Reinsurers' concerns over potential pressure to reduce pricing and offer more favorable terms have diminished following a series of late summer storms that increased natural catastrophe losses, according to a new report from Bloomberg Intelligence (BI).
Losses from Hurricanes Milton and Helene are likely to prevent the industry from seeing a repeat of 2023, when returns were buoyed by a lack of significant North Atlantic hurricane claims.
Meanwhile, retention rates will keep primary insurers responsible for a larger portion of claims stemming from secondary perils, such as floods and wildfires, as demand grows for a coordinated government response to climate change.
Charles Graham (pictured above), senior industry analyst at Bloomberg Intelligence, said insured natural catastrophe losses may surpass $150 billion in 2024.
“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 Oct. 9. Estimates of the cost of insurance claims from Milton range between $17-$50 billion,” Graham said.
The United States accounted for seven of the 10 most expensive insured loss events through September, according to Gallagher Re. Of these, Hurricane Helene was the largest event but could be eclipsed by claims related to Hurricane Milton in the fourth quarter.
Storm Boris, with an estimated $3.1 billion in claims, was the costliest event in Europe, while the Noto Peninsula earthquake in Japan led to the largest loss in Asia, at $3 billion. Severe convective storms were responsible for more than half of total insured losses during the year.
Graham also noted that the global economic cost of catastrophe events likely exceeded $280 billion, with $264 billion attributed to weather-related 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,” Graham said.
The scale of losses from Hurricane Milton is complex and may take time to fully assess. Initial estimates for privately insured losses range from $17 billion to $50 billion, with wind damage making up the bulk of claims.
Moody's RMS estimates the losses at between $22 billion and $36 billion, with a best estimate of $26 billion, factoring in wind, storm surge, and flooding from precipitation.
KCC's projection is closer to $36 billion, covering damage to properties, vehicles, and business interruptions, though it excludes boats, offshore facilities, and National Flood Insurance Program claims.
CoreLogic's estimate is lower, ranging from $17 billion to $28 billion, while Verisk projects industry losses in a range of €30 billion to €50 billion.
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