Best’s News & Research Service - August 23, 2017 03:25 PM (EDT)
A.M. BestTV: How Hurricane Andrew Wrecked and Rebuilt an Industry
- August 23, 2017 03:25 PM (EDT)
Oldwick //BestWire// - This special episode of A.M.BestTV examines how Hurricane Andrew swept through the insurance industry, leaving a path of failures, overturned assumptions and gave the industry a new respect for next-generation underwriting. Click on http://www.ambest.com/v.asp?v=andrew817 to view the entire program.
Hurricane Andrew took place on Aug. 24, 1992, and was the most destructive hurricane in Florida’s history. It destroyed 63,000 homes, damaged more than 100,000 throughout Florida and left roughly 175,000 homeless.
“It changed how property/casualty is dealt with in the United States, forever,” said Mark Bove, senior research meteorologist, Munich Reinsurance America, Inc. “The insured loss to the insurance industry was about $16.5 billion, $15 billion in Florida and $1.5 billion in Louisiana. An estimated 11 companies went insolvent due to their accumulations of exposure, and another 30 companies lost 25% of their policyholders’ surplus.”
John Andre, managing director, A.M. Best highlighted some of the changes that have occurred in the industry since Hurricane Andrew.
“It introduced into the industry hurricane deductibles, which did not exist prior to Andrew, and it really pushed the industry into the 21st century. It created risk management strategies and has made the industry sharper.”
The episode also looks at how new reinsurance companies formed due to the hurricane, as well as the expanded use of catastrophe models since the event. A.M. Best rates many insurance organizations serving the Florida market. A.M. Best believes that those insurers that hold an A.M. Best rating possess the financial strength to honor policyholders’ claims.
Other people that appear in this episode:
- Robert Reynolds, president and chief executive officer, Morris & Reynolds Insurance;
- Patrick Murphy, former house representative, Florida;
- Jay Neal, president and chief executive officer, Florida Association of Insurance Reform;
- Robert Newbold, executive vice president, AIR Worldwide;
- Karen Clark, president and chief executive officer, Karen Clark and Company; and
- A. Morris Tooker, executive vice president, middle market, The Hartford.
Recent episodes of A.M.BestTV include:
- Mergers & Acquisitions Narrow the Ranks of London-Centric Insurers, Says A.M. Best Senior Director: Catherine Thomas, senior director, analytics, A.M. Best, discusses hot-button issues impacting the U.K. insurance market, including mergers and acquisitions by insurers from Japan and elsewhere: http://www.ambest.com/v.asp?v=ukmarket817 .
- Captive Executives Say It’s About Risk Management, Not Pricing: At the VCIA conference, panelists say their insureds focus on service, support and claims handling, which helps keep business flowing despite competitive pricing in the traditional market: http://www.ambest.com/v.asp?v=vcia4817 .
- Captives, Known for Their Uniqueness, Find Ways to Benchmark Themselves: At the VCIA conference, a panel of captive experts assesses the growing range of tools and strategies that captives use to measure themselves: http://www.ambest.com/v.asp?v=vcia3817 .
- Vermont and Washington D.C. Regulators Describe Handling Risk Retention Group Failures: At the VCIA conference, two insurance industry regulators discuss their handling of risk retention group failures, as well as what issues arise in the oversight of agency captives: http://www.ambest.com/v.asp?v=vcia1817 .
A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html . View A.M.BestTV episodes at http://www.ambest.tv.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.