While Hurricane Katrina still ranks as the costliest catastrophe in the United States in terms of insured property losses that totaled roughly $41 billion, experts predict that future storms could prove even costlier. By all predictions, 2008 is an active year for hurricanes and storms.

"We are in a cycle where we should expect more severe storm activities," says Jeanne Salvatore, spokesperson for the Insurance Information Institute (III). "If the meteorologists are correct, than it's unfortunately a possibility that we can have another storm as severe as [Katrina]."

Dr. Robert Hartwig, and economist and president of III, says that 2005 remains by far the worst year for insured catastrophe losses. But he estimates that disaster losses along the coast are likely to escalate in the coming years — possibly reaching upwards of $100 billion — due to huge increases in development and rising rebuilding and repair costs in hurricane-prone areas.

"We keep moving to the coast and building more expensive structures," Salvatore adds. "That's the trend. At the same time, we have this enhanced risk of hurricanes. It's a problem."

The hurricane season of 2005, which began in June and lasted until the end of November, broke all previous records for property/casualty insurance damages, far surpassing 2004, which had been the previous recordholder. Losses from catastrophic events of 2004 totaled $27.5 billion. The insured losses from 2005 almost tripled that number, with a staggering loss of $62.3 billion. Although there were a total of 24 events of 2005, the vast majority of losses were a result of five events: Hurricanes Katrina, Wilma, Rita, Ophelia and Dennis. These five hurricanes were responsible for $57.7 billion in insured losses (93 percent of the total damage for the year). Loss from catastrophic events in a single year had never been so devastating.

Hurricane Katrina remains the single most destructive hurricane in American history. It reached the Category 5 level, the most severe on the Saffir-Simpson scale, over the Gulf of Mexico, but weakened to Category 3 before decimating the central Gulf coastal region, most especially the cities of New Orleans, Mobile, Ala., and Gulfport, Miss. These cities experienced intense destruction. Katrina was responsible for $41.1 billion in insured damages.

Hurricane Wilma, the last major hurricane of 2005, occurred in October. It reached the level of Category 5 over the Atlantic Basin. Landfall occurred on the Yucatan Peninsula and the hurricane weakened to Category 3 before striking Florida on Oct. 24. Hurricane Wilma caused $10.3 billion in insured damages.

Sources: Insurance Information Institute
and ISO's Property Claim Service Unit