Upload
others
View
4
Download
0
Embed Size (px)
Citation preview
The Legacy of Hurricane Andrew:What Has Been Learned Over the Past 20 Years?
Florida International University
Miami, FL
June 27, 2012
Download at www.iii.org/presentationsRobert P. Hartwig, Ph.D., CPCU, President & Economist
Insurance Information Institute ♦♦♦♦ 110 William Street ♦♦♦♦ New York, NY 10038
Tel: 212.346.5520 ♦♦♦♦ Cell: 917.453.1885 ♦♦♦♦ [email protected] ♦♦♦♦ www.iii.org
2
Hurricane Andrew: The Legacy Lives On
� At $15.5 Bill, Hurricane Andrew Was the Costliest Insurance Event in Global History When it Occurred in 1992 ($25 Bill in 2011 $)
� Andrew held that title until the Sept. 11, 2001 terrorist attacks ($24 bill in 2011 $)
� Most expensive natural disaster until Hurricane Katrina ($47.6 bill in 2011 $)
� Hurricane Andrew Was the Most Disruptive Event in US Insurance History
� 11 small insurers failed (FL, LA); resources of many large insurers were strained
� Hurricane Andrew Fundamentally and Irrevocably Changed How Insurers and Reinsurers Manage Catastrophic Risk in the US and Globally
� Insurance Markets Changes Occurring in the 20 Years Since Andrew:
� More Carefully Managed Coastal Exposure (and for cat exposure in general)
� Capital Base (Capacity) of Global (Re)Insurance Industry Greatly Expanded
� More Use of Reinsurance
� Birth and Rapid Evolution of Sophisticated Catastrophe Modeling
� Growth of Markets Like Bermuda
� Use of Capital Market Instruments (e.g., CAT Bonds)
� Larger Role of Government in Insuring Coastal Risks
� Strong Support for Strengthened Building Codes and Mitigation
3
Lesson Learned: Strong Building Codes, Mitigation Are Essential in Creating Disaster
Resistant Communities
Hurricane Andrew Had Major Impact on Building Code Strengthening
and Enforcement3
Residential Building Code Ratings in Hurricane Prone States
Source: Rating the States, Dec. 31, 2011, Insurance Institute for Business and Home Safety; Insurance Information Institute. 4
Florida and Virginia were the top ranked states
in terms preparedness of
residential structures against hurricane damage
Despite catastrophic losses from Hurricane
Katrina in 2005, MS still has no statewide building code, putting it dead last
in the US;
AL and TX rank poorly as well despite major post-
Andrew storms
Florida Leads the US with 2.1 Million NFIP Policies in Force*
5
*As of Sept. 30, 2011
Source: National Flood Insurance Program; Insurance Information Institute.
Insurance Industry Invests Millions in Property Loss Reduction Research
6Source: Insurance Information Institute from IBHS web site: http://ofb.ibhs.org/research
In 2010, the Insurance Institute for Business and Home Safety Research Center Opened in Chester County, SC. The $40 Million Facility Is Entirely
Funded by the Insurance Industry and Its Mission Is to Conduct Research to Reduce Property Loss from a Variety of Perils, Including Hurricanes
7
Lesson NOT Learned: The US Is More Vulnerable than
Ever to Catastrophic Hurricane Loss
Hurricane Andrew Had Zero Effect in Terms of Diminishing Demand for
At-Risk Property7
8
U.S. Insured Catastrophe Loss Update
2011 Was One of the Most Expensive Years on Record
8
9
Top 14 Most Costly Disastersin U.S. History
(Insured Losses, 2011 Dollars, $ Billions)
*Losses will actually be broken down into several “events” as determined by PCS. Includes losses for the period April 1 – June 30.
Sources: PCS; Insurance Information Institute inflation adjustments.
$9.0$11.9 $13.1
$19.1$21.3
$24.0 $25.0
$47.6
$8.5$7.7$6.5$5.5$4.4$4.3
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
Irene
(2011)
Jeanne
(2004)
Frances
(2004)
Rita
(2005)
Hugo
(1989)
Ivan
(2004)
Charley
(2004)
Wilma
(2005)
Ike
(2008)
Northridge
(1994)
Spring
Tornadoes
& Storms*
(2011)
9/11
Attack
(2001)
Andrew
(1992)
Katrina
(2005)
Even 20 years later, Hurricane Andrew is the 2nd most
expensive event in US history
Most of the costliest disaster in US history were hurricanes, most impacting FL
Nu
mb
er
Geophysical (earthquake, tsunami, volcanic activity)
Climatological (temperature extremes, drought, wildfire)
Meteorological (storm)
Hydrological (flood, mass movement)
Natural Disasters in the United States, 1980 – 2011Number of Events (Annual Totals 1980 – 2011)
Source: MR NatCatSERVICE 10
37
8
51
2
There were 117 natural disaster events in 2011
Losses Due to Natural Disasters in the US, 1980–2011 (Overall & Insured Losses)
11
Overall losses (in 2011 values) Insured losses (in 2011 values)
Source: MR NatCatSERVICE © 2011 Munich Re
(2011 Dollars, $ Billions)
2011
Overall Losses: $72.8 Bill
Insured Losses: $35.9 Bill
2011 was the 5th most expensive year on record for insured
catastrophe losses in the US.
Approximately 50% of the overall cost of
catastrophes in the US was covered by insurance in 2011
(Overall and Insured Losses)
12
$1
2.3
$10
.7
$3
.7 $14
.0
$11
.3
$6.0
$3
3.9
$7
.4 $15
.9
$32
.9
$7
1.7
$1
0.3
$7
.3
$2
8.5
$11
.2
$14
.1
$32
.3
$10
0.0
$13
.7
$4
.7
$7.8
$3
6.9
$8.6
$2
5.8
$0
$20
$40
$60
$80
$100
$120
89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11*20??
US Insured Catastrophe Losses
*PCS figure as of April 6, 2012.
Note: 2001 figure includes $20.3B for 9/11 losses reported through 12/31/01 ($25.9B 2011 dollars). Includes only business and personal property claims, business interruption and auto claims. Non-prop/BI losses = $12.2B ($15.6B in 2011 dollars.)
Sources: Property Claims Service/ISO; Insurance Information Institute.
US CAT Losses in 2011 Were the 5th Highest in US History on An Inflation Adjusted Basis
$100 Billion CAT Year is Coming Eventually
Record Tornado Losses Caused
2011 CAT Losses to Surge
($ Billions, 2011 Dollars)
12
13
Inflation Adjusted U.S. Catastrophe Losses by Cause of Loss, 1990–2011:H11
0.2%
2.4%
3.4%4.9%
6.6%
8.0%
31.8%
42.7%
1. Catastrophes are defined as events causing direct insured losses to property of $25 million or more in 2009 dollars.
2. Excludes snow.
3. Does not include NFIP flood losses
4. Includes wildland fires
5. Includes civil disorders, water damage, utility disruptions and non-property losses such as those covered by workers compensation.
Source: ISO’s Property Claim Services Unit.
Hurricanes & Tropical Storms, $160.5
Fires (4), $9.0
Tornadoes (2), $119.5
Winter Storms, $30.0
Terrorism, $24.9
Geological Events, $18.5
Wind/Hail/Flood (3), $12.7
Other (5), $0.6
Wind losses are by far cause the most catastrophe losses,
even if hurricanes/TS are excluded.
Tornado share of CAT losses is
rising
14
RNW Homeowners: FL vs. U.S.,1990-2010
Sources: NAIC.
-800%
-700%
-600%
-500%
-400%
-300%
-200%
-100%
0%
100%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10
US HO FL HO
(Percent)
15
Homeowners Average Expenditure: FL vs. U.S., 1995-2009
Sources: NAIC.
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
US HO FL HO
16
Global Property Catastrophe Rate on Line Index, 1990—2012 (as of Jan. 1)
15%
-3%
-13% -8
%
-20%
-18% -1
1%
3%
14%
-11% -6
%
-9%
-16%
10%
-12%
-3%
8%1
4%
76%
68%
25%
20%
0%
115
141
230
200
184
147
123
152
255
233
195
235
184
199
133111
105
237
100
154
173
145
190
-40%
-20%
0%
20%
40%
60%
80%
100%
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Ye
ar
Ov
er
Ye
ar
% C
ha
ng
e in
RO
L
0
50
100
150
200
250
300
Cu
mu
lativ
e R
ate
on
Lin
e (1
99
0=
10
0)
Year Over Year % Change
Cumulative Rate on Line Index
Sources: Guy Carpenter; Insurance Information Institute.
