EFFECTS OF RECENT WEATHER EXTREMES ON THE INSURANCE INDUSTRY - MAJOR IMPLICATIONS FOR THE ATMOSPHERIC SCIENCES

Frequent and extremely damaging severe weather conditions in the Unite d States during 1991-94 caused $40 billion in insured losses, creating major impacts and eliciting diverse responses in the weather insuranc e industry. Population, one reason for the growing national sensitivit y to storm damage, explained much of the increase in the number of cat astrophes (property losses > $10 million) as well as the increases in the amount of losses. The largest increases in storms occurred in area s experiencing the greatest population growth (west, southwest, south, and southeast). Shifts in atmospheric variables (particularly in the frequency of extratropical cyclones) explained most of the 1949-94 flu ctuations found in the intensity of catastrophic storms (losses divide d by storm frequency). The property-casualty sector raised rates, made major changes in insurance availability in high-risk areas, tightened underwriting restrictions in hurricane-prone areas, and is making ext ensive assessments of weather risks. The reinsurance industry raised r ates up to 200%, sought and received funds from the financial markets, and developed new firms. However, some existing firms also withdrew f rom the marketplace. Crop losses led to major changes in the nation's crop insurance program. The property casualty and reinsurance sectors, which experienced the greatest losses, have gained a greater apprecia tion of the need to incorporate atmospheric data, information, and exp ertise into their operations. Assessment of the problems created by re cent weather extremes and possible solutions identified ways that the atmospheric sciences community and industry can work together more eff ectively to deal with future climate conditions and weather extremes.