Late hurricanes to keep reinsurance rates elevated, according to Bloomberg Intelligence
The US accounted for seven of the top 10 costliest insured-loss events in the first nine months of the year, Gallagher Re estimates
Reinsurers’ fear of increased pressure to cut pricing and offer more generous terms has eased after late summer storms caused natural catastrophe losses to rise, according to a new report from Bloomberg Intelligence (BI). Losses from Hurricanes Milton and Helene look set to ensure returns won’t be boosted this year by an absence of major North Atlantic hurricane claims as they were in 2023. Maintained retention rates will see primary insurers continue to bear a higher share of claims from secondary perils like floods and wildfires amid increasing demand for a more coordinated government approach to the challenge of climate change.
Charles Graham, BI Senior Industry Analyst (Insurance), commented: “The insured cost of natural catastrophe losses may exceed US$150 billion this year. Gallagher Re estimates the cost of natural catastrophe events through September at $108 billion before the additional cost of claims from Hurricane Milton, which made landfall on 9 October. Estimates of the cost of insurance claims from Milton range between $17–$50 billion.”
The US accounted for seven of the top 10 costliest insured-loss events in the nine months to September, according to Gallagher Re estimates. Of these, Hurricane Helene is by far the largest, yet that’s likely to be dwarfed in Q4 by claims from Hurricane Milton. Storm Boris, estimated to have cost insurers $3.1 billion in claims, was the most expensive European loss, and the Noto Peninsula earthquake in Japan the most expensive in Asia at $3 billion. Severe convective storms accounted for more than half of total insured losses.
Graham continued: “The total economic cost of global catastrophe events likely exceeded $280 billion, $264 billion of which related to weather events. Economic losses in the US were at least $128 billion, of which about $78 billion was insured, including $57 billion related to convective-storm events.”
Hurricane Milton is a complex loss, the size of which will take time to assess. Early loss estimates for privately insured losses range from $17–$50 billion, with most insured claims attributable to wind damage. Moody’s RMS estimates put losses in a $22–$36 billion range, with a best estimate of $26 billion. That includes losses from wind, storm surge and precipitation-induced flooding. KCC puts the loss at close to $36 billion for damage to residential, commercial and industrial properties and automobiles, as well as business interruption, but not including damage to boats, offshore properties, or National Flood Insurance Program claims. CoreLogic’s estimate is lower at $17–$28 billion and Verisk expects industry losses to be in a €30–€50 billion range.
Squaremouth recently explored what travel insurance coverage travellers should consider if they’re taking a trip this hurricane season.