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P/C Insurance Industry Overview & Outlook for 2013 and Beyond

P/C Insurance Industry Overview & Outlook for 2013 and Beyond

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P/C Insurance Industry Overview & Outlook for 2013 and Beyond

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  1. P/C InsuranceIndustry Overview & Outlook for2013 and Beyond Casualty Actuaries of New England Sturbridge, MA April 4, 2013 Download at www.iii.org/presentations Robert P. Hartwig, Ph.D., CPCU, President & Economist Insurance Information Institute  110 William Street  New York, NY 10038 Tel: 212.346.5520  Cell: 917.453.1885  bobh@iii.org  www.iii.org

  2. P/C Insurance Industry Financial Overview Profit Recovery in 2012 After High CAT Losses; Ultimate Impact of Sandy Still Unclear 2

  3. P/C Net Income After Taxes1991–2012:Q3 ($ Millions) P-C Industry 2012:Q3 profits were up 222% from 2011:Q3, due primarily to lower catastrophe losses • 2005 ROE*= 9.6% • 2006 ROE = 12.7% • 2007 ROE = 10.9% • 2008 ROE = 0.1% • 2009 ROE = 5.0% • 2010 ROE = 6.6% • 2011 ROAS1= 3.5% • 2012:Q3 ROAS1 = 6.3% * ROE figures are GAAP; 1Return on avg. surplus. Excluding Mortgage & Financial Guaranty insurers yields a 6.6% ROAS through 2012:Q3, 4.6% ROAS for 2011, 7.6% for 2010 and 7.4% for 2009. Sources: A.M. Best, ISO, Insurance Information Institute

  4. A 100 Combined Ratio Isn’t What ItOnce Was: Investment Impact on ROEs A combined ratio of about 100 generates an ROE of ~6.6% in 2012, ~7.5% ROE in 2009/10,10% in 2005 and 16% in 1979 Combined Ratio / ROE Catastrophes and lower investment income pulled down ROE in 2012 Combined Ratios Must Be Lower in Today’s DepressedInvestment Environment to Generate Risk Appropriate ROEs * 2008 -2012 figures are return on average surplus and exclude mortgage and financial guaranty insurers. 2012:Q3 combined ratio including M&FG insurers is 100.9, 2011 combined ratio including M&FG insurers is 108.2, ROAS = 3.5%. Source: Insurance Information Institute from A.M. Best and ISO data.

  5. Profitability Peaks & Troughs in the P/C Insurance Industry, 1975 – 2013F* History suggests next ROE peak will be in 2016-2017 ROE 1977:19.0% 1987:17.3% 2006:12.7% 10 Years 1997:11.6% 10 Years 9 Years 2013F 5.8% 2012E:3.6% 1975: 2.4% 2001: -1.2% 1992: 4.5% 1984: 1.8% *Profitability = P/C insurer ROEs. 2011 figure is an estimate based on ROAS data. Note: Data for 2008-2012 exclude mortgage and financial guaranty insurers. 2012:Q3 ROAS = 6.2% including M&FG. Source: Insurance Information Institute; NAIC, ISO, A.M. Best.

  6. The Strength of the Economy Will Influence P/C Insurer Growth Opportunities Growth Will Expand Insurer Exposure Base Across Most Lines 6

  7. US Real GDP Growth* The Q4:2008 decline was the steepest since the Q1:1982 drop of 6.8% Real GDP Growth (%) Recession began in Dec. 2007. Economic toll of credit crunch, housing slump, labor market contraction was severe 2013 is expected to see initially slow growth, then gradually accelerate throughout the year and into 2014 Demand for Insurance Continues To Be Impacted by Sluggish Economic Conditions, but the Benefits of Even Slow Growth Will Compound and Gradually Benefit the Economy Broadly * Estimates/Forecasts from Blue Chip Economic Indicators. Source: US Department of Commerce, Blue Economic Indicators 3/13; Insurance Information Institute.

  8. State-by-State Leading Indicatorsthrough 2013:Q2 The economic outlook for most of New England is relatively strong, suggesting future strength in the creation of insurable exposures Sources: Federal Reserve Bank of Philadelphia at http://www.philadelphiafed.org/index.cfm ;Insurance Information Institute.