Hurricane Andrew had a major impact on Property-
Cat reinsurance pricing
Source: James Madison Institute, February 2008.
ME
NH
MA
CT
PA
WV
VA
NC
LA
TX
OK
NE
ND
MN
MI
IL
IA
ID
WA
OR
AZ
HI
NJ
RI B
DE
AL
VT
NY
MD
SC
GA
TN
AL
FL
MS
ARNM
KYMOKS
SDWI
IN
OH
MT
CA
NV
UT
WY
CO
AK
= A
= B
= C
= D
= F
= NG
Source: R Street Institute, June 2012.
B- B+
B
C
A
C
B
B
B
C-
AB-
C
C
C-
C
C+ D
B
C-
D+
C
CC+
A
B+
B+
A+
A+
C
B
B+
A+
B-
C+
B-
B
B+
B
C-
D+
CD
C
B-
C-
D F
D
2011 Property and Casualty InsuranceRegulatory Report Card
Not Graded: District of Columbia
Florida was the only state to get a grade of “F” in 2011, due in
large part to it’s disastrous state-run (re)insurance programs
18
Coastal Residual Market Exposure
State-Run Coastal Plans Surged With Population Growth in Exposed States;
Growth Continues
18
333.7
283.1
427.1
104.6
662.9
136.2
1,388.1
254.5
1,136.6
229.1
1,725.8
410.7
2,746.5
3,831.4
4,178.4
12,465.9
12,703.4
501.0
247.8
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
New York
Louisiana
Connecticut
Mississippi
Alabama
Rhode Island
Massachusetts
Maine
New Jersey
Hawaii
South Carolina
Delaware
Maryland
New Hampshire
Virginia
Georgia
North Carolina
Texas
Florida
Population Growth Projections for Hurricane Exposed States (2000 to 2030) (000s)
The U.S. as a whole is expected to have a population increase of 82.1 million, or 29.2 percent during the same period.
Source: U.S. Census Bureau, accessed at http://www.census.gov/population/projections/PressTab1.xls
By 2030, Florida is expecting a population increase of 12.7 million, closely followed by Texas with an expected increase of 12.5 million.
49%
50%
52%
59%
67%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Santa Rosa, FL
Chesterfield, VA
Walton, FL
Fort Bend, TX
St. Bernard, LA
Leading Coastal Counties In Projected Population Change, 2011-2025
Source: NOAA State of the Coast, Woods & Poole and NOAA, 2010.
Four of the five fastest growing coastal counties
expected from 2011 to 2025 are located along
the Gulf of Mexico.
U.S. Residual Market: Total Policies In-Force (1990-2011) (000)
Source: PIPSO; Insurance Information Institute
931.6
1,785.0
1,458.1
1,196.5
1,741.7
2,841.4
3,311.8
2,479.4
1,319.7
2,621.32,780.6
1,642.3
2,840.4
2,209.32,203.9
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(000)
Hurricane Andrew
4 Florida Hurricanes
Katrina, Rita and Wilma
In the 22-year period between 1990 and 2011, the total number of policies in-force in the residual market (FAIR & Beach/Windstorm) Plans has more
than tripled.
22
U.S. Residual Market Exposure to Loss($ Billions)
Source: PIPSO; Insurance Information Institute (I.I.I.).
$281.8
$757.9
$884.7
$430.5$372.3
$54.7
$150.0
$292.0$244.2$221.3
$419.5
$656.7$696.4
$771.9$703.0
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
($ Billions)
In the 22-year period between 1990 and 2011, total exposure to loss in the residual market (FAIR & Beach/Windstorm) Plans has surged from $54.7
billion in 1990 to a record high of $884.7 billion in 2011.
