Insurance Industry is Well Positioned to Keep Its Financial Commitments to Gulf Coast Residents

"The financial and underwriting performance of the property/casualty insurance industry during the first quarter of 2005 was the best in many years. Results through the first six months of the year (at least) are likely to be very good as well." – Robert P. Hartwig, Ph.D., CPCU, The Insurance Information Institute

Insurance Industry's Record Surplus is Six Times Larger than Their Estimated Liability from Hurricane Katrina. According to the Insurance Information Institute, the insurance industry has a record $401.8 billion in surpluses. These surpluses can be used to meet their financial commitments to policy holders affected by Hurricane Katrina in the event the industry exceeds the reserves it sets aside to pay expected claims. The most recent damage estimates suggest that the industry's total liability will be between $40 billion and $60 billion for Katrina-related claims. These estimates represent, at most, 15 percent of the industry surpluses. ["2005 - First Quarter Results", Robert P. Hartwig, Ph.D., CPCU, Insurance Information Institute; Associated Press, 9/20/05]

Industry's Surpluses and Profits Have Increased Dramatically Over the Last Three Years. Since 2002, the insurance industry has seen a 40 percent increase in its surpluses, to a record $401.8 billion in 2005. The industry's profits also saw a dramatic gain, as well, increasing from $2.9 billion in 2002 to $38.7 billion in 2004. [Insurance Information Institute data]

Insurance Information Institute Has Highlighted the Industry's Strong Financial Standing. In his most recent reports on the industry, the Insurance Information Institute's Chief Economist, Dr. Robert P. Hartwig, has underscored the strong financial standing of the insurance industry:

Analysis of the First Quarter of 2005: "…the financial results for the first three months of the year were quite spectacular. … Should insurers maintain similar levels of profitability through the remainder of 2005, the industry would record its best year since 1987... The financial and underwriting performance of the property/casualty insurance industry during the first quarter of 2005 was the best in many years. Results through the first six months of the year (at least) are likely to be very good as well." ["2005 - First Quarter Results", Robert P. Hartwig, Ph.D., CPCU, Insurance Information Institute]

Year End Analysis of 2004: "The financial and underwriting performance of the property/casualty insurance industry during 2004 was the best in years, despite the magnitude of catastrophe losses." ["2004 - Year End Results", Robert P. Hartwig, Ph.D., CPCU, Insurance Information Institute]

September 27, 2005