  9. Consumer Sentiment Survey (1966 = 100) January 2010 through March 2013 Optimism among consumers has remained fairly strong despite tax hike, federal budget concerns Consumer confidence has been low for years amid high unemployment, falling home prices and other factors adversely impact consumers, but improved substantially in late 2011 and in 2012 Source: University of Michigan; Insurance Information Institute

  10. Auto/Light Truck Sales, 1999-2019F Job growth and improved credit market conditions will boost auto sales in 2013 and beyond (Millions of Units) New auto/light truck sales fell to the lowest level since the late 1960s. Forecast for 2013-14 is still far below 1999-2007 average of 17 million units, but a robust recovery is well underway. Car/Light Truck Sales Will Continue to Recover from the 2009 Low Point, Bolstering the Auto Insurer Growth and the Manufacturing Sector. Source: U.S. Department of Commerce; Blue Chip Economic Indicators (3/13); Insurance Information Institute.

  11. Personal Auto Insurance Direct Written Premiums vs. Recently-Registered Cars $ Billions 4%/yr growth forecast for PP DWP from recovering new car/truck sales In 2004-07 no growth in PP DWP despite strong new car/truck sales New car/truck sales grow to 14-15M/year Average age of registered cars rose as fewer new cars were bought (and insured) PP DWP, flat from 2004-2009, is rising again.Conning forecasts growth at 3.5% in 2013 and 4.0% in 2014. Sources: AIPSO Facts (various issues); SNL Financial; Conning Research & Consulting, Property-Casualty Forecast and Analysis, First Quarter 2012; Insurance Information Institute.

  12. Monthly Change* in Auto Insurance Prices, 1991–2013* Cyclical peaks in PP Auto tend to occur approximately every 10 years (early 1990s, early 2000s and likely the early 2010s) Pricing peak occurred in late 2010 at 5.3%, falling to 2.8% by Mar. 2012 “Hard” markets tend to occur during recessionary periods The Feb. 2013 reading of 5.2% is up from 3.6% a year earlier; Highest since Dec. 2010 *Percentage change from same month in prior year; through Feb. 2013; seasonally adjusted Note: Recessions indicated by gray shaded columns. Sources: US Bureau of Labor Statistics; National Bureau of Economic Research (recession dates); Insurance Information Institutes. 14 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  13. New Private Housing Starts, 1990-2019F Job growth, low inventories of existing homes, low mortgage rates and demographics are stimulating new home construction for the first time in years (Millions of Units) New home starts plunged 72% from 2005-2009; A net annual decline of 1.49 million units, lowest since records began in 1959 Homeowners Insurers Are Starting to See Meaningful Exposure Growth for the First Time Since 2005. Commercial Insurers with Construction Risk Exposure, Surety, Workers Comp Also Benefit Source: U.S. Department of Commerce; Blue Chip Economic Indicators (3/13); Insurance Information Institute.

  14. Average Premium forHome Insurance Policies** Countrywide Home Insurance Expenditures Increased by an Estimated 4.0%in 2011 and 4.5% in 2012 * Insurance Information Institute Estimates/Forecasts **Excludes state-run insurers. Source: NAIC, Insurance Information Institute estimates for 2011-2012 based on CPI data and other data. eSlide – P6466 – The Financial Crisis and the Future of the P/C