Hurricane Andrew
4 Florida Hurricanes
Katrina, Rita and Wilma
U.S. FAIR Plans: Total Policies In-Force(1990-2011) (000)
Source: PIPSO; Insurance Information Institute
781.2951.7 958.6
885.6
1,576.2
2,281.22,130.5
2,462.0
2,710.32,561.4
1,112.4
1,505.0
2,526.4
2,045.52,046.2
0
500
1,000
1,500
2,000
2,500
3,000
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
(000)
Hurricane Andrew
4 Florida Hurricanes
Katrina, Rita and Wilma
In the 22-year period between 1990 and 2011, the total number of policies in-force in the nation’s FAIR Plans has more than tripled.
U.S. FAIR Plans Exposure to Loss(Billions of Dollars)
Source: PIPSO; Insurance Information Institute
$715.3
$662.6$614.9
$612.7
$684.8
$601.9
$387.8$400.4
$345.9
$269.6
$140.7$113.3
$170.1
$96.5
$40.2
$0
$100
$200
$300
$400
$500
$600
$700
$800
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total exposure to loss in the residual market (FAIR & Beach/Windstorm) Plans has surged from $54.7bn in 1990 to a record $884.7 billion in 2011.
In the 22-year period between 1990 and 2011, total exposure to loss in the FAIR Plans has surged by a massive 1,679 percent from $40.2 billion in 1990
to $715.3 billion in 2011.
U.S. Beach and Windstorm Plans Exposure to Loss (Billions of Dollars)
*PIPSO figures for 2011 include the North Carolina Beach Plan, now a member of PIPSO (as of June, 2012).Source: PIPSO; Insurance Information Institute
$169.4
$95.2$88.1
$83.7$85.5
$54.9
$31.7$30.0$26.4$22.4
$103.5$108.0$111.8
$53.5
$14.5
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011*
In 2002 Florida combined its Windstorm and Joint Underwriting Association to create Florida Citizens, so Florida data shifted to the FAIR plans from this date.
In the 22-year period between 1990 and
2011, total exposure to loss in the Beach and
Windstorm plans ballooned by more
than 550 percent, from $14.5 billion in 1990 to $169.4 billion in 2011*.
FAIR Plan Operating Gains/Losses 1990-2011 (Millions of Dollars)
Source: PIPSO; Insurance Information Institute.
$444.3
$894.8$719.5
$532.7
$1,861.0
$3,579.4
-$1,860.3-$1,508.6
$510.2$529.9
$21.4$11.4$81.1
-$51.9
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The FAIR plans’ aggregate operating loss between 1995 and 2005 ballooned by 3584 percent.
In the course of the last six years (2006-2011) the FAIR plans have
reported an aggregate operating gain, after successive operating losses in
2005 and 2004.
1.21%
1.71%
11.49%
4.01%
4.16%
5.79%
7.64%
13.70%
3.74%
3.79%
0% 2% 4% 6% 8% 10% 12% 14% 16%
Texas (TWIA)
Rhode Island
Louisiana
Massachusetts
Florida
2002 2010
FAIR/Beach Plan Earned Premium as % of Overall Property Market (Top 5 states) 2002 vs. 2010
Source: PIPSO; Insurance Information Institute
$14.9
$54.1
$51.8
$60.6
$85.6
$92.5
$132.8
$146.9
$158.8
$191.9
$224.4
$479.9
$635.5
$772.8
$895.1
$2,378.9
$2,458.6
$55.7
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000
Maryland
Rhode Island
Mississippi
New Hampshire
Delaware
Georgia
Alabama
North Carolina
Maine
Virginia
S. Carolina
Louisiana
Connecticut
New Jersey
Massachusetts
Texas
New York
Florida
Total Value of Insured Coastal Exposure In 2007($ Billions)
Source: AIR Worldwide
Florida had $2.5 trillion in insured coastal property exposure in 2007,
the highest of any hurricane-exposed state.
