Population growth fuels catastrophe risk

Citation

(2000), "Population growth fuels catastrophe risk", Disaster Prevention and Management, Vol. 9 No. 4. https://doi.org/10.1108/dpm.2000.07309dab.005

Population growth fuels catastrophe risk

Population growth fuels catastrophe risk

Population growth in US states at high risk from natural catastrophes poses a serious policy implication for homeowners insurers, a new study by the American Insurance Association (AIA) suggests.

Of the top ten states projected to lead the nation's population growth, the top three – California, Texas and Florida – are also most at risk from catastrophes such as hurricanes, earthquakes, wildfires, and severe tornado and hail outbreaks, according to the report.

In addition, within those three states, the most popular locations for new population and housing growth tend to be in the regions most exposed to natural catastrophes.

Exposed

This includes the coastlines of Florida, the coastline and hail belt of Texas, and areas of California most exposed to earthquakes and wildfires.

As a result, insurers must continue to focus on catastrophe management, the AIA urges.

"California, Texas and Florida will see the largest aggregate increase in population in the coming years. Those states are also among the highest risk states for earthquakes or hurricanes."

Focus

"The insurance industry will need to continue its focus on exposure management, improved building codes and enforcement and land use planning," comments David Unnewehr, the AIA's most senior research manager.

Many of the states that will grow the fastest from now until 2005 continue to be popular retirement destinations, which is another factor in their growth prospects. Only one of the top ten fastest growing states, Arizona, is without a significant hurricane, earthquake or hail/tornado risk.

The report also points out that large catastrophes, which are beyond the boundaries of the climate change debate, will continue to pose the most significant threat to insurers in future.

"Apart from climate change, large catastrophes such as Hurricane Andrew, the Northridge earthquake, and the Oakland fires are random events that have the potential to change the home insurance underwriting and claims environment in significant and unanticipated ways from now through 2005.

"Thus, catastrophe exposure management and efforts to promote mitigation will become increasingly important," it concludes.

Lloyd's Casualty Week, Vol. 317, No. 9, August 27, 1999.