the legacy of hurricane andrew - iii · 2 hurricane andrew: the legacy lives on at $15.5 bill,...

The Legacy of Hurricane Andrew:What Has Been Learned Over the Past 20 Years?

Florida International University

Miami, FL

June 27, 2012

Download at www.iii.org/presentationsRobert P. Hartwig, Ph.D., CPCU, President & Economist

Insurance Information Institute 110 William Street New York, NY 10038

Tel: 212.346.5520 Cell: 917.453.1885 [email protected] www.iii.org

2

Hurricane Andrew: The Legacy Lives On

At $15.5 Bill, Hurricane Andrew Was the Costliest Insurance Event in Global History When it Occurred in 1992 ($25 Bill in 2011 $)

Andrew held that title until the Sept. 11, 2001 terrorist attacks ($24 bill in 2011 $)

Most expensive natural disaster until Hurricane Katrina ($47.6 bill in 2011 $)

Hurricane Andrew Was the Most Disruptive Event in US Insurance History

11 small insurers failed (FL, LA); resources of many large insurers were strained

Hurricane Andrew Fundamentally and Irrevocably Changed How Insurers and Reinsurers Manage Catastrophic Risk in the US and Globally

Insurance Markets Changes Occurring in the 20 Years Since Andrew:

More Carefully Managed Coastal Exposure (and for cat exposure in general)

Capital Base (Capacity) of Global (Re)Insurance Industry Greatly Expanded

More Use of Reinsurance

Birth and Rapid Evolution of Sophisticated Catastrophe Modeling

Growth of Markets Like Bermuda

Use of Capital Market Instruments (e.g., CAT Bonds)

Larger Role of Government in Insuring Coastal Risks

Strong Support for Strengthened Building Codes and Mitigation

3

Lesson Learned: Strong Building Codes, Mitigation Are Essential in Creating Disaster

Resistant Communities

Hurricane Andrew Had Major Impact on Building Code Strengthening

and Enforcement3

Residential Building Code Ratings in Hurricane Prone States

Source: Rating the States, Dec. 31, 2011, Insurance Institute for Business and Home Safety; Insurance Information Institute. 4

Florida and Virginia were the top ranked states

in terms preparedness of

residential structures against hurricane damage

Despite catastrophic losses from Hurricane

Katrina in 2005, MS still has no statewide building code, putting it dead last

in the US;

AL and TX rank poorly as well despite major post-

Andrew storms

Florida Leads the US with 2.1 Million NFIP Policies in Force*

5

*As of Sept. 30, 2011

Source: National Flood Insurance Program; Insurance Information Institute.

Insurance Industry Invests Millions in Property Loss Reduction Research

6Source: Insurance Information Institute from IBHS web site: http://ofb.ibhs.org/research

In 2010, the Insurance Institute for Business and Home Safety Research Center Opened in Chester County, SC. The $40 Million Facility Is Entirely

Funded by the Insurance Industry and Its Mission Is to Conduct Research to Reduce Property Loss from a Variety of Perils, Including Hurricanes

http://ofb.ibhs.org/research

7

Lesson NOT Learned: The US Is More Vulnerable than

Ever to Catastrophic Hurricane Loss

Hurricane Andrew Had Zero Effect in Terms of Diminishing Demand for

At-Risk Property7

8

U.S. Insured Catastrophe Loss Update

2011 Was One of the Most Expensive

Years on Record

8

9

Top 14 Most Costly Disastersin U.S. History

(Insured Losses, 2011 Dollars, $ Billions)

*Losses will actually be broken down into several “events” as determined by PCS. Includes losses for the period April 1 – June 30.

Sources: PCS; Insurance Information Institute inflation adjustments.