1.0%
5.0%
9.0%
12.0%
13.0%
23.0%
26.0%
28.0%
29.0%
34.0%
35.0%
36.0%
54.0%
59.0%
62.0%
64.0%
79.0%
11.0%
0% 20% 40% 60% 80% 100%
Maryland
Georgia
NC
Virginia
Alabama
Mississippi
NH
Texas
S. Carolina
Rhode Island
New Jersey
Louisiana
Delaware
Massachusetts
Maine
New York
Connecticut
Florida
Insured Coastal Exposure As a % Of Statewide Insured Exposure In 2007
Source: AIR Worldwide
Value of Insured Residential Coastal Exposure In 2007 ($ Billions)
$660.4
$388.3
$373.0
$319.5
$250.8
$96.9
$90.1
$81.1
$78.4
$72.6
$46.5
$38.1
$36.7
$31.9
$30.8
$25.7
$7.2
$1,238.6
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400
Florida
New York
Texas
Massachusetts
New Jersey
Connecticut
Louisiana
S. Carolina
Maine
North Carolina
Virginia
Alabama
Georgia
Delaware
Rhode Island
New Hampshire
Mississippi
Maryland
Source: AIR Worldwide
Value Of Insured Commercial Coastal Exposure 2007 ($ Billions)
$1,220.0
$506.8
$399.8
$316.0
$229.1
$127.5
$101.8
$86.2
$65.9
$54.4
$47.5
$46.0
$26.1
$24.9
$23.8
$22.2
$7.7
$1,718.6
$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000
New York
Florida
Texas
Massachusetts
New Jersey
Connecticut
Louisiana
S. Carolina
Virginia
Maine
North Carolina
Georgia
Alabama
Mississippi
New Hampshire
Delaware
Rhode Island
Maryland
Source: AIR Worldwide
22%30% 31%
28%
33% 32%
0%
10%
20%
30%
40%
50%
60%
70%
Coastal Counties Interior Counties Noncoastal States
Somewhat Unfair Very unfair
Public Attitude Monitor 2006: Unfairness of Policyholder Subsidies
Growth in residual market mechanisms may be due in part to implicit support of residents of coastal communities.
Coastal States
Source: Insurance Research Council
29%25%
30%
22%34%
31%
0%
10%
20%
30%
40%
50%
60%
70%
Coastal Counties Interior Counties Noncoastal States
Somewhat Unfair Very unfair
Public Attitude Monitor 2006: Unfairness of Taxpayer Subsidies
Some 59% of those living in interior counties and 61% in noncoastal states think taxpayer-subsidized insurance is unfair, compared to just 51% of those living in coastal counties.
Coastal States
Source: Insurance Research Council
FAIR Plan Operating Gains/Losses 1990-2011 (Millions of Dollars)
Source: PIPSO; Insurance Information Institute.
$444.3
$894.8$719.5
$532.7
$1,861.0
$3,579.4
-$1,860.3-$1,508.6
$510.2$529.9
$21.4$11.4$81.1
-$51.9
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The FAIR plans’ aggregate operating loss between 1995 and 2005 ballooned by 3584 percent.
In the course of the last six years (2006-2011) the FAIR plans have
reported an aggregate operating gain, after successive operating losses in
2005 and 2004.
Residual Market Plan Estimated Deficits 2004/2005 (Millions of Dollars)
* MWUA est. deficit for 2005 comprises $545m in assessments plus $50m in Federal Aid.Source: Insurance Information Institute
-$516
-$1,425
-$1,770
-$954
-$595 *
-$2,000
-$1,800
-$1,600
-$1,400
-$1,200
-$1,000
-$800
-$600
-$400
-$200
$0
Florida Hurricane
Catastrophe Fund
(FHCF) Florida Citizens Louisiana Citizens
Mississippi
Windstorm
Underwriting
Association (MWUA)
2004 2005
The impact of Hurricane Katrina pushed all of the residual market property plans
in the affected states into deficits for 2005, following an already record
hurricane loss year in 2004.
Florida Citizens Exposure to Loss ($ Billions)
Source: PIPSO; Insurance Information Institute (I.I.I.).
$154.6
$195.5 $206.7 $210.6
$408.8
$485.1
$421.9$406.0
$460.7
$510.7
$0
$100
$200
$300
$400
$500
$600
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Since its creation in 2002, total exposure to loss in Florida Citizens has increased by 230 percent, from $154.6 billion to $510.7 billion in 2011.
