Catastrophe modeling firms have released estimates of insured losses resulting from Hurricane Milton, which struck Florida's west coast on Oct. 9, shortly after Hurricane Helene.
According to the estimates, insured losses from Milton range between $17 billion and $50 billion. These losses are expected to contribute to what is shaping up to be the fifth consecutive year in which insured catastrophe losses exceed $100 billion, as reported by Moody’s.
Earlier in 2024, the reinsurance sector had seen pricing for higher-attaching layers decline by 5% to 10% during midyear renewals in the US.
However, Moody’s notes that the continued high level of insured catastrophe losses globally, including the impacts of Hurricanes Helene and Milton, could support stabilizing property catastrophe reinsurance pricing as the January 2025 renewals approach.
Hurricane Milton made landfall as a Category 3 storm, with sustained winds of 120 miles per hour, hitting Siesta Key, Florida. Milton then crossed central Florida, exiting into the Atlantic Ocean as a Category 1 storm.
Moody’s RMS has projected insured losses from Milton at $26 billion. Given these estimates, it is likely that Hurricane Milton will rank among the 10 costliest hurricanes in U.S. history.
The reinsurance sector is expected to bear a significant portion of the losses from Hurricane Milton. As insured losses increase, a larger share is typically ceded to reinsurers through excess of loss reinsurance agreements.
According to Moody’s, the final impact on reinsurers will depend on the underlying primary insurance coverages and the terms of reinsurance contracts. Additionally, many reinsurers transfer some of their peak catastrophe risk to alternative capital markets through instruments such as collateralized reinsurance and catastrophe bonds.
Global insured natural catastrophe losses reached $60 billion in the first half of 2024, 62% higher than the 10-year average for the same period, according to Swiss Re. With significant losses from Hurricanes Helene and Milton, along with other events such as hailstorms and wildfires, Moody’s expects global insured catastrophe losses to exceed $100 billion for the fifth consecutive year.
Moody’s also points to several implications for the reinsurance sector. Despite the volatility in catastrophe-exposed coverages, reinsurers are expected to maintain underwriting discipline as they approach the 2025 renewals. They are likely to keep attachment points high to avoid frequency events and limit aggregate reinsurance coverage.
Additionally, Helene and Milton will test the effectiveness of recent legal reforms in Florida aimed at reducing litigation costs in the state’s insurance market. These reforms include the removal of "one-way attorney fees" and limits on the assignment of insurance benefits to third parties.
Looking ahead, barring further large catastrophe events in the final months of 2024, Moody’s believes that annual catastrophe losses should remain within most reinsurers' budgets, though overall results for 2024 are not expected to match last year's figures.
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