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Natural Disasters:
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Are you at risk?
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| Earthquakes | Hurricanes | Blizzards | |
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| Fires | Tornados | ||
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| Floods | |||
Natural Disasters are becoming more frequent.
Leading meteorologists, such as Dr. William Gray (University
of Colorado) who accurately forecast Hurricane Andrew, predict
a sharp rise in the number and severity of hurricanes in the
near future as part of a 30-50 year cycle of hurricane activity.
There is an 86 percent chance of a catastrophic (magnitude 7
or stronger) earthquake occurring in California within 20 years,
according to a January 1995 report by the scientists at the University
of California.
The probability of a major earthquake occurring in the eastern
United States before the year 2000 is better than 75 percent
and nearly 100 percent before the year 2010, according to the
National Center for Earthquake Engineering Research.
Natural disasters are becoming more costly.
Prior to 1987, the United States never experienced a natural
disaster with insured losses greater than $1 billion. Since that
time there have been eight such events.
New studies project higher losses from future storms: $53 billion
for a class 5 hurricane striking Miami and $51 billion for a
class 4 storm striking New Jersey and Long Island.
A catastrophic earthquake striking Los Angeles or San Francisco,
or a similar quake in the New Madrid Zone of the Mississippi
River Valley, could cause insured damage of $100 billion.
The enormous potential for future losses is causing insurance
availability problems.
A.M. Best, the independent insurance rating service, recently
announced it will lower the financial ratings of at least 14
major insurers if they do not reduce their exposure to natural
disasters.
Approximately 40 percent of all homeowners in Hawaii lost their
insurance after Hurricane Iniki due to insurer insolvencies and
market withdrawals.
The probable maximum loss from a hurricane striking Honolulu
is $30 billion--- the equivalent of 483 times the annual homeowners
insurance premiums collected in the state ($62 million).
Only 1 in 5 California homeowners carry earthquake insurance;
in other parts of the country where earthquakes are also a risk,
the rate is less than five percent.
Proper planning could save lives and substantially reduce
property loss.
Many states and localities have not adopted building codes
which will reduce damage caused by wind, flood and earthquakes
-- and where codes are in place, they are not always properly
enforced.
In the aftermath of Hurricane Andrew, experts found that losses
could have been reduced by as much as 30-40 percent had existing
building codes been properly enforced.
The United States spends less than $4 million annually on wind-hazard
mitigation, most of which is for storm-warning capability. Given
recent windstorm devastation, it is clear that a greater investment
in prevention could reduce disaster losses by hundreds
of millions of dollars.
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Kennedy Professional
Insurance Agency
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