Massachusetts Insured Catastrophe Loss Summary YTD. Insured Losses from Major Catastrophes Are on the Rise in Massachusetts

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1 Analysis of Insured Catastrophe Losses and Competition in the Massachusetts Homeowners Insurance Market: YTD Insurance Information Institute September 2015 Robert P. Hartwig, Ph.D., CPCU, President & Economist Insurance Information Institute 110 William Street New York, NY Tel: Cell:

2 Massachusetts Insured Catastrophe Loss Summary YTD Insured Losses from Major Catastrophes Are on the Rise in Massachusetts 2

3 Insured Catastrophe Losses in Massachusetts, 2005 Sept. 1, 2015 No. of PCS Catastrophe Designations ($ Millions) Insured Losses in MA $1,200 $1,000 $800 $600 $400 $200 $0 2 Insured catastrophe losses in 2010, 2011, 2012 and 2015 are among the highest on record $68.1 $54.2 $36.0 $90.5 $0.00 Insured catastrophe losses in Massachusetts (dollars and no. of events) are at their highest level in at least a decade. 4 4 $184.0 $536.0 $ $ $81.1 $1, * *As of Sept. 1, Note: Data shown are the Massachusetts component of official PCS designated catastrophe events. PCS defines an event as one which results in $25 million or more in insured property losses (includes residential and commercial property, business interruption and personal and commercial motor vehicle losses) across all impacted states. Source: PCS unit of Verisk Analytics/ISO; Insurance Information Institute

4 Insured Catastrophe Losses in MA Have Tracked Sharply Higher Since 2010 Cumulative Insured Catastrophe Losses, * Millions of Dollars $2,500 $2,000 $1,500 Insurers in MA have sustained $2.316 billion in insured catastrophe losses since Of that, 89% ($2.067B) were incurred since $2,316 $1,000 $500 $ * *As of Sept. 1, Note: Data shown are the Massachusetts component of official PCS designated catastrophe events. PCS defines an event as one which results in $25 million or more in insured property losses (includes residential and commercial property, business interruption and personal and commercial motor vehicle losses) across all impacted states. Source: Insurance Information Institute analysis of data from the PCS unit of Verisk Analytics/ISO. 4

5 The Number of CAT Events Impacting MA Has Tracked Sharply Higher Since 2010 Cumulative Number of PCS CAT Events, * Number of Events There have been 24 official PCS CAT event designations impacting MA since 2005, 17 of them (71%) occurring since * *As of Sept. 1, Note: Data shown are the Massachusetts component of official PCS designated catastrophe events. PCS defines an event as one which results in $25 million or more in insured property losses (includes residential and commercial property, business interruption and personal and commercial motor vehicle losses) across all impacted states. Source: Insurance Information Institute analysis of data from the PCS unit of Verisk Analytics/ISO. 5

6 Distribution of Insured Catastrophe Losses in Massachusetts, * Wind/Thunderstorm/ Tornado/Hail**, 15% $ Millions $476.1 Total MA CAT Losses 2005 to 2015 = $2.316 Billion* Hurricane/Tropical Storm, 21% $345.0 $1,494.3 Winter storm CAT losses in MA from accounted for nearly 2/3 of losses over this period Winter Storms, 64% *As of Sept. 1, **Category also includes privately insured flood losses. Note: Data shown are the Massachusetts component of official PCS designated catastrophe events. PCS defines an event as one which results in $25 million or more in insured property losses (includes residential and commercial property, business interruption and personal and commercial motor vehicle losses) across all impacted states. Source: Insurance Information Institute analysis of data from the PCS unit of Verisk Analytics/ISO.

7 Winter Storm Loss Summary Insured Winter Storm Losses in Massachusetts Have Been Particularly Severe 7

8 Insured Winter Storm CAT Losses in Massachusetts, 2005 Sept. 1, 2015 ($ Millions) Insured Losses in MA $1,200 $1,000 $800 $600 $400 $200 $0 Winter storm losses in 2011 totaled $251 million, 12% of the national total $55.0 $27.5 $0.0 $90.5 $0.0 Insured CAT losses from winter storms in Massachusetts totaled nearly $1 billion in 2015, accounting for 32% of all winter storm losses in the US this year $30.0 $251.0 $0.0 $0.0 $41.4 $ * *As of Sept. 1, Note: Data shown are the Massachusetts component of official PCS designated catastrophe events. PCS defines an event as one which results in $25 million or more in insured property losses (includes residential and commercial property, business interruption and personal and commercial motor vehicle losses) across all impacted states. Source: PCS unit of Verisk Analytics/ISO; Insurance Information Institute. 8

9 Distribution of Winter Storm CAT Losses in 2015, MA vs. All Other States* Total US Winter Storm CAT Losses in 2015 = $3.09 Billion All Other States, 68% $2,091.5 $ Millions $998.9 Massachusetts, 32% Winter storm CAT losses in 2015 in MA accounted for nearly 1/3 of losses throughout the entire US *As of Sept. 1, Note: Data shown are the Massachusetts component of official PCS designated catastrophe events. PCS defines an event as one which results in $25 million or more in insured property losses (includes residential and commercial property, business interruption and personal and commercial motor vehicle losses) across all impacted states. Source: Insurance Information Institute analysis of data from the PCS unit of Verisk Analytics/ISO.

10 Competitve Analysis The Massachusetts Homeowners Insurance Market Is Competitive, Consumers Benefit 10

11 HHI Index Values for Homeowners Insurance Markets in the Northeast, Herfindahl-Hirshman Index Under 1,500: Not Concentrated 1,500 2,500: Moderately Concentrated Over 2,500: Concentrated NJ CT MA ME NH VT RI NY The Massachusetts homeowners insurance market is competitive and not concentrated. Source: Insurance Information Institute analysis of SNL data. 11

12 Number of Homeowners Insurers in Northeast States, Homeowners in MA have more insurance options than in any other New England state VT ME RI NH CT NJ MA NY The Massachusetts homeowners is competitive, benefitting consumers. Source: Insurance Information Institute analysis of SNL data. 12

13 Insurance Information Institute Online: Thank you for your time and your attention! Twitter: twitter.com/bob_hartwig 13