  15. Construction Employment,Jan. 2010—February 2013* (Thousands) Construction employment growth accelerated in the second half of 2012. Stronger growth in this key sector is possible in 2013. Construction for the new $4B Tappan Zee Bridge will create thousands of jobs *Seasonally adjusted Sources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute. 18 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  16. Construction Employment, Jan. 2003–Feb. 2013 (Thousands) Construction employment as of Feb. 2013 totaled 5.784 million, an increase of 349,000 jobs or 6.4% from the Jan. 2011 trough Construction employment peaked at 7.726 million in April 2006 Construction employment troughed at 5.435 million in Jan. 2011, after a loss of 2.291 million jobs, a 29.7% plunge from the April 2006 peak The “Great Recession” and housing bust destroyed 2.3 million constructions jobs The Construction Sector Could Be a Growth Leader in 2013 and 2014 as the Housing Market and Private Investment Recover. Commercial Insurers Will Benefit. Note: Recession indicated by gray shaded column. Sources: U.S. Bureau of Labor Statistics; Insurance Information Institute. 19 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  17. Nonfarm Payroll (Wages and Salaries):Quarterly, 2005–2012:Q4 Billions Latest (2012:Q4) was $6.96 trillion, a new peak--$708B above 2009 trough Prior Peak was 2008:Q1 at $6.60 trillion Pace of payroll growth accelerated in late 2012 Growth rates in 2012Q1:12 over Q4:11: 1.8%Q2 over Q1: 1.4% Q3 over Q2: 0.3% Q4 over Q3: 1.0% Recent trough (2009:Q3) was $6.25 trillion, down 5.3% from prior peak Note: Recession indicated by gray shaded column. Data are seasonally adjusted annual rates. Sources: http://research.stlouisfed.org/fred2/series/WASCUR; National Bureau of Economic Research (recession dates); Insurance Information Institute. 20 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  18. Commercial & Industrial Loans Outstandingat FDIC-Insured Banks, Quarterly, 2006-2012:Q4* $Trillions Commercial lending activity is exceeds pre-crisis levels (+29.1% or $340B above mid-2010 trough) Commercial lending plunged by 21.2% ($330B) during the financial crisis and ensuing period of tight credit Outstanding Commercial Loan Volume Has Been Growing for Over Two Years and Is Now Nearly Back to Early Recession Levels. Bodes Very Well for the Creation of Current and Future Commercial Insurance Exposures *Latest data as of 3/18/2013. Source: FDIC at http://www2.fdic.gov/qbp/ (Loan Performance spreadsheet); Insurance Information Institute. eSlide – P6466 – The Financial Crisis and the Future of the P/C

  19. Percent of Non-current Commercial & Industrial Loans Outstanding at FDIC-Insured Banks,Quarterly, 2006-2012:Q4* Almost back to “normal” levels of noncurrent industrial & commercial loans Recession Non-current loans (those past due 90 days or more or in nonaccrual status) are back to early-recession levels, fueling bank willingness to lend. *Latest data as of 3/18/2013. Source: FDIC at http://www2.fdic.gov/qbp/ (Loan Performance spreadsheet); Insurance Information Institute. eSlide – P6466 – The Financial Crisis and the Future of the P/C

  20. Value of Construction Put in Place, February 2013 vs. February 2012* Growth (%) Private: +12.6% Public: -1.5% Public sector construction activity remains depressed Private sector construction activity is up in both the residential and nonresidential segments Overall Construction Activity is Up, But Growth Is Entirely in the Private Sector as State/Local Government Budget Woes Continue *seasonally adjustedSource: U.S. Census Bureau, http://www.census.gov/construction/c30/c30index.html ; Insurance Information Institute.

  21. Value of Private Construction Put in Place, by Segment, Feb. 2013 vs. Feb. 2012* Led by the Residential Construction, Lodging, Office, and Manufacturing industries, Private sector construction activity is up across many segments after plunging during the “Great Recession” Growth (%) Private Construction Activity is Up in Most Segments, Including the Key Residential Construction Sector *seasonally adjustedSource: U.S. Census Bureau, http://www.census.gov/construction/c30/c30index.html ; Insurance Information Institute.

  22. Value of Public Construction Put in Place, by Segment, Feb. 2013 vs. Feb. 2012* Transportation and Power projects lead public sector construction Growth (%) Public sector construction activity is down substantially in many segments, but is actually now up in some key segments Public Construction Activity is Down in Many Segments as State and Local Budgets Remain Under Stress; Improvement Possible in 2013. *seasonally adjustedSource: U.S. Census Bureau, http://www.census.gov/construction/c30/c30index.html ; Insurance Information Institute.

  23. ISM Manufacturing Index (Values > 50 Indicate Expansion) January 2010 through March 2013 Manufacturing activity continues to expand, albeit modestly The manufacturing sector expanded for 33 of the 39 months from Jan. 2010 through Mar. 2013. The expectation is that this will continue. Source: Institute for Supply Management at http://www.ism.ws/ismreport/mfgrob.cfm; Insurance Information Institute.

  24. Dollar Value* of Manufacturers’ Shipments Monthly, Jan. 1992—Jan. 2013 $ Millions ENERGY INTENSIVE The value of Manufacturing Shipments in Jan. 2013 were up 35% to $481.8B from its May 2009 trough. June figure is only 0.7% below its previous record high in July 2008. Monthly shipments are nearly back to peak (in July 2008, 8 months into the recession). Trough in May 2009. Growth from trough to Jan. 2013 was 35%. Manufacturing is an energy intensive activity and growth leads to gains in many commercial exposures: WC, Commercial Auto, Marine, Property and Various Liability Coverages *seasonally adjustedSource: U.S. Census Bureau, Full Report on Manufacturers’ Shipments, Inventories, and Orders, http://www.census.gov/manufacturing/m3/ 27 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  25. Manufacturing Employment,Jan. 2010—February 2013* Manufacturing employment is up by more than 500,000 or 4.5% since Jan. 2010—a surprising source of strength in the economy. Employment in the sector is close to a multi-year high. (Thousands) *Seasonally adjusted Sources: US Bureau of Labor Statistics at http://data.bls.gov; Insurance Information Institute. 30 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  26. ISM Non-Manufacturing Index (Values > 50 Indicate Expansion) January 2010 through March 2013 Optimism among non-manufacturers is stable and remains expansionary in 2013 Non-manufacturing industries have been expanding and adding jobs. The question is whether this will continue. Source: Institute for Supply Management at http://www.ism.ws/ismreport/nonmfgrob.cfm; Insurance Information Institute.

  27. Business Bankruptcy Filings,1980-2012:Q3 % Change Surrounding Recessions 1980-82 58.6% 1980-87 88.7% 1990-91 10.3% 2000-01 13.0% 2006-09 208.9%* 2011 bankruptcies totaled 47,806, down 15.1% from 56,282 in 2010—the second consecutive year of decline. Business bankruptcies more than tripled during the financial crisis. Through Q3:2012, filings were down 15.8% vs. Q3:2011 Significant Exposure Implications for All Commercial Lines as Business Bankruptcies Begin to Decline Sources: American Bankruptcy Institute at http://www.abiworld.org/AM/AMTemplate.cfm?Section=Home&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=61633; Insurance Information Institute 32 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  28. Private Sector Business Starts, 1993:Q2 – 2012:Q2* Business Starts2006: 872,0002007: 843,0002008: 790,0002009: 697,000 2010: 742,000 2011: 748,000* (Thousands) Business starts were up 2.2% to 748,000 in 2011 vs. 2010. In 2012, starts are likely to be up by about 2.7% over 2011 levels. Business Starts Were Down Nearly 20% in the Recession, Holding Back Most Types of Commercial Insurance Exposure, But Are Recovering Slowly * Data through Jun. 30, 2012 are the latest available as of Apr. 3, 2013; Seasonally adjusted. Source: Bureau of Labor Statistics, http://www.bls.gov/news.release/cewbd.t08.htm. 33 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  29. NFIB Small Business Optimism Index January 1985 through February 2013 Small business optimism is returning after taking a big hit over “Fiscal Cliff” fears Source: National Federation of Independent Business at http://www.advisorperspectives.com/dshort/charts/indicators/Sentiment.html?NFIB-optimism-index.gif ; Insurance Information Institute.

  30. 12 Industries for the Next 10 Years: Insurance Solutions Needed Health Care Health Sciences Energy (Traditional) Many industries are poised for growth, though insurers’ ability to capitalize on these industries varies widely Alternative Energy Petrochemical Agriculture Natural Resources Technology (incl. Biotechnology) Light Manufacturing Insourced Manufacturing Export-Oriented Industries Shipping (Rail, Marine, Trucking, Pipelines)

  31. Hurricane Sandy Summary Sandy Will Become One of the Most Expensive Events in Insurance History 36

  32. Top 12 Most Costly Hurricanesin U.S. History (Insured Losses, 2012 Dollars, $ Billions) 10 of the 12 most costly hurricanes in insurance history occurred over the past 9 years (2004—2012) Hurricane Sandy could become the 3rdcostliest hurricanein US insurance history Hurricane Irene became the 12th most expensive hurricane in US history in 2011 *Estimate as of 12/09/12 based on estimates of catastrophe modeling firms and reported losses as of 1/12/13. Estimates range up to $25B. Sources: PCS; Insurance Information Institute inflation adjustments to 2012 dollars using the CPI.

