May turned out to be a mega-expensive month in terms of insurance losses. A busy week of severe thunderstorms and tornadoes across much of the US generated between $4 billion and $7 billion in insured losses, according to AIR Worldwide. AIR Worldwide is a catastrophe modeling company.

The rough month of May follows several months of unheard of losses that includes floods and cyclones in Australia, earthquakes in New Zealand and Japan, unrest in the Middle East, and of course, sky high tornado damage in the US. The unprecedented pattern of damage has left the insurance industry with little option but to raise rates.

According to the Chicago Tribune, experts say that 2011 losses for reinsurers are already more than double their full-year forecast. Two major tornado episodes ranked among the costliest in history. The insurance industry may be responding with higher prices. They’re also preparing for hurricane season which just started and could lead to even more destruction. The US did not have a major hurricane hit land the past two years but experts are predicting an active 2011 hurricane season.

The private insurance industry won’t take as much of an impact from Japan’s earthquake, tsunami and nuclear disaster as it did for Hurricane Katrina nearly six years ago, even though this recent natural disaster is expected to be much costlier. According to a report from MSNBC, the reason it won’t be as bad for the insurance sector is because Japanese homeowners and businesses depend largely on government-based insurance for these types of natural disasters.

Statistics from the Reinsurance Association of America show that only 14 to 17 percent of Japanese homeowners carry private earthquake insurance. In Japan there is also a cap on the total claims paid out during a disaster. If claims surpass $60 billion, homeowners only receive partial coverage for their losses.

Some are estimating the losses from the natural disasters to top $180 billion, others say even more. Hurricane Katrina once held the top spot for costliest disaster, coming in at $125 billion. Experts are still trying to estimate Japan’s damage. “It’s still early in the aftermath; we have been running hundreds of computer simulations taking all the geophysical data and simulating the ground motion and estimating damage based on this simulation,” Jayanta Guin, head of research and modeling for AIR told MSNBC. “We’re working through the details to see if we can refine it.”

What’s still unknown is what kind of impact the nuclear plant will have on the area. But due to the Japanese Nuclear Act of 1961, the plan operators won’t be responsible for any of the costs. “Those disasters are typically excluded from property and casualty policies,” he said. MSNBC says it’s likely that people worldwide could feel the impacts of these disasters in the form of higher insurance premiums to make up for what will likely be the most expensive event in history.

Plenty of Americans are looking for ways to cut costs. And according to the senior vice president and chief economist for the Insurance Information Institute, that could slow growth for the insurance industry. Steven N. Weisbart spoke to the attendees of the Annual Executive Conferences in New York saying consumers have less buying power, especially when it comes to financial products. And that reduced buying power isn’t good for the insurance industry, according to P&C National Underwriter.

Growth has been noticeably slower during this recession compared to past recessions, according to Weisbart. He explained that gross domestic product grew at about three percent after past recessions, but this recession has been slower. Unemployment and comprehensive unemployment numbers are also higher than normal. According to current statistics, unemployment is at 9.6-percent while comprehensive unemployment is at 17.6-percent. Weisbert says that roughly 6.25 million people fall under the long-term unemployment category.

All of this impacts the insurance industry because the less disposable income people have the less likely they are to buy insurance beyond what is required by law. Also, new car purchases are down which means people are driving older cars. Complying with new regulations from the Federal Insurance Office is also proving to be difficult for the industry, according to P&C National Underwriter.

A study by the American Journal of Public Health found that larger health, disability and long term care insurance providers are investing big bucks into fast food chains including McDonald’s and Pizza Hut. The investments reached nearly $2 billion dollars according to Dr. Wesley Boyd, an author of the study and clinical professor at Harvard Medical School. According to the study:

• Northwestern Mutual owns $422.2 million in fast food stocks, with most invested in McDonald’s.
• Massachusetts Mutual owns $366.5 million worth of fast food stock with all but $100 million in McDonald’s.
• ING holds $406.1 million in fast food stocks, more than 75 percent of which is in McDonald’s.
• Life and long-term disability insurance company Prudential Financial has $355.5 million in fast food holdings including large portions of Burger King, Jack-in-the-Box and McDonald’s.

Boyd feels that the study shows a need for insurance companies to be held to a higher standard. “The insurance industry, so far as it seeks to make a profit, it does so in an amoral way,” Boyd said in a CBS News report. “In order to generate profits, they will invest in any area they need to … to make money, even if what they invest in, in this case fast food, is an industry that is known to cause people to get sick and to die early.” According to CNN, the authors of the report feel that perhaps the insurance company should use their power to force fast food companies into creating more healthy options.

CNN contacted several of the insurance companies about the study’s findings. One email response from Massachusetts Mutual spokesperson Mark Cybulski called the findings “absolutely incorrect.” Cybulski told CNN that as of the end of 2009 the company held less than $1.4 million in fast food stock which equals less than one-hundredth of a percent of the company’s cash and assets.

Another source told CNN that if the study is true, the insurance company may profit from investing in companies like fast food and tobacco which contribute greatly to mortality rates. “They are essentially killing off their consumer base, so it’s not a sustainable model in the long-term,” Sara N. Bleich, Ph.D., an assistant professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health told CNN. “Long-term goals should be consistent with health, because that ensures a large population from which to draw consumers.”

Auto insurance is a form of protection not only for you but for other motorists sharing the road and property holders as well. It is important to have and it is required by law. Auto insurance is mandatory in nearly every state in the country. If you do not have an active and legitimate insurance policy, there can be serious legal consequences including fines and imprisonment. This makes finding a insurance policy that is affordable and which provides adequate coverage a pressing concern for motorists.