$9.0$11.9 $13.1

$19.1$21.3

$24.0 $25.0

$47.6

$8.5$7.7$6.5$5.5$4.4$4.3

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Irene

(2011)

Jeanne

(2004)

Frances

(2004)

Rita

(2005)

Hugo

(1989)

Ivan

(2004)

Charley

(2004)

Wilma

(2005)

Ike

(2008)

Northridge

(1994)

Spring

Tornadoes

& Storms*

(2011)

9/11

Attack

(2001)

Andrew

(1992)

Katrina

(2005)

Even 20 years later, Hurricane Andrew is the 2nd most

expensive event in US history

Most of the costliest disaster in US history were hurricanes, most impacting FL

Nu

mb

er

Geophysical

(earthquake, tsunami,

volcanic activity)

Climatological

(temperature extremes,

drought, wildfire)

Meteorological (storm)

Hydrological

(flood, mass movement)

Natural Disasters in the United States, 1980 – 2011Number of Events (Annual Totals 1980 – 2011)

Source: MR NatCatSERVICE 10

37

8

51

2

50

100

150

200

250

300

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

There were 117 natural disaster events in 2011

Losses Due to Natural Disasters in the US, 1980–2011 (Overall & Insured Losses)

11

Overall losses (in 2011 values) Insured losses (in 2011 values)

Source: MR NatCatSERVICE © 2011 Munich Re

(2011 Dollars, $ Billions)

2011

Overall Losses: $72.8 Bill

Insured Losses: $35.9 Bill

2011 was the 5th most expensive year on record for insured

catastrophe losses in the US.

Approximately 50% of the overall cost of

catastrophes in the US was covered by insurance in 2011

(Overall and Insured Losses)

12

$1

2.3

$1

0.7

$3

.7 $1

4.0

$1

1.3

$6

.0

$3

3.9

$7

.4 $1

5.9

$3

2.9

$7

1.7

$1

0.3

$7

.3

$2

8.5

$1

1.2

$1

4.1

$3

2.3

$1

00

.0

$1

3.7

$4

.7

$7

.8

$3

6.9

$8

.6

$2

5.8

$0

$20

$40

$60

$80

$100

$120

89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11*20??

US Insured Catastrophe Losses

*PCS figure as of April 6, 2012.

Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01 ($25.9B 2011 dollars). Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B ($15.6B in 2011 dollars.)

Sources: Property Claims Service/ISO; Insurance Information Institute.

US CAT Losses in 2011 Were the 5th Highest in US History on An Inflation Adjusted Basis

$100 Billion CAT Year is Coming Eventually

Record Tornado Losses Caused

2011 CAT Losses to Surge

($ Billions, 2011 Dollars)

12

13

Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1990–2011:H11

0.2%

2.4%

3.4%4.9%

6.6%

8.0%

31.8%

42.7%

1. Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2009 dollars.

2. Excludes snow.

3. Does not include NFIP flood losses

4. Includes wildland fires

5. Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation.

Source: ISO’s Property Claim Services Unit.

Hurricanes & Tropical Storms, $160.5

Fires (4), $9.0

Tornadoes (2), $119.5

Winter Storms, $30.0

Terrorism, $24.9

Geological Events, $18.5

Wind/Hail/Flood (3), $12.7

Other (5), $0.6

Wind losses are by far cause the most catastrophe losses,

even if hurricanes/TS are excluded.

Tornado share of CAT losses is

rising

Florida’s Longest Span Between Hurricanes

*As of June 30, 2012

Source: USA Today, 6/26/12. from flhurricane.com; Insurance Information Institute.

9.15

6.686.22

4.87

0

1

2

3

4

5

6

7

8

9

10

Aug., 31, 1856 -

Oct. 23, 1865

Oct. 24, 2005 -

???*

Sep. 4, 1979 -

Nov. 20, 1985

Oct. 12, 1987 -

Aug. 23, 1992

The current hurricane dry spell is the second longest in recorded history. Despite recent low activity, it is not a question of ―IF‖ a hurricane

will hit Florida but ―WHEN‖

9 Y

ears

53 D

ays

6 Y

ears

249 D

ays*

6 Y

ears

79 D

ays*

6 Y

ears

317 D

ays*

15

RNW Homeowners: FL vs. U.S.,1990-2010

Sources: NAIC.

-800%

-700%

-600%

-500%

-400%

-300%

-200%

-100%

0%

100%

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

US HO FL HO

(Percent)

16

Homeowners Average Expenditure: FL vs. U.S., 1995-2009

Sources: NAIC.

