The Aftermath of Hurricanes
Hurricane Matthew left the U.S. and is no longer directly damaging cities. Its aftermath, however, left a mark physically and financially.
There’s been an estimate of 44 deaths in the U.S. and more than 800 deaths in the Caribbean. Between destruction in the Caribbean islands and those in Florida, Georgia, and the Carolinas, it’s estimated that damages covered by insurers could amount to as much as $8.8 billion. Communities and organizations are dealing with the flooding damages but it will take some time to restore cities along the southeastern coast. Amid this destruction, it may be helpful to look at the impact that hurricane Katrina had in 2005.
In a 25-year span leading up to 2005, homeowners insurers in Louisiana wrote a total of $13 billion in homeowners insurance premium, from which they earned $1 billion in profit, according to the chief actuary at the state insurance department.”
It’s no surprise that many insurance companies chose to move out of the area.
Since Katrina, there have been improvements in insurance computer models that calculate risk. Also, lLanguage within insurance policies are less ambiguous and allow policyholders to understand their coverage better. Insurance companies are less able to dispute claims by saying that certain damage was done by water instead of wind or vice-versa. All of these wereT large problems during the Katrina crisis.
The catastrophe of Katrina is awful, but in its aftermath, many improvements were made to our insurance system. $8.8 billion in claim payments may not seem like a lot when compared to the $41.1 billion from 2005, but it is still a large sum of money that could have damaged the insurance industry along the east coast and caused companies to avoid taking risks in that area in the future. Even building codes have been altered to make homes safer in these areas (and easier to insure as a result). Companies have returned to the gulf since Katrina and insure houses again but they take more precautions than they used to.
Hurricane Katrina was a horrible tragedy made worse by flaws in the insurance industry. While the deaths and destruction caused by Katrina were terrible, people have learned from the mistakes and relief effort has been improved; a silver lining in any crisis. At least the improvements in the insurance industry give people more peace of mind in the aftermath.