Historical hurricane costs upwards of $10bn in 2012, claim cat experts

Storm warning

Experts have stated that 28 out of almost 180 hurricanes that have occurred in the United States since 1990 would have caused $10bn (£6.3bn) or more in insured losses had they happened today.

According to independent experts in catastrophe risk management at Karen Clark & Company, the cost of devastation caused by these historical catastrophic events would be magnified in 2012, as a result of the greater number, size and cost of structures in their paths.

The 1926 Great Miami Hurricane tops the list with an estimated $125bn (£79bn) loss. The two deadliest hurricanes in US history, the 1928 Okeechobee Hurricane and the famous Galveston storm of 1900, are the next costliest at $65bn and $50bn, respectively.

Two other Florida storms, the 1947 Fort Lauderdale Hurricane and the 1992 Hurricane Andrew are also estimated at $50bn. Rounding out the top loss producers are the 1915 Galveston ($40bn), the 2005 Hurricane Katrina ($40 bn), the 1938 Great New England ($35bn), the 1954 Hazel and 1965's Betsy, both estimated at $20bn.

Hurricane Donna in 1960 affected the entire East Coast from Florida to Maine and would likely cause a $25bn loss today. The remaining 17 storms on the list range from $10bn to $15bn each.

Commenting on the findings, Karen Clark, president and chief executive of KCC, said: "It's clear many hurricanes that struck the United States in the earlier part of the 20th century would cause orders of magnitude more damage today.

"This is due not only to an increased density of structures in coastal regions, but also to changes in construction practices that have resulted in larger and more expensive buildings. Even a storm as recent as Hurricane Andrew, which struck 20 years ago this month, would be three times as costly today."

Glen Daraskevich, senior vice president at KCC, added: "We conducted this study because our clients asked us to provide historical event information as another tool they can use to assess their catastrophe loss potential.

"Researching the various data sources we found incomplete and conflicting information, which led us to compile and thoroughly evaluate all of the sources. Our methodology built on previous work which we extended and enhanced to develop a credible and reliable estimate for each historical storm."

For this study, KCC combined approaches, gathering and cross-referencing information, modifying that information as necessary to ensure reliability, and using it to estimate the losses for each hurricane.

The report indicates the US can expect a hurricane loss of $10 billion or greater once every four years on average. This equates to a 25 percent probability this year. A $50 billion hurricane loss has almost a five percent probability this year.

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