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

US HO FL HO

17

Global Property Catastrophe Rate on Line Index, 1990—2012 (as of Jan. 1)

15%

-3%

-13% -8

%

-20%

-18% -1

1%

3%

14%

-11% -6

%

-9%

-16%

10%

-12%

-3%

8%1

4%

76%

68%

25%

20%

0%

115

141

230

200

184

147

123

152

255

233

195

235

184

199

133111

105

237

100

154

173

145

190

-40%

-20%

0%

20%

40%

60%

80%

100%

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12

Ye

ar

Ov

er

Ye

ar

% C

ha

ng

e in

RO

L

0

50

100

150

200

250

300

Cu

mu

lativ

e R

ate

on

Lin

e (1

99

0=

10

0)

Year Over Year % Change

Cumulative Rate on Line Index

Sources: Guy Carpenter; Insurance Information Institute.

Hurricane Andrew had a major impact on Property-

Cat reinsurance pricing

Source: James Madison Institute, February 2008.

ME

NH

MA

CT

PA

WV

VA

NC

LA

TX

OK

NE

ND

MN

MI

IL

IA

ID

WA

OR

AZ

HI

NJ

RI B

DE

AL

VT

NY

MD

SC

GA

TN

AL

FL

MS

ARNM

KYMOKS

SDWI

IN

OH

MT

CA

NV

UT

WY

CO

AK

= A= B= C= D= F= NG

Source: R Street Institute, June 2012.

B- B+

B

C

A

C

B

B

B

C-

AB-

C

C

C-

C

C+ D

B

C-

D+

C

CC+

A

B+

B+

A+

A+

C

B

B+

A+

B-

C+

B-

B

B+

B

C-

D+

CD

C

B-

C-

D F

D

2011 Property and Casualty InsuranceRegulatory Report Card

Not Graded: District of Columbia

Florida was the only state to get a grade of ―F‖ in 2011, due in

large part to it’s disastrous state-run (re)insurance programs

19

Coastal Residual Market Exposure

State-Run Coastal Plans Surged With

Population Growth in Exposed States;

Growth Continues

19

333.7

283.1

427.1

104.6

662.9

136.2

1,388.1

254.5

1,136.6

229.1

1,725.8

410.7

2,746.5

3,831.4

4,178.4

12,465.9

12,703.4

501.0

247.8

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

New York

Louisiana

Connecticut

Mississippi

Alabama

Rhode Island

Massachusetts

Maine

New Jersey

Hawaii

South Carolina

Delaware

Maryland

New Hampshire

Virginia

Georgia

North Carolina

Texas

Florida

Population Growth Projections for Hurricane Exposed States (2000 to 2030) (000s)

The U.S. as a whole is expected to have a population increase

of 82.1 million, or 29.2 percent during the same period.

Source: U.S. Census Bureau, accessed at http://www.census.gov/population/projections/PressTab1.xls

By 2030, Florida is expecting a population increase of 12.7 million, closely followed by Texas with an expected increase of 12.5 million.

49%

50%

52%

59%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Santa Rosa, FL

Chesterfield, VA

Walton, FL

Fort Bend, TX

St. Bernard, LA

Leading Coastal Counties In Projected Population Change, 2011-2025

Source: NOAA State of the Coast, Woods & Poole and NOAA, 2010.

Four of the five fastest growing coastal counties

expected from 2011 to 2025 are located along

the Gulf of Mexico.

U.S. Residual Market: Total Policies In-Force (1990-2011) (000)

Source: PIPSO; Insurance Information Institute

931.6

1,785.0

1,458.1

1,196.5

1,741.7

2,841.4

3,311.8

2,479.4

1,319.7

2,621.32,780.6

1,642.3

2,840.4

2,209.32,203.9

0

500

1,000

1,500

2,000

2,500

3,000

3,500

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(000)

Hurricane Andrew

4 Florida Hurricanes

Katrina, Rita and Wilma

In the 22-year period between 1990 and 2011, the total number of policies in-force in the residual market (FAIR & Beach/Windstorm) Plans has more

than tripled.

23

U.S. Residual Market Exposure to Loss($ Billions)

Source: PIPSO; Insurance Information Institute (I.I.I.).

