4 Reasons 2011 Was a Unique Year for Catastrophe Events

CoreLogic, a Santa Ana, Calif.-based provider of analytics and business intelligence, released its 2011 Natural Hazard Risk Summary and Analysis earlier this week. Among the highlights:

• 2011 was the most expensive and the deadliest hurricane season for the U.S. since 2008. Three Atlantic storms caused a combined $8 billion in damage, much of it from flooding.
• 2011 was the third most active tornado season since 1980. The 1,559 storms resulted in the deaths of 552 people. The most powerful storms, in Tuscaloosa, Ala. and Joplin, Mo., led to combined losses in excess of at least $5 billion.
• There were fewer wildfires in 2011, continuing a downward trend in fire numbers since 2006. However, acres burned more than doubled.
• 2010 and 2011 both saw more than double the number of earthquakes compared to the previous 14 years.

  "We've had a lot of events this year that were exceptional, such as the earthquake in Virginia and the swarm of earthquakes in Oklahoma," Dr. Howard Botts, EVP and director of database development for CoreLogic Spatial Solutions tells Insurance & Technology.

  Other exceptional events, Botts notes, included the uptick in tornado and hail activity, and the amount of damage caused by flooding rather than wind when it came to hurricane damage. These events are causing insurers to adapt some of their practices.

  "Every insurer we talked to is concerned with getting a handle on [tornadoes] and expanding the areas in which they charge their highest rates," he says. "Climatic variability is increasing so we seem to get much more dramatic storms. In the US we see tremendous movement of people to high hazard areas. We have more property at risk and that's a huge issue."

  The flooding that followed Hurricane Irene was an exceptional surprise to insurers. Like Deloitte's Howard Mills told us earlier this year, Botts recommends insurers depend less on FEMA flood maps when establishing the flood risk of their insureds.

  "Companies want to have a much better understanding of what their risk is outside the flood zones," he says. "A lot of the damage was outside the 100-year or even the 500-year FEMA flood zones. A single storm paralleling the coast can cause havoc all the way up the east coast."

  Nathan Golia is senior editor of Insurance & Technology. He joined the publication in 2010 as associate editor and covers all aspects of the nexus between insurance and information technology, including mobility, distribution, core systems, customer interaction, and risk ... View Full Bio