COST OF DISASTERS : Mother Nature’s Mayhem

During the last 12 months, the cost of U.S. natural disasters has topped $30 billion, an unprecedented level. Before 1987, the nation experienced no natural disaster exceeding $1 billion in insured losses. As yet another hurricane bears down on the U.S. coastline, here is a look at the rising costs of such storms:

Rising Burden of Natural Disasters (In billions) ‘82: $1.5 ‘83: $2.3 ‘84: $1.5 ‘85: $2.9 ‘86: $0.9 ‘87: $0.9 ‘88: $1.4 ‘89: $7.6 ‘90: $2.8 ‘91: $4.7 ‘92: $23 Probable Costs if the Big One Hits (In billions) Los Angeles (7.0 earthquake): $57.7 San Francisco (8.2 earthquake): $84.4 Memphis, Tenn. (8.6 earthquake): $69.7 Miami (Class 5 hurricane): $53 New Orleans (Class 5 hurricane): $25.6 New York (Class 4 hurricane): $45 Seattle (7.5 earthquake): $33.3 The Nation’s Risk Profile

The areas most likely to experience natural disasters.

The Next Step

The severity of recent natural disasters--primarily Hurricane Andrew--blew away the insurance industry’s notions about how costly a disaster could be. The result: homeowners and renters in affected regions will find insurance harder to find, more expensive and more restrictive. A bill recently introduced in Congress--the natural disaster protection bill--would increase funding for building code enforcement and create an industry-generated fund that would reduce the risk to insurance companies.

Sources: U.S. Geological Survey, Federal Emergency Management Agency, Uniform Building Codes, Council of State Governments, American Insurance Services Group, Risk Engineering Inc., University of Southern California