Insurance Association Applies Katrina Lessons to Future

On the fifth anniversary of Hurricane Katrina, insurers are highlighting the good that came from the worst U.S. natural disaster in a new report.

The Property Casualty Insurers Association of America released a white paper on Aug. 11, 2010, The Hurricane Katrina Experience – A Property Casualty Insurance Perspective: Five Years Later. David Sampson, president and chief executive officer of the association wrote the document that explores the amount of damage caused by the hurricane throughout Louisiana and Mississippi and how insurers are handling catastrophic events.

More human and financial resources were deployed to assist the region than from any other storm in American history, said Sampson. The insurance industry dispatched thousands of insurance adjusters to the Gulf region to help with filing claims. The industry paid billions of dollars in claims and helped with relief efforts.

Hurricane Katrina Changes Insurance Practices

According to the paper, Hurricane Katrina created important opportunities for the insurance industry to assess the ways it prepares for future natural disasters. The paper lists the following lessons insurers should learn.

Communities and homeowners must be encouraged to reduce their risk of loss, which would lower costs to insurance companies
insurers are better able to handle disruptions in service, and many have overcome challenges, such as mobile operations centers
Insurers are using advanced technologies to improve customer communications and service
Insurers need to explain the necessity for flood insurance to customers on a regular basis
They must continue to develop more sophisticated catastrophe models

As part of its plans to use Katrina lessons and apply them to the future, PCI is trying to get legislators to establish effective mitigation programs. They also are using satellite technologies to locate disaster victims and reach them to provide assistance and assess damage in timely manner. Insurers also have campaigned Congress to strengthen the National Flood Insurance Program, the report said.

Katrina Remains Most Devastating Storm

Statistics show Katrina is the most costly disaster in U.S. history, reaching $45.9 billion in damage. Hurricane Andrew in 1992 cost $24.1 billion, the report said. The rest of the top 10 include a California earthquake in 1994, $18.4 billion; Hurricane Ike in 2008, $12.7 billion; Hurricane Wilma in 2005, $11.5 billion; Hurricane Charley in 2004, $8.6 billion; Hurricane Ivan in 2004, $8.2 billion; Hurricane Hugo in 1989; $7.4 billion; Hurricane Rita in 2005, $6.3 billion; and Hurricane Frances in 2004, $5.3 billion.

Hurricane Katrina, the most devastating natural disaster in America has left a long-last impact on hundreds of thousands of people, but it also provided many lessons that property insurers can use in their practices, the report concluded.

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