$281.8

$757.9

$884.7

$430.5$372.3

$54.7

$150.0

$292.0$244.2

$221.3

$419.5

$656.7$696.4

$771.9$703.0

$0

$100

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

($ Billions)

In the 22-year period between 1990 and 2011, total exposure to loss in the residual market (FAIR & Beach/Windstorm) Plans has surged from $54.7

billion in 1990 to a record high of $884.7 billion in 2011.

Hurricane Andrew



U.S. FAIR Plans: Total Policies In-Force(1990-2011) (000)


781.2951.7 958.6

885.6

1,576.2

2,281.22,130.5

2,462.0

2,710.32,561.4

1,112.4

1,505.0

2,526.4

2,045.52,046.2

0

500

1,000

1,500

2,000

2,500

3,000

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(000)

Hurricane Andrew



In the 22-year period between 1990 and 2011, the total number of policies in-force in the nation’s FAIR Plans has more than tripled.

U.S. FAIR Plans Exposure to Loss(Billions of Dollars)


$715.3

$662.6$614.9

$612.7

$684.8

$601.9

$387.8$400.4

$345.9

$269.6

$140.7$113.3

$170.1

$96.5

$40.2

$0

$100

$200

$300

$400

$500

$600

$700

$800

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total exposure to loss in the residual market (FAIR & Beach/Windstorm)

Plans has surged from $54.7bn in 1990 to a record $884.7 billion in 2011.

In the 22-year period between 1990 and 2011, total exposure to loss in the FAIR Plans has surged by a massive 1,679 percent from $40.2 billion in 1990

to $715.3 billion in 2011.

U.S. Beach and Windstorm Plans Exposure to Loss (Billions of Dollars)

*PIPSO figures for 2011 include the North Carolina Beach Plan, now a member of PIPSO (as of June, 2012).


$169.4

$95.2$88.1

$83.7$85.5

$54.9

$31.7$30.0$26.4$22.4

$103.5$108.0$111.8

$53.5

$14.5

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*

In 2002 Florida combined its Windstorm and Joint Underwriting Association to

create Florida Citizens, so Florida data shifted to the FAIR plans from this date.

In the 22-year period between 1990 and

2011, total exposure to loss in the Beach and

Windstorm plans ballooned by more

than 550 percent, from $14.5 billion in 1990 to $169.4 billion in 2011*.

FAIR Plan Operating Gains/Losses 1990-2011 (Millions of Dollars)

Source: PIPSO; Insurance Information Institute.

$444.3

$894.8$719.5

$532.7

$1,861.0

$3,579.4

-$1,860.3-$1,508.6

$510.2$529.9

$21.4$11.4$81.1

-$51.9

-$3,000

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

The FAIR plans’ aggregate

operating loss between 1995 and

2005 ballooned by 3584 percent.

In the course of the last six years (2006-2011) the FAIR plans have

reported an aggregate operating gain, after successive operating losses in

2005 and 2004.

1.21%

1.71%

11.49%

4.01%

4.16%

5.79%

7.64%

13.70%

3.74%

3.79%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Texas (TWIA)

Rhode Island

Louisiana

Massachusetts

Florida

2002 2010

FAIR/Beach Plan Earned Premium as % of Overall Property Market (Top 5 states) 2002 vs. 2010


$14.9

$54.1

$51.8

$60.6

$85.6

$92.5

$132.8

$146.9

$158.8

$191.9

$224.4

$479.9

$635.5

$772.8

$895.1

$2,378.9

$2,458.6

$55.7

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000

Maryland

Rhode Island

Mississippi

New Hampshire

Delaware

Georgia

Alabama

North Carolina

Maine

Virginia

S. Carolina

Louisiana

Connecticut

New Jersey

Massachusetts

Texas

New York

Florida

Total Value of Insured Coastal Exposure In 2007($ Billions)

Source: AIR Worldwide

Florida had $2.5 trillion in insured coastal property exposure in 2007,

the highest of any hurricane-exposed state.

