Reinsurers regain leverage as late storms drive up nat cat losses: Bloomberg

With a series of late storms causing natural catastrophe losses to rise, pressure on reinsurers to cut pricing and offer more generous terms has eased, according to a new report from Bloomberg Intelligence (BI).

As per Charles Graham, BI Senior Industry Analyst (Insurance), the insured cost of natural catastrophe losses may exceed $150 billion in 2024.

Citing figures from Gallagher Re, Graham noted that the cost of natural catastrophe events in the first nine months of this year was $108 billion, before the additional cost of claims from Hurricane Milton which made landfall on Oct. 9. Early loss estimates for privately insured losses range from $17-$50 billion for this event, with the majority of insured claims attributable to wind damage.

Moody’s RMS estimates put losses in the $22-$36-billion range, with a best estimate of $26 billion. That includes losses from wind, storm surge and precipitation-induced flooding.

Meanwhile, 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 Protection scheme claims.

CoreLogic’s estimate is lower at $17-$28 billion and Verisk expects industry losses to be in the €30- €50 billion range.

BI has thus suggested that losses from Hurricanes Milton and earlier Helene are 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,” the firm added.

BI concluded that reinsurer’s fear of increased pressure to cut pricing and offer more generous terms has “eased” after the late storms caused natural catastrophe losses to rise.

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