A.M. BestTV: How Hurricane Andrew Wrecked and Rebuilt an Industry

By a News Reporter-Staff News Editor at Investment Weekly News -- This special episode of A.M.BestTV examines how Hurricane Andrew swept through the insurance industry, leaving a path of failures, overturned assumptions and gave the industry a new respect for next-generation underwriting. Click on http://www.ambest.com/v.asp?v=andrew817 to view the entire program.

Hurricane Andrew took place on Aug. 24, 1992, and was the most destructive hurricane in Florida's history. It destroyed 63,000 homes, damaged more than 100,000 throughout Florida and left roughly 175,000 homeless.

"It changed how property/casualty is dealt with in the United States, forever," said Mark Bove, senior research meteorologist, Munich Reinsurance America, Inc. "The insured loss to the insurance industry was about $16.5 billion, $15 billion in Florida and $1.5 billion in Louisiana. An estimated 11 companies went insolvent due to their accumulations of exposure, and another 30 companies lost 25% of their policyholders' surplus."

John Andre, managing director, A.M. Best highlighted some of the changes that have occurred in the industry since Hurricane Andrew.

"It introduced into the industry hurricane deductibles, which did not exist prior to Andrew, and it really pushed the industry into the 21st century. It created risk management strategies and has made the industry sharper."

The episode also looks at how new reinsurance companies formed due to the hurricane, as well as the expanded use of catastrophe models since the event. A.M. Best rates many insurance organizations serving the Florida market. A.M. Best believes that those insurers that hold an A.M. Best rating possess the financial strength to honor policyholders' claims.

Keywords for this news article include: A.M. Best, Investing.

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