Hurricane Sandy is expected to cost The Hartford $370 million in total claims, before tax, the property-casualty insurer said Tuesday.
The Hartford Financial Services Group has reinsurance to cover part of that, and expects the company’s losses from the storm will be $350 million before tax, net of reinsurance.
Hurricane Sandy is estimated to cost The Travelers Cos. $650 million after the company accounts for tax and reinsurance.
Reinsurance is insurance for insurers, covering insured costs if the dollar amount reaches a certain level.
The Travelers Cos. reported soaring profits for the third-quarter Thursday as the company benefited from its ability to retain customers while raising prices, and it was spared by a relatively calm hurricane season.
Net income for the three-month period ending Sept. 30 was $864 million, or $2.21 per diluted share, compared with $333 million, or 79 cents per diluted share, during the same period in 2011.
“We remain committed to continuing to improve profitability through a strategy of actively, but selectively, seeking price increases and improved terms and conditions, given historically low interest rates and uncertain weather patterns,” said Travelers Chairman and CEO Jay Fishman.
Climate change increased the number of hurricanes, tornadoes and other weather-related catastrophes by nearly five times in North America during the past 30 years, according to research published Wednesday by the world’s largest reinsurer, Munich Re.
The German reinsurer said that “nowhere in the world is the rising number of natural catastrophes more evident than in North America.”
Insurance companies and reinsurers, which provide property coverage to insurers, have paid out between $10.4 billion and $110.8 billion annually to cover natural disasters worldwide between 2000 and 2009, according to the Insurance Information Institute, a trade group.
Separately, I wrote recently about the rising liability costs to insurers to pay lawyers in defending against climate-change related lawsuits, of which there have been more than 500 since 1989, according to a tally by a Columbia University law professor.
Between 1980 and 2011, the total insured property cost of weather-related catastrophes in the U.S. was $510 billion. About 30,000 people died as a result of storms during this period.
Munich Re, the parent company of Hartford Steam Boiler Inspection and Insurance Co., was careful to point out that the rising cost of storms and catastrophes is due to factors other than climate change.
“The increasing losses caused by weather related natural catastrophes have been primarily driven by socio-economic factors, such as population growth, urban sprawl and increasing wealth,” Munich Re said in a press release.
Here are some excerpts from Munich Re’s release:
- The study was prepared in order to support underwriters and clients in North America, the world’s largest insurance and reinsurance market. Using its NatCatSERVICE — with more than 30,000 records the most comprehensive loss data base for natural catastrophes — Munich Re analyzes the frequency and loss trends of different perils from an insurance perspective. The North American continent is exposed to every type of hazardous weather peril — tropical cyclone, thunderstorm, winter storm, tornado, wildfire, drought and flood. One reason for this is that there is no mountain range running east to west that separates hot from cold air.
- Nowhere in the world is the rising number of natural catastrophes more evident than in North America. The study shows a nearly quintupled number of weather-related loss events in North America for the past three decades, compared with an increase factor of 4 in Asia, 2.5 in Africa, 2 in Europe and 1.5 in South America. Anthropogenic climate change is believed to contribute to this trend, though it influences various perils in different ways. Climate change particularly affects formation of heat-waves, droughts, intense precipitation events, and in the long run most probably also tropical cyclone intensity.