$14.9
$54.1
$51.8
$60.6
$85.6
$92.5
$132.8
$146.9
$158.8
$191.9
$224.4
$479.9
$635.5
$772.8
$895.1
$2,378.9
$2,458.6
$55.7
$0 $500 $1,000 $1,500 $2,000 $2,500 $3,000
Maryland
Rhode Island
Mississippi
New Hampshire
Delaware
Georgia
Alabama
North Carolina
Maine
Virginia
S. Carolina
Louisiana
Connecticut
New Jersey
Massachusetts
Texas
New York
Florida
Total Value of Insured Coastal Exposure In 2007($ Billions)
Source: AIR Worldwide
Louisiana had $224.4 billion in insured coastal property exposure in 2007, 7th
highest of any hurricane-exposed state.
Mississippi Windstorm Plan: Exposure to Loss (Millions of Dollars)
Source: PIPSO; Insurance Information Institute
$7
,21
0.5
$7
,02
4.2
$6
,68
7.0
$6
,25
3.1
$5
,64
3.0
$5
,36
9.5
$1
,87
3.0
$1
,63
1.8
$1
,34
4.3
$1
,12
1.7
$8
48
.6
$8
64
.9
$9
17
.9
$6
37
.1
$3
52
.9
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Total exposure to loss in the Mississippi Windstorm Underwriting Association (MWUA) has surged by 1,943 percent, from $352.9 million in
1990 to $7.2 billion in 2011.
Texas Windstorm Insurance Association (TWIA): Exposure to Loss (Building & Contents Only) ($ Billions)
Source: TWIA at 06/05/12, Texas Department of Insurance, Southwestern Insurance Information Services (SIIS)
$72.0$71.1$67.4
$64.4
$58.6$58.6
$38.3
$23.3$20.8$18.8
$16.0$13.2$12.1
$0
$10
$20
$30
$40
$50
$60
$70
$80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Mar
31-
2012
TWIA’s exposure to loss for building & contents has surged by 495 percent in the last 12 years from $12.1 billion in 2000 to
$72.0 billion in 2012.
Texas Windstorm Insurance Association (TWIA) Total Exposure to Loss (Millions of Dollars)
Source: TWIA at 06/05/12, Texas Department of Insurance
$7,077.3
$72,048.9
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
Building & Contents ALE/Business Income
By March 31, 2012, TWIA’s total exposure had surged to $79.1 billion.
Texas Windstorm Insurance Association (TWIA) New Financial Structure
Source: Southwestern Insurance Information Institute (SIIS)
New TWIA financing structure made available up to $2.5 billion to fund
losses via three post-event bonding layers.
The new structure eliminated the unlimited
assessment on TWIA member insurers and did
not call for TWIA to purchase reinsurance.
Massachusetts FAIR Plan Policy Count (1990-2011)
Source: PIPSO; Insurance Information Institute
49
,62
8 77
,63
2
88
,45
6
85
,36
8
88
,03
6
98
,77
0
11
6,3
85 1
55
,64
0
22
2,8
25
21
5,5
70
21
6,1
82
19
2,9
44
21
7,0
56
23
4,5
82
23
1,6
59
0
50,000
100,000
150,000
200,000
250,000
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
In the 22-year period between 1990 and 2011, the number of policies in
the MA FAIR plan has surged by 336 percent from 49,628 policies in
1990 to 216,182 policies in 2011.
Massachusetts FAIR Plan Exposure to Loss (Billions of Dollars)
Source: PIPSO; Insurance Information Institute
$76.7$77.6$79.4$81.5$79.5
$68.6
$54.0
$39.2
$26.7
$20.5$16.7$15.3
$10.3$8.3$4.1
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
1990 1995 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
In the 22-year period between 1990 and 2011, total exposure to loss in the MA FAIR plan has surged by 1,771 percent from $4.1 billion in
1990 to $76.7 billion in 2011.
Massachusetts FAIR Plan Operating Gain or Loss 2000-2011 (Millions of Dollars)
Source: PIPSO; Insurance Information Institute
$17.2
$43.4$47.0
$141.7
$93.2
$58.12
$32.94
$9.46
-$14.27-$3.38
$1.96
-$6.20
-$40
-$20
$0
$20
$40
$60
$80
$100
$120
$140
$160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The MA FAIR Plan’s operating results have been variable over
the years.
www.iii.org
Thank you for your timeand your attention!
Twitter: twitter.com/bob_hartwig
Download at www.iii.org/presentations
Insurance Information Institute Online:
45