Top 12 Most Costly Disasters in US History, (Insured Losses, $2007)

$4.0 $5.0 $6.0 $7.0 $7.8 $8.1 $8.2$10.9 $10.9

$22.0 $22.9

$43.6

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

Jeanne(2004)

Frances(2004)

Rita (2005)

Hugo(1989)

Ivan (2004)

Ike(2008)*

Charley(2004)

Wilma(2005)

Northridge(1994)

9/11Attacks(2001)

Andrew(1992)

Katrina(2005)

$ B

illi

ons

*2008 dollarsSources: ISO/PCS; AIR Worldwide, RMS, Eqecat; Insurance Information Institute inflation adjustments.

10 of the 12 most expensive disasters ever were hurricanes; 8 of the top 10

hurricanes occurred since 2004In 2008, Hurricane Ike became the 5th most expensive hurricane

in US history and the 7th most expensive disaster ever.

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

$2,378.9$895.1

$772.8$635.5

$479.9$224.4

$191.9$158.8$146.9$132.8

$92.5$85.6

$60.6$55.7$51.8$54.1

$14.9

$2,458.6

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

FloridaNew York

TexasMassachusetts

New JerseyConnecticut

LouisianaS. Carolina

VirginiaMaine

North CarolinaAlabamaGeorgia

DelawareNew Hampshire

MississippiRhode Island

Maryland

Source: AIR Worldwide

In 2007, Florida still ranked as the #1 most exposed state to hurricane loss, with $2.459 trillion exposure, an increase of $522B or 27% from

$1.937 trillion in 2004.

The insured value of all coastal property was $8.9 trillion in 2007, up 24% from $7.2 trillion in 2004.

$522B increase since 2004, up 27%

($10.60)

($0.21)

$0.69 $0.43$0.86 $1.08 $1.23 $1.28 $1.43 $1.15 $1.38 $1.76

($9.30)

($3.77)

$2.96 $3.40

($12)

($10)

($8)

($6)

($4)

($2)

$0

$2

$4

$6

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07E

Underwriting Gain (Loss) in Florida Homeowners Insurance,

1992-2007E*

*2007 estimate by Insurance Information Inst. based on historical loss, expense and premium data for FL.**Does not include Citizens Property Insurance Corporation results.

$ B

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ons

Florida’s homeowners insurance market produces small/modest

profits in most years and enormous losses in others

Private Insurers**

-$10.6-$10.8-$10.1-$9.7

-$8.8-$7.7

-$6.5

-$5.2

-$3.8-$2.7

-$1.3

$0.5

-$8.8

-$12.6

-$9.6

-$6.2

($14)

($12)

($10)

($8)

($6)

($4)

($2)

$0

$2

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07E

Cumulative Underwriting Gain (Loss) in Florida Homeowners

Insurance, 1992-2007E*

$ B

illi

ons

It took insurers 11 years (1993-2003) to erase the UW loss

associated with Andrew, but the 4 hurricanes of 2004 erased the prior 7 years of profits &

2005 deepened the hole.

Regulator under US law has duty to allow rates

that are “fair,” “not excessive” and “not

unduly discriminatory.”Reality is that regulators

in CAT-prone states suppress rates.

*2007 estimate by Insurance Information Inst. based on historical loss, expense and premium data for FL.**Does not include Citizens Property Insurance Corporation results.

Private Insurers**

CAPITAL & CAPACITY CONSIDERATIONS:

INSURERS MUST PUT LARGE AMOUNTS OF CAPITAL AT

RISK TO OFFER INSURANCE IN FLORIDA

Are Coastal Development

Patterns Economically

Rational?

Florida for Sale: 24/7/365

Ft. Lauderdale West Palm Miami Beach

New Condo Construction inSouth Miami Beach, 2007-2009

• Number of New Developments: 15

• Number of Individual Units: 2,111

• Avg. Price of Cheapest Unit: $940,333

• Avg. Price of Most Expensive Unit: $6,460,000

• Range: $395,000 - $16,000,000

• Overall Average Price per Unit: $3,700,167*

• Aggregate Property Value: At least $6 Billion*Based on average of high/low value for each of the 15 developments

Source: Insurance Information Institute from www.miamicondolifestyle.com accessed April 5, 2007.

Great Miami Hurricane of 1926: Hurricane Damage Adjusted for Inflation, Growth in Coastal

Properties, Real Growth in Property Values*

$0.76

$500

$130

$73

$0

$100

$200

$300

$400

$500

$600

1926 1998 2005 2020

$ B

illi

ons

Repeat of Great Miami Hurricane of

1926 could cause $500B in damage by 2020 given current

demographic trends

*Includes damage form wind and storm surge but generally excludes inland flooding.Source: Roger Pielke and Christopher Landsea, December 2005; Insurance Info. Institute.

(Billions of 2004 Dollars)

Track of 1926 storm

Insurance Information Institute On-Line

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