The enormous growth in coastal population and development is dramatically increasing the possibility that insurers will be unable to pay claims after major catastrophes, according to a paper by GE Insurance Solutions, a Kansas City, Mo., unit of General Electric Co.
The insurance industry is well capitalized and able to withstand storms and earthquakes with insured price tags in the range of $60 billion to $120 billion, according to the report, which was released Thursday. But it also said that numerous catastrophes within 12 months could put a cumulative strain on capital, leaving some insurers without reinsurance protection.
The paper questioned whether the industry's capital providers would continue to maintain sufficient levels of support if a heavy natural catastrophe season occurred in the same year as an unexpected loss like the Sept. 11 terrorist attacks.
