I have the reputation at work of being the weather guy who takes perverse enjoyment out of watching storms, which sometimes causes the underwriters I work with to (in a good natured way) dread when one of my emails appears in their inboxes.
Mayfield admitted he was the bearer of “bad news” as he cautioned more than 1,000 insurance adjusters, mediators and attorneys attending the Feb. 8 to 11 Seventh Annual Windstorm Insurance Conference in Orlando to prepare for what very likely will be a 2006 repeat performance of 2004 and 2005. Mayfield even suggested that due to the El Nino effect, there could be more hurricanes in 2006 than there were in 2005.
You know, I got a little burned out last year passing along NHC reports, once storm names made it to the Greek alphabet. (Actually, I burned out after the week I spent tracking down our New Orleans risks on NOAA aerial photos). I could really do without a repeat performance.
So far, the insurance industry seems to be doing relatively OK. True, the storm losses for the past few years have sucked, and there are now insurers who find themselves with long-term averages of zero (or fewer) profits in FL, MS, and/or LA. But at least some of the insanity in property pricing seems to have slowed, and pricing pressures do seem to be attracting new capital into what frequently seems like a ho-hum industry for investors.
However, I also think that the industry could stand with a year off from hurricanes (if only Mother Nature and Max Mayfield would provide). The availability of homeowners insurance in Florida, and elsewhere in coastal zones of the southeast is a problem that needs to be addressed…even though the gap between the real cost of risk for such coverage and affordability sometimes seems insurmountable. We also have the open and still-forming debate of who should pay for mega-catastrophes, in the light of increasing risk-loads in reinsurance premiums, issues that have been highlighted with programs like NFIP, and the impact to public coffers in the form of aid to repair uninsured/underinsured property and lost tax revenues in the impacted areas. And we can’t also forget the reminder that cat modeling, while pretty snazzy, does have its limitations (ITV, anyone?) and reports on expected outcomes are still subject to significant variance.