  33. Hurricane Sandy: Claim Payments to Policyholders, by State ($ Thousands) TOTAL = $18.75 BILLION At $9.6B and $6.6B, respectively, NY and NJ suffered, by far, the largest losses from Hurricane Sandy Insurers Will Pay at Least $18.75 Billion to 1.52 Million Policyholders Across 15 States and DC in the Wake of Hurricane Sandy Sources: Catastrophe loss data is for Catastrophe Serial No. 90 (Oct. 28 – 31, 2012) from PCS as of Jan. 18, 2013; Insurance Information Institute .

  34. Hurricane Sandy: Number of Claims by Type* Hurricane Sandy resulted in an estimated 1.52 million privately insured claims resulting in an estimated $18.75 to $25 billion in insured losses. Hurricane Katrina produced 1.74 million claims and $48.7B in losses (in 2012 $) Total Claims = 1.52 Million* Sandy is a high HO frequency, (relatively low) severity event (avg. severity <50% Katrina) *PCS claim count estimate s as of 1/18/13. Loss estimate represents PCS total ($18.75B) and upper end of range estimates by risk modelers RMS, Eqecat and AIR. All figures exclude losses paid by the NFIP. Source: PCS; AIR, Eqecat, AIR Worldwide; Insurance Information Institute.

  35. Hurricane Sandy: Insured Loss by Claim Type* ($ Millions) Although Commercial Lines accounted for only 13% of total claims, they account for 48% of all claim dollars paid. In most hurricanes, Commercial Lines accounts for about 1/3 of insured losses. Total Claim Value = $18.75 Billion* *PCS insured loss estimates as of 1/18/13. Catastrophe modeler estimates range up to $25 billion. All figures exclude losses paid by the NFIP. Source: PCS; Insurance Information Institute.

  36. Hurricane Sandy: Value of Homeowners Claims Paid, by State* ($ Millions) Hurricane Sandy • Estimated 1,067,000 homeowners claims** • $7.0 billion in insured losses. • Average loss per claim is $6,558 • Claims in NJ estimated at $2.5 billion (36%) and $2.7 billion in NY (38%) *Preliminary as of 1/18/13. Source: PCS.

  37. Hurricane Sandy: Number of Auto Claims by State* Hurricane Sandy • Estimated 250,500 vehicle claims • $2.729 billion in insured losses. • Average loss per claim is $10,894 • 60% of the claims occurred in NY state. *Preliminary as of 1/18/13. Source: PCS.

  38. Hurricane Sandy: Value of Auto Claims Paid, by State* ($ Millions) Hurricane Sandy • Estimated 250,500 vehicle claims • $2.729 billion in insured losses. • Average loss per claim is $10,894 • About 69% of the claim dollars will be paid in NY, 26% in NJ. *Preliminary as of 1/18/13. Source: PCS.

  39. Hurricane Sandy: Loss Distribution by Commercial/Personal Lines and Reinsurance vs. Primary Insurer Personal vs. Commercial Lines* Primary vs. Reinsurer Share** ~55% of Sandy losses appear to be commercial lines, and ~45% personal, the opposite of the norm for hurricane losses Reinsurers’ share of Sandy losses appears to be in the 30% range, though this is highly preliminary *Fitch Ratings assigns a range of 60-65% commercial and 35-40% personal lines., Hurricane Sandy Update, January 8, 2013. **Source: Insurance Information Institute rough estimate based on company reports as of January 13, 2013. Actual number will vary.

