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What is the definition of Catastrophe?

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Catastrophe refers to term that is used regarding a single incident or a succession of related incidents that cause massive losses to insured property, the amount of which reaches by the millions of dollars. This term is used for purposes of statistical recording. The insurance industry has pegged a specific amount, that is, a dollar threshold (currently at $25 million) that is reached or breached because of a disaster. A catastrophe also involves losses for a considerable number of insurance companies.

A catastrophe may be a natural or man-made disaster. Examples are the hurricane Katrina and the terrorism attack on 9/11 at the World Trade Center. Catastrophes include hurricanes, tornadoes, wildfire or forest fires, and acts of terrorism.

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