The reinsurance market will bear brunt of Nicole losses

The reinsurance market will bear the brunt of insured losses from damage on Bermuda caused by Hurricane Nicole, according to a briefing by AM Best.

Hurricane Nicole inflicted a direct blow on Bermuda on October 13, 2016, as a category 3 hurricane. The eye of the storm passed directly over the island, causing Bermuda to experience sustained winds of 120 mph, heavy rains, widespread power outages and significant coastal flooding as a result of storm surge.

The Best’s Briefing, titled “Bermuda property/casualty insurers likely to look to reinsurers in the wake of Hurricane Nicole,” notes that primary domestic property/casualty insurers are heavily reinsured with manageable retentions.

AM Best anticipates that domestic insurers will be insulated from any major financial impact resulting from the storm, given their extensive use of property quota share reinsurance.

But the report also stressed that the event does not represent a material financial impact and should be easily absorbed by reinsurers.