  40. Hurricane Sandy: Average Claim Payment by Type of Claim Commercial (i.e., business claims) are more expensive because the value of property is often higher as well as the impact of insured business interruption losses The average insured flood loss was 6.5 times larger than the average non-flood insured loss (mostly wind) Commercial (Business) Claims Were Nearly Seven Times More Expensive than Homeowners Claims; Vehicle Claims Were Unusually Expensive Due to Extensive Flooding *Includes rental and condo policies (excludes NFIP flood). **As of Feb. 20, 2013. Sources: Catastrophe loss data is for Catastrophe Serial No. 90 (Oct. 28 – 31, 2012) from PCS as of Jan. 18, 2013; Insurance Information Institute .

  41. Hurricane Sandy: Flood Issues Most of the Uninsured Direct Losses Are Due to Flooding 47

  42. Residential NFIP Flood Take-Up Rates in NJ (2010) & Sandy Storm Surge Flood coverage penetration rates were extremely low in many very vulnerable areas in NJ, with take-up rates far below 50% in many areas Source: Wharton Center for Risk Management and Decision Processes, Issue Brief, Nov. 2012; Insurance Information Institute. 48

  43. Residential NFIP Flood Take-Up Rates in NY, CT (2010) & Sandy Storm Surge Flood coverage penetration rates were extremely low in many very vulnerable areas of NY and CT, with take-up rates far below 50% in many areas Source: Wharton Center for Risk Management and Decision Processes, Issue Brief, Nov. 2012; Insurance Information Institute. 49

  44. Hurricane Sandy: National Flood Insurance Program Payment, by State* ($ Millions) TOTAL = $4.797 BILLION At $2.437B and $2.152B, respectively, NY and NJ sustained, by far, the largest NFIP flood losses from Hurricane Sandy The NFIP Will Ultimately Likely Pay Close to $7 Billion to 100,000 Policyholders Across 9 States and DC in the Wake of Hurricane Sandy *As of February 20, 2013. Sources: NFIP; Insurance Information Institute .

  45. Flood Loss Paid by the National Flood Insurance Program, 1980-2012E Billions (Original Values) Hurricane Sandy and other events could result in $7.5 billion in payouts from the NFIP in 2012, second only to 2005 and potentially exhausting the NFIP’s borrowing authority Hurricanes Katrina and Rita accounted for the majority of 2005’s record $17.4B payout Hurricane Ike *Estimate as of 11/25/12. Sources: Department of Homeland Security, Federal Emergency Management Agency, NFIP; Insurance Information Institute. 51 12/01/09 - 9pm eSlide – P6466 – The Financial Crisis and the Future of the P/C

  46. Federal Disaster Declarations Patterns: 1953-2012 Despite 11 Sandy Declarations, Fewer Disasters Were Declared in 2012 than the Record Number of Declarations in 2010 and 2011 53

  47. Number of Federal Disaster Declarations, 1953-2013* There have been 2,103 federal disaster declarations since 1953. The average number of declarations per year is 35 from 1953-2012, though there few haven’t been recorded since 1995. The number of federal disaster declarations set a new record in 2011, with 99, shattering 2010’s record 81 declarations. 47 federal disasters were declared in 2012 The Number of Federal Disaster Declarations Is Rising and Set New Records in 2010 and 2011. Hurricane Sandy Produced 13 Declarations in 2012/13. *Through Apr. 3, 2013. Source: Federal Emergency Management Administration; http://www.fema.gov/disasters; Insurance Information Institute.

  48. Federal Disasters Declarations by State, 1953 – 2013: Highest 25 States* Over the past 60 years, Texas has had the highest number of Federal Disaster Declarations *Through Apr. 3, 2013. Includes Puerto Rico and the District of Columbia. Source: FEMA: http://www.fema.gov/news/disaster_totals_annual.fema; Insurance Information Institute.

  49. Federal Disasters Declarations by State, 1953 – 2012: Lowest 25 States* Over the past 60 years, Wyoming and Rhode Island had the fewest number of Federal Disaster Declarations *Through Apr, 3, 2013. Includes Puerto Rico and the District of Columbia. Source: FEMA: http://www.fema.gov/news/disaster_totals_annual.fema; Insurance Information Institute.

  50. U.S. Insured Catastrophe Loss Update 2012 Catastrophe Losses Were Close to “Average” Until Sandy Hit 2011 Was the 5th Most Expensive Year on Record 57