AM Best Company - Major Storm Season Could Wipe Out 20-40 Insurance Cos

NEW YORK - The US hurricane season kicked off Thursday with another gloomy prediction: major storms could cause US$100 billion worth of property loss, and wipe out 20 to 40 insurers. With a booming coastal population and high-priced real estate, "this is not far down the road," said John Williams, an author of the report at A.M. Best Co., a leading rating agency for insurers.

For 3 to 7 percent of insurers exposed to the catastrophe, that could spell disaster, Williams said. Likely to fail are thinly capitalized property casualty carriers that are low-rated at Best, along with some firms not rated at all. "This will take a bigger bite out of the industry than the 1906 San Francisco earthquake," Williams said.

Insurance costs from last year's major catastrophes, or "megacats" -- Hurricanes Katrina, Rita and Wilma -- have already reached US$58 billion, with some claims still in court. In addition, federal aid to rebuild areas such as New Orleans, which was flooded by Katrina, will top US$100 billion, Best said.

With population expansion in vulnerable areas and soaring real estate values, catastrophe losses are likely to double every 10 years, according to hurricane modelers. In Florida, which has seen five major hurricanes in the past two years, four insurers have already failed, according to Best. When insurers are no longer around to answer the phone, the burden falls to the state, which sets up a claims fund and forces solvent insurers to pay the costs. But settlements are slow, particularly after a catastrophe like Katrina has damaged the infrastructure, Williams said.

EDIT

http://www.planetark.org/dailynewsstory.cfm/newsid/36628/story.htm

It's not going to be expensive to get insurance, it's going to be IMPOSSIBLE!