Global Insurers, Reinsurers Likely Paying 50 Percent of Estimated Losses From Hurricanes Harvey, Irma and Maria
Global insurers and reinsurers are essential to a healthy and functional insurance market – they spread risk across the world so that there is always capital to cover a disaster, whether it be an earthquake in Japan or a hurricane in Texas. Hurricanes Harvey, Irma and Maria have wreaked havoc on the Gulf Coast, Florida and the Caribbean, leaving thousands of people in need. Based on past catastrophes, global insurers and reinsurers will likely bear 50% of the losses from this record-setting hurricane season for home and business owners. Today they are speeding billions of dollars into American pockets, moving as quickly as possible so that those who fell into harm’s way can rebuild and recover faster.
Losses are heavy and will increase.
Industry experts, including CoreLogic, RMS, AIR Worldwide and Karen Clark & Co have compiled mid-point
estimates of the current losses from Hurricanes Harvey, Irma and Maria:
- Hurricane Harvey: $21.25 billion
- Hurricane Irma: $43.5 billion
- Hurricane Maria: $50 billion
- Total: $114.75 billion
These staggering losses will fuel insurance payments that will help rebuild American communities devastated
by this series of storms, bringing people a sense of hope for a return to normalcy while contributing to
Global insurers and reinsurers are distributing US risk to protect consumers from added economic burdens.
Global insurers and reinsurers diversify risk and share its benefits with US consumers via competitive markets
that provide lower insurance costs and prevent additional taxes necessary to cover uninsured losses. With the
storms still part of recent memory, loss estimates are preliminary. Contributions by global insurers and reinsurers are currently projected at more than 65% of total payments. As additional financial disclosures are made from US carriers this share will likely move closer to the 50/50 or 60/40 split seen in previous large loss hurricanes from Katrina, Rita, Wilma and Sandy.
Global insurers and reinsurers will continue their support in good times and bad.
Global insurers and reinsurers are contributing greatly to the recovery process. Payments have reduced
capacity between $70 billion and $100 billion, with global insurers and reinsurers taking the biggest equity hit.
Media outlets covering insurance are suggesting that rates will increase in the double digits due to a decreased
supply of reinsurance. According to Insurance Insider, S&P has stated that “rate increases in the alternative
capital space next year are almost a given because incoming capital supplies are unlikely to come in at prices
similar to earlier periods.” More specifically, “top-up and stop-gap covers being sought by insurers to guard
against additional cat losses carry risk premiums of 20 percent to 30 percent.”
When reinsurance renewals take place on January 1, the price impact of these hurricanes will only be
aggravated by an unwise decision to enact punitive taxes targeting reinsurance.
But the headlines say it all.
Global reinsurers are covering US losses post-hurricane and are signaling the need for rate increases next year.
Insurance Insider – Munich Re expects global uplift in cat pricing post-HIM
Now is not the time to burden those who are trying to rebuild with additional taxes.