | DE FL GA MD NC NJ NY PA PR SC VA | $3,655m |
| Sep 15-21, 2004 | 30/2004 Hurricane Ivan | Flooding, Hurricane, Tornadoes, Wind | AL DE FL GA LA MS NC NJ OH PA TN VA WV | $7,110m |
| Mar 25-28, 2005 | 40/2005 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | AL FL GA MS NC TX VA | $655m |
| Jul 9-11, 2005 | 47/2005 Hurricane Dennis | Flooding, Hurricane, Tornadoes, Wind | A FL GA MS | $1,115m |
| Aug 25-30, 2005 | 49/2005 Hurricane Katrina | Flooding, Hurricane, Tornadoes, Wind | A FL GA LA MS TN | $41,100m |
| Sep 20-26, 2005 | 51/2005 Hurricane Rita | Flooding, Hurricane, Tornadoes, Wind | AL AR FL LA MS TN TX | $5,627m |
| Oct 24, 2005 | 54/2005 Hurricane Wilma | Flooding, Hurricane, Tornadoes, Wind | FL | $10,300m |
| Apr 2-3, 2006 | 65/2006 Wind & Thunderstorm | Hail, Tornadoes, Wind | AR IL IN KY MO TN | $500m |
| Apr 6-8, 2006 | 66/2006 Wind & Thunderstorm | Hail, Tornadoes, Wind | AL GA IN KS KY NE OH TN | $1,282m |
| Apr 13-15, 2006 | 67/2006 Wind & Thunderstorm | Hail, Tornadoes, Wind | IA, IL IN WI | $1,850m |
| Aug 23-25, 2006 | 81/2006 Wind & Thunderstorm | Flooding Hail, Tornadoes Wind | IL IN MN WI | $560m |
| Aug 30, 2006 | 85/2006 Wind & Thunderstorm | Flooding, Hail, Tornadoes, Wind | IA IL IN MI MN OH WI | $670m |