U.S. insurers well prepared for Atlantic hurricane season

Home, auto and business insurers in the United States are well prepared for this year’s hurricane season, which is predicted to be an active one, the Insurance Information Institute said Monday.

“The insurance industry is, and will remain, extremely well capitalized and financially prepared to pay the claims that may arise out of significant natural disasters in 2013, and beyond,” Dr. Robert Hartwig, president of the I.I.I. and an economist noted in a statement.

Hartwig also said that the industry’s claims paying capital stood at a record $608 billion at the start of the second quarter of 2013.

“The growth in the industry’s capital base occurred despite the fact that insurers paid out nearly $70 billion in catastrophe-caused claims over the prior two years,” he said.

Indeed, in both 2011 and 2012, catastrophe-caused claims were more than 40% higher than the $23.9 billion annual average over the past decade.

“The fact that the industry was able to meet its financial obligations after Sandy, and enter 2013 in such a strong financial position, is continued evidence of the property/casualty (P/C) insurance industry’s remarkable resilience in the face of extreme adversity.”

There have been three named storms so far in this year’s Atlantic hurricane season, which began June 1.

The National Oceanic and Atmospheric Administration has forecast an “active or extremely active” season, which runs until the end of November.

The NOAA’s Climate Prediction Center said there is a 70% likelihood of 13 to 20 named storms (with winds of 39 miles per hour or higher).

Of those, seven to 11 could become hurricanes (with winds of 74 miles per hour or higher), including three  to six major hurricanes (Category 3, 4 or 5 with winds of 111 miles per hour or higher).

In May, Fitch Ratings also said the P&C industry is well-positioned to take on the hurricane season.