Current and Potential Impact Of Hurricane Variability on the Insurance Industry

Abstract

An analysis of the current and projected U.S. hurricane property loss potential is presented. The estimated loss potential today and the future loss projections are based on a quantitative model developed at Applied Insurance Research for a wide range of uses. It is found that the recent large losses from landfalling hurricanes are due primarily to exponential growth in the valuation of coastal property. The observed variable nature of hurricane landfall frequency in the past century indicate that the loss potential in the future from the onset of a period of more frequent and/or intense hurricanes could increase dramatically from that experienced in recent decades.