Hurricanes

With hurricanes Carol, Edna and Hazel causing $75m of damage in the US, the sheer scale and destruction hurricanes could inflict began to make itself known to the insurance world.

Hurricane Betsey was the first tropical cyclone in the Atlantic Basin to cause at least $1bn (1965 value) worth of damage – the most widespread US damage since the San Francisco earthquake. Insurers were badly affected, since the market had been soft, which meant that premiums has been written at very low rates; the average loss per Name was £5,400.

Inflation caused added problems, as did a sharp rise in liability awards in the US. A banker at the time commented: ‘I wouldn‘t touch Lloyd‘s with the wrong end of a Kew Garden flagpole.’

Of course, all was far from over, though Lloyd’s had learned a lesson and altered its structure accordingly.

In 2004, Hurricanes Charley, Ivan, Frances and Jeanne all hurled their way in over the Atlantic to devastate parts of America and the Caribbean. The total industry loss was estimated to be approximately $25bn, of which Lloyd’s share was $2.3bn.

86% of the Florida claims were settled by Christmas. And, while others battened down the hatches, we continued to offer insurance. At the time, Jonathan Gray, underwriter for Beazley said: ‘It wasn’t just the size of the loss, but how incredibly hard it was to adjust – with one hurricane following another. But we were there providing cover for homes and businesses immediately afterwards.’

Hurricane Katrina was the deadliest and most destructive Atlantic hurricane of the 2005 Atlantic hurricane season and with Wilma, hot on her heels, the most intense tropical cyclone ever recorded in the troubled Atlantic basin. It was the costliest natural disaster, as well as one of the five deadliest hurricanes, in the history of the US.

In Katrina’s wake, more than a thousand people lost their lives, tens of thousands were displaced and the once-great city of New Orleans is a shadow of its former self.

In difficult circumstances, Lloyd’s responded quickly and strongly, sending thousands of loss adjusters to the region, paying billions of dollars in claims and donating millions of dollars in relief funds. Within hours of Katrina hitting, Lloyd’s had an emergency hurricane response team in London and the US established. We also launched a toll-free helpline to deal with urgent policyholder concerns, which took thousands of calls and helped more than 99% of policyholders initiate contact with the right people in our marketplace. And Lloyd’s was the first to pay claims to the offshore energy industry after the hurricane decimated the Gulf.