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6 Of The Most Expensive Insurance Claims of All Time

November 6th, 2013 by in Featured with 980 Views

Generally speaking, being a successful insurer is an insanely profitable business. Centuries of development of economics and actuarial science have seen to this. Insurance is all about clever risk management, essentially…

Every now and then, however, something comes out of the blue that’s so unusual, unpredictable and outright expensive that the insurance business doesn’t seem quite so profitable anymore. Such disasters, if naturally occurring, are sometimes referred to as ‘Acts of God’, and the death, cost and civil destruction associated with them could certainly be described as ‘godlike’.

Here are six events which left insurers reeling:

Event: Hurricane Katrina

Location: Bahamas, Cuba, USA

Date: August, 2005

Total Cost: $72.3 billion

Unusual fact: It’s thought that at one point, 80% of New Orleans was underwater, and that it was up to 20 feet deep in some places.

More than 1.7 million insurance claims resulted from Hurricane Katrina which hit Florida first as a relatively tame ‘category one hurricane’, before heading out to the Gulf Of Mexico and returning a few days later to wreak utter havoc in Louisiana as a category three.

The damage done to Louisiana was incredible, making it the costliest national disaster that the USA has ever endured. Over 1,800 people lost their lives, most of them in the city of New Orleans where the levee that protected the city from water broke under Katrina’s weight. This caused so much destruction that later an (unsuccessful) lawsuit was filed against the U.S. Army Corps of Engineers, who designed the levee.

Event: 9/11 World Trade Centre disaster

Location: New York, USA

Date: 9/11/2001

Total Cost: $40 billion

Unusual fact: Fires raged at the site of Ground Zero for 99 days

The world won’t forget the tragedy that befell New York on that fateful September afternoon, and nor will the insurers who had to pay out for it. Almost 3,000 people died in the terrorist attacks that brought down the Twin Towers of the World Trade Centre, and the non-human costs were astronomical.

Insurance companies were forced to pay out around $40 billion in losses, which covered the likes of life insurance, workers compensation, liabilities insurance and aviation costs. As a centre of financial trading the attacks disrupted the global economy and directly triggered the expensive and ongoing ‘War on Terror’.

Event: Hurricane Andrew

Location: The Bahamas, Southern USA

Date: August, 1992

Total Cost: $30 billion

Unusual fact: Hurricane Andrew resulted in 1.4 million Americans losing electricity and 150,000 losing telephone communications

Hurricane Andrew arrived in Southern Florida in the middle of the night on August the 23rd, before seething across the Gulf of Mexico and eventually settling on the Southeastern states on August the 25th.

Bringing 200 mile per hour winds and a huge storm surge, the hurricane left over a quarter of a million people homeless. These people were forced to live for several months in temporary ‘tent cities’ arranged by the government. Hurricane Andrew hit the petroleum industry particularly hard, damaging and destroying a number of wells and costing about half a billion dollars in damage.

Event: Tohoku earthquake and tsunami

Location: Japan

Date: March, 2011

Total Cost: US$14.5 to $34.6 billion

Unusual fact: The ’quake is thought to have shifted the Earth’s axis by at least 10cm

A combination of factors conspired to make the Tohoku event one of the worst natural disasters in Japan’s history. First was a magnitude 9 earthquake, the most powerful of such to ever hit Japan and the fifth most powerful in recorded history.

This caused a tsunami which ravaged the coastal settlements of the island nation, and resulted in the failure of the cooling system at Fukushima Daiichi Nuclear Power Plant. Though not quite a ‘Chernobyl’, radiation levels in the plant were around 1,000 higher than normal and nearby residents were evacuated. All in all, almost 16,000 deaths were recorded for the entire disaster, with over 2,500 people still missing today.

Event: Northridge earthquake

Location: United States of America

Date: January, 1994

Total Cost: $20.6 billion

Unusual Fact: The earthquake’s timing (it arrived in the early morning and on an American holiday) is thought to have reduced the death toll, as most city residents were asleep in their homes and not amongst the crumbling motorways and office buildings.

The Northridge Earthquake made itself known on January 17th, 1994 in the San Fernando Valley, a few miles northwest of Los Angeles. At 6.8 on the Richter scale, the ’quake destroyed about 8,000 homes and damaged over 114,000 buildings in total.

The towns of Santa Monica, Santa Clarita and Simi Valley were hardest hit, though the ’quake was felt as far away as Las Vegas, Nevada (over 200 miles away). Around 60 people died and over 8,700 were injured.

  • MD Golam Rabbani

    Yes these are the 6 Most Expensive Insurance Claims of All Time of the world. I can still see the 9/11 World Trade Centre disaster. How terrible was it!

  • Sakil Hossen

    Some of these disaster details are not in my knowledge, just learned about these by studying this educative post!! Though 9/11, Japan Tsunami, and Hurricane Katrina these disasters are I’ve observe in my time.

  • Geofrey Bett

    yes,no doubt this are the most expensive Insurance claims in the world.This are the kinds of insurance claims the insurer feels like escaping from paying.

  • Farhad khan

    Reading your article I just informed some world big disaster. North ridge earthquake, Hurricane Katrina , Hurricane Andrew was totally out of my knowledge. You are absolutely right, these mentioned six disaster are the most expensive Insurance claims in the world.

  • Kristin Radzioch

    Wow those are some hefty sums of money! My mom was an insurance agent for most of the past fifteen years. I would think that claims like these would make any involved insurance agent/ agency cry.

  • liz soliven

    Now it’s the super typhoon Haiyan that swept the visayas in the Phil. For almost all of the people here in the phil, most of them doesn’t care or are not aware of any insurance