1.0%

5.0%

9.0%

12.0%

13.0%

23.0%

26.0%

28.0%

29.0%

34.0%

35.0%

36.0%

54.0%

59.0%

62.0%

64.0%

79.0%

11.0%

0% 20% 40% 60% 80% 100%

Maryland

Georgia

NC

Virginia

Alabama

Mississippi

NH

Texas

S. Carolina

Rhode Island

New Jersey

Louisiana

Delaware

Massachusetts

Maine

New York

Connecticut

Florida

Insured Coastal Exposure As a % Of Statewide Insured Exposure In 2007


Value of Insured Residential Coastal Exposure In 2007 ($ Billions)

$660.4

$388.3

$373.0

$319.5

$250.8

$96.9

$90.1

$81.1

$78.4

$72.6

$46.5

$38.1

$36.7

$31.9

$30.8

$25.7

$7.2

$1,238.6

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400

Florida

New York

Texas

Massachusetts

New Jersey

Connecticut

Louisiana

S. Carolina

Maine

North Carolina

Virginia

Alabama

Georgia

Delaware

Rhode Island

New Hampshire

Mississippi

Maryland


Value Of Insured Commercial Coastal Exposure 2007 ($ Billions)

$1,220.0

$506.8

$399.8

$316.0

$229.1

$127.5

$101.8

$86.2

$65.9

$54.4

$47.5

$46.0

$26.1

$24.9

$23.8

$22.2

$7.7

$1,718.6

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000

New York

Florida

Texas

Massachusetts

New Jersey

Connecticut

Louisiana

S. Carolina

Virginia

Maine

North Carolina

Georgia

Alabama

Mississippi

New Hampshire

Delaware

Rhode Island

Maryland


22%30% 31%

28%

33% 32%

0%

10%

20%

30%

40%

50%

60%

70%

Coastal Counties Interior Counties Noncoastal States

Somewhat Unfair Very unfair

Public Attitude Monitor 2006: Unfairness of Policyholder Subsidies

Growth in residual market mechanisms may be due in part

to implicit support of residents of coastal communities.

Coastal States

Source: Insurance Research Council

29%25%

30%

22%34%

31%

0%

10%

20%

30%

40%

50%

60%

70%

Coastal Counties Interior Counties Noncoastal States

Somewhat Unfair Very unfair

Public Attitude Monitor 2006: Unfairness of Taxpayer Subsidies

Some 59% of those living in interior counties and 61% in

noncoastal states think taxpayer-subsidized insurance is unfair,

compared to just 51% of those living in coastal counties.

Coastal States

Source: Insurance Research Council

FAIR Plan Operating Gains/Losses 1990-2011 (Millions of Dollars)

Source: PIPSO; Insurance Information Institute.

$444.3

$894.8$719.5

$532.7

$1,861.0

$3,579.4

-$1,860.3-$1,508.6

$510.2$529.9

$21.4$11.4$81.1

-$51.9

-$3,000

-$2,000

-$1,000

$0

$1,000

$2,000

$3,000

$4,000

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

The FAIR plans’ aggregate

operating loss between 1995 and

2005 ballooned by 3584 percent.

In the course of the last six years (2006-2011) the FAIR plans have

reported an aggregate operating gain, after successive operating losses in

2005 and 2004.

Residual Market Plan Estimated Deficits 2004/2005 (Millions of Dollars)

* MWUA est. deficit for 2005 comprises $545m in assessments plus $50m in Federal Aid.

Source: Insurance Information Institute

-$516

-$1,425

-$1,770

-$954

-$595 *

-$2,000

-$1,800

-$1,600

-$1,400

-$1,200

-$1,000

-$800

-$600

-$400

-$200

$0

Florida Hurricane

Catastrophe Fund

(FHCF) Florida Citizens Louisiana Citizens

Mississippi

Windstorm

Underwriting

Association (MWUA)

2004 2005

The impact of Hurricane Katrina pushed all of the residual market property plans

in the affected states into deficits for 2005, following an already record

hurricane loss year in 2004.

Florida Citizens Exposure to Loss ($ Billions)

Source: PIPSO; Insurance Information Institute (I.I.I.).

$154.6

$195.5 $206.7 $210.6

$408.8

$485.1

$421.9$406.0

$460.7

$510.7

$0

$100

$200

$300

$400

$500

$600

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Since its creation in 2002, total exposure to loss in Florida Citizens has increased by 230 percent, from $154.6 billion to $510.7 billion in 2011.

