After Rough 2006, Indiana Avoids Catastrophes in 2007

Indiana weather has been known to quickly move from one extreme to another. The insurance industry’s 2007 loss figures demonstrate that on a large scale.

In 2006, Indiana shocked the insurance world by being the state hardest hit by large natural disasters. But in 2007 things moved to the other extreme. No large weather events – known as "catastrophes" in the insurance industry – struck Indiana in 2007, according to insurance trade group ISO.

Indiana saw eight catastrophes in 2006, with insurance claims totaling about $1.5 billion. The largest of the group was the Good Friday hail storm, which affected much of the state. Insurance Institute of Indiana President Steve Williams said the lack of catastrophes in 2007 is a relief to insurers.

"These two years are a great example of the difficult job insurers have in assessing risk," Williams said. "The unpredictability of Mother Nature is the reason insurance companies look at a much larger picture when setting rates."

While the lack of large events in 2007 is good news, it doesn’t guarantee a drop in insurance rates, just as the 2006 storms did not guarantee a rate hike. Insurers typically average the losses over five to ten years to create an accurate risk picture.

That is why states such as Texas, Florida, and Mississippi have higher rates: they have a consistently higher risk.

"In fact, many of the problems in the coastal states are causing insurers to put more focus on gaining business in the heartland," Williams said. "That means Hoosiers are benefiting from increased competition."

In 2007, California had the most property damage due to catastrophes. The October wild fires in north San Diego caused about $1.1 billion in damage. The biggest catastrophe, which delivered losses to multiple states, was a mid-April storm that swept through 19 states from Texas to Maine causing $1.35 billion in damage.

Below is a look at the top five catastrophe states from 2006 and 2007, as well as a list of total catastrophe losses and number of catastrophe events in the last decade: