Surprise! This year there’s an estimated record number of natural catastrophes predicted to occur in the United States. It seems this is becoming old news. Summer arrives with twenty some odd large Atlantic storms, 12-16 becoming hurricanes, and 6-8 expected to make landfall causing “significant damage”. At the same time, the forecasts are proving to be accurate. The number of hurricanes we’ve had in the past few years is very significant. Can’t think of any recent hurricanes? Ask somebody from New Orleans about Katrina. With potential catastrophes on the way and potential damage inevitable, what does this mean for the insurance industry?

First, according to Carl Hedde, head of risk accumulation for Munich Re America, the number of incidents in the United States will result in record losses for the industry. The number of incidents reported for the first half of 2008 (109 in total) exceeds all years dating back to 1980. The direct economic loss from natural disasters  has been $8.1 billion from thunderstorms and $30 billion from wildfires in 2008 alone. www.propertyandcasualtyinsurancenews.com

The insurance industry has openly stated global climate change is a contributing factor in causing these extreme weather patterns. They have even cited human activity as a factor for worsening the situation. Interestingly enough, however, industry experts don’t see these events inducing a “marketwide turn from soft pricing”. In other words, premiums are following a downward trend and not expected to rise! Even though a record number of losses, of both insured and uninsured property, are anticipated to occur this year the prices are going to remain relatively static or even go down. What’s wrong with this picture?

I don’t know, but understanding the cyclical nature of the business, the rebound effect will happen. When it does the prices for insurance will be ascending toward our ever-changing atmosphere. Enjoy the calm before the storm!

Anybody in the tri-state area would be able to tell you about the hectic weather we had this past June. Sweltering heat, severe thunderstorms, and everything in between wrecked havoc in our daily lives, or so it seemed. While I found myself on a quest for air conditioning one week, the following week I found myself scampering out of the rain in search of shelter. I bet many others have felt the same way I have, however, from what I have witnessed; people have not been the only ones being affected by this extreme weather.

While reading the June 18th New York Times I came across an article that discussed the tree damage in Central Park during a mid-June storm.New York Times In total, the park lost 33 trees, including a handful of trees that were three to four feet in diameter. There was a considerable amount of maple trees damaged, as well. At the same time, I saw dozens of trees down in my town of Stamford, CT. I even had to change driving routes three times one night due to road blockades as a result of fallen trees! However, the extreme weather damage in the tri-state region paled by comparison to nationwide events.

Flooding in the Midwest dominated the news; displaced thousands, and will end up costing billions of dollars. According to a study done at Ball State University the total crop damage could reach $2.7 billion. The following week, it was the ballooned Mississippi River that we saw all over the news. On June 19th CNN.com reported that eleven levees, both natural levees and man-made, on the Mississippi have been breached around St. Louis. The number of overflowed levees was up to twenty in Iowa and Missouri alone. CNN.com The damage caused by the flooding of the Mississippi had already ruined 25,000 acres of crop in Adams County, Illinois, while flooding in Oakville, Iowa, covered over 20 square miles of crop fields.

While the trees lost in Central Park were miniscule in dollar value to the crops lost in the Midwest, each loss could have been remedied through Live Asset Insurance. For example, the trees in Central Park could have been insured and replaced with replacement trees of the same size and species. Crops lost from flooding in the Midwest could have been replaced as long as they were inventories insured under our live asset policy.

The trees in Central Park are gone and farmers in the Midwest are left to rely on their Federal Crop Insurance policy. However, they are going to suffer greatly due to its high deductibles and nominal protection. With Live Asset Insurance, the covered live asset would be subject to replacement from the tornadoes and flooding. The trees in Central Park could be replaced, along with the covered crops in the Midwest. Unfortunately, they are lost forever.

While Live Asset Insurance is not yet available nationwide, these natural disasters show how a catastrophic loss can effect the lives of so many. Don’t get caught in Mother Nature’s crossfire! Protect your important live assets.