$14.9

$54.1

$51.8

$60.6

$85.6

$92.5

$132.8

$146.9

$158.8

$191.9

$224.4

$479.9

$635.5

$772.8

$895.1

$2,378.9

$2,458.6

$55.7

$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000

Maryland

Rhode Island

Mississippi

New Hampshire

Delaware

Georgia

Alabama

North Carolina

Maine

Virginia

S. Carolina

Louisiana

Connecticut

New Jersey

Massachusetts

Texas

New York

Florida

Total Value of Insured Coastal Exposure In 2007($ Billions)


Louisiana had $224.4 billion in insured coastal property exposure in 2007, 7th

highest of any hurricane-exposed state.

Mississippi Windstorm Plan: Exposure to Loss (Millions of Dollars)


$7

,21

0.5

$7

,02

4.2

$6

,68

7.0

$6

,25

3.1

$5

,64

3.0

$5

,36

9.5

$1

,87

3.0

$1

,63

1.8

$1

,34

4.3

$1

,12

1.7

$8

48

.6

$8

64

.9

$9

17

.9

$6

37

.1

$3

52

.9

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total exposure to loss in the Mississippi Windstorm Underwriting Association (MWUA) has surged by 1,943 percent, from $352.9 million in

1990 to $7.2 billion in 2011.

Texas Windstorm Insurance Association (TWIA): Exposure to Loss (Building & Contents Only) ($ Billions)

Source: TWIA at 06/05/12, Texas Department of Insurance, Southwestern Insurance Information Services (SIIS)

$72.0$71.1$67.4

$64.4

$58.6$58.6

$38.3

$23.3$20.8$18.8

$16.0$13.2$12.1

$0

$10

$20

$30

$40

$50

$60

$70

$80

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Mar

31-

2012

TWIA’s exposure to loss for building & contents has surged by 495 percent in the last 12 years from $12.1 billion in 2000 to

$72.0 billion in 2012.

Texas Windstorm Insurance Association (TWIA) Total Exposure to Loss (Millions of Dollars)

Source: TWIA at 06/05/12, Texas Department of Insurance

$7,077.3

$72,048.9

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Building & Contents ALE/Business Income

By March 31, 2012, TWIA’s total exposure had surged to $79.1 billion.

Texas Windstorm Insurance Association (TWIA) New Financial Structure

Source: Southwestern Insurance Information Institute (SIIS)

New TWIA financing structure made available up to $2.5 billion to fund

losses via three post-event bonding layers.

The new structure eliminated the unlimited

assessment on TWIA member insurers and did

not call for TWIA to purchase reinsurance.

Massachusetts FAIR Plan Policy Count (1990-2011)


49

,62

8 77

,63

2

88

,45

6

85

,36

8

88

,03

6

98

,77

0

11

6,3

85 1

55

,64

0

22

2,8

25

21

5,5

70

21

6,1

82

19

2,9

44

21

7,0

56

23

4,5

82

23

1,6

59

0

50,000

100,000

150,000

200,000

250,000

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In the 22-year period between 1990 and 2011, the number of policies in

the MA FAIR plan has surged by 336 percent from 49,628 policies in

1990 to 216,182 policies in 2011.

Massachusetts FAIR Plan Exposure to Loss (Billions of Dollars)


$76.7$77.6$79.4$81.5

$79.5

$68.6

$54.0

$39.2

$26.7

$20.5$16.7$15.3

$10.3$8.3$4.1

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

In the 22-year period between 1990 and 2011, total exposure to loss in the MA FAIR plan has surged by 1,771 percent from $4.1 billion in

1990 to $76.7 billion in 2011.

Massachusetts FAIR Plan Operating Gain or Loss 2000-2011 (Millions of Dollars)


$17.2

$43.4$47.0

$141.7

$93.2

$58.12

$32.94

$9.46

-$14.27-$3.38

$1.96

-$6.20

-$40

-$20

$0

$20

$40

$60

$80

$100

$120

$140

$160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

The MA FAIR Plan’s operating results have been variable over

the years.

www.iii.org

Thank you for your timeand your attention!

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