Data & Analytics

11:12 AM
Kathy Burger
Kathy Burger
Slideshows
Connect Directly
Google+
Twitter
RSS
E-Mail
50%
50%

8 Insurance Industry Impacts of Hurricane Andrew

Technology, regulation, construction and the P&C insurance industry itself all have changed since – and in some instances, because of – Hurricane Andrew, the category 5 storm that made landfall in south Florida on August 24, 1992. Here are eight ways that the catastrophe changed the way insurance companies do business.
Previous
1 of 8
Next


1. Out Of Tragedy, A Stronger Market

"Hurricane Andrew was quickly elevated into more than a human tragedy -- it also altered our state’s history, and became a watershed event that transformed Florida’s property insurance market as well as global catastrophe markets. The magnitude of this event surprised the insurance industry leading to several bankruptcies and a reconstituted property market. The immediate result was that several regional insurers failed, while large insurers made business decisions to limit their risk in our state.

After our initial focus on recovery, Florida’s policymakers instituted far-reaching reforms that included modernizing our emergency management systems, and improving state, county, and city government coordination. We also leveraged government resources to augment the private marketplace and create a better property insurance safety net. This involved the creation of the Florida Hurricane Catastrophe fund (Cat Fund), and the creation of the forerunner of Citizens Property Insurance Corporation. These entities provided state-sponsored insurance for those Floridians who could not find coverage in the private market, and state-sponsored catastrophe reinsurance for insurers that protected homes in our state.

This new framework allowed us to weather the unprecedented storm seasons of 2004 and 2005 when eight named storms reached our shores. Despite these catastrophic series of storms in 2004 and 2005, our state minimized insurer insolvencies, and the global reinsurance market was able to recapitalize following these events. Today the global reinsurance market is stronger than ever. While the vision of our leaders turned the tragedy of Hurricane Andrew into an opportunity to strengthen our state, we should use the 20th anniversary of this event as a warning for us to stay prepared, and remain ever vigilant in our preparation for a future catastrophic event."

— Florida Insurance Commissioner Kevin McCarty

Source: Florida Office of Insurance Regulation

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio

Previous
1 of 8
Next
Comment  | 
Print  | 
More Insights
Register for Insurance & Technology Newsletters
White Papers
Current Issue
Insurance & Technology Digital Issue Oct. 27, 2014
Innovation? Check. Core modernization? Check. Security? Check. Today's insurance IT challenges don't stump this year's Elite 8.
Slideshows
Video