Man-made crises add to Nat CAT burden
Source: Middle East Insurance Review | Oct 2022
New research in the US has examined how the tragedies from hurricane Andrew ultimately paved the way for positive community safety innovations through modern building codes and enhanced regional mitigation initiatives. The study, however, revealed that new man-made events have also increased insurance crises for the US consumers.
The joint research ‘It’s Not Just the Weather: The Man-Made Crises Roiling Property Insurance Markets’ released on the eve of the 30th anniversary of hurricane Andrew was conducted by the American Property Casualty Insurance Association (APCIA), the Reinsurance Association of America (RAA), the Association of Bermuda Insurers and Reinsurers and University of South Carolina Risk and Uncertainty Management Center director and professor of finance Robert Hartwig.
The study revealed that 30 years later, there are new, growing property insurance crises in many US states resulting from man-made events – legal system abuse, government interference and fraud.
According to the Florida Office of Insurance Regulation, in the last 10 years, $51bn has been paid in insurance claims and of that, 71% went to attorneys’ fees and public adjusters while only 8% went to claimants.
Fraud related to property insurance claims is another issue that costs policyholders and impacts the marketplace. According to data from the FBI the cost of non-health-related insurance fraud is estimated to be more than $40bn per year, which can translate to an additional $400 to $700 annually in insurance premiums for the average US family. M