US property catastrophe reinsurance rates increased by as much as 50% during July 1 renewals, driven in part by the escalating frequency of natural disasters.
A report by Gallagher Re noted that US reinsurance rates for policies that have previously faced claims for natural catastrophes surged by 30% to 50%.
Meanwhile, hurricane-prone Florida saw reinsurance rates for similar policies increase by 30% to 40%.
The heightened risk associated with property catastrophe insurance has prompted some firms to withdraw from disaster-hit markets to avoid heavy losses.
State Farm, for instance, announced in May that it would stop selling new insurance policies to homeowners in California, citing “rapidly growing catastrophe exposure” among other factors.
Florida is another example, with major carriers leaving the market to be dominated by “very small, very thinly capitalised insurers.”
Speaking with Reuters, James Vickers, chairman international, reinsurance, at Gallagher Re, remarked on the situation in Florida, calling it “exactly what you don't want.”
Aon echoed the trend of rising reinsurance rates in its own report about the July 1 renewals, stating that rate increases for US and Florida property catastrophe policies averaged between 25% to 35%.
Risk modelling firm RMS recently predicted a “near normal” hurricane season for 2023, but still cautioned that such a classification might not provide much comfort considering the events of the previous year.
The firm noted that last year’s hurricane season was also deemed “near normal,” yet it included Hurricane Ian, considered to be one of the costliest hurricanes in US history.
Swiss Re recently identified Hurricane Ian as the costliest disaster of 2022, causing estimated insured losses of up to $65 billion.
Natural disasters of the past year accounted for global insured losses amounting to $125 billion, according to Swiss Re.
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