11 September 2017 Insurance

Irma may be a simpler event than Harvey

Hurricane Irma could possibly be a market-changing event, depending on its path and the level of damage it causes, according to Fitch Ratings.

At its annual press conference at the Monte Carlo Rendez-Vous, Brian Schneider, senior director at Fitch, said it was still very early days in terms of assessing the impact of Irma, but he stressed that it would in all likelihood be a wind event as opposed to a flood event such as Hurricane Harvey.

He said that as things currently stood Irma might be a simpler event than Harvey, with the latter causing losses complicated by the severe flooding.

Schneider said that early estimates of the damage that Irma might cause ranged from $20 to $65 billion. He also pointed out that a lot of the re/insurance for Florida is now covered by Florida specialists, many of which are largely untested by any recent large event of this scale.

Looking at the bigger picture in terms of the global market at this point in 2017, Fitch continues have a negative outlook.

According to Fitch: “Intense market competition and the endurance of alternative capital have both contributed to our belief that a pricing floor has yet to be reached. Continued low investment yields, which Fitch expects to persist, put further strain on reinsurance profitability.

“If pricing or investment yields do not improve some reinsurers may be unable to generate positive operating results should catastrophe losses revert to the long-term historical average.”

Catastrophe losses for the first half of 2017 were below average, which would help the sector to absorb Harvey-related losses in the second half of the year. Scheider added that a large proportion of economic losses will be uninsured or covered by the US Government’s National Flood Insurance programme, as losses were more likely to be flood-related than wind-related.

He believes that there could be further M&A activity across the global reinsurance sector in 2018, adding that some of these deals might involve foreign entities buying into Bermuda as they seek to diversify and develop business outside their core markets and home regions.

Get the latest re/insurance news sent to your inbox every day -  Sign up to our free email newsletters

Today’s Monte Carlo stories

Hurricane losses and rising interest rates to boost profits: SCOR

11 bidders aiming for SOVAG portfolio

B3i blockchain: 30% efficiency gains

Re/insurance is not a growth industry: Munich Re

Harvey will revive the pricing debate

New data + new risks = new ILS deals

Parts of the Lloyd’s Vision 2025 ‘should be reconsidered’

The power to move the market?

Market conditions ripe for M&A; Bermuda under most pressure

Insurtech has moved beyond the hype

Reinsurers: pay heed to cedant failure

ILS market shows its new maturity

Digital transformation a top concern of insurers

Don't miss our insurtech email newsletter - sign up today

Already registered?

Login to your account

To request a FREE 2-week trial subscription, please signup.
NOTE - this can take up to 48hrs to be approved.

Two Weeks Free Trial

For multi-user price options, or to check if your company has an existing subscription that we can add you to for FREE, please email Elliot Field at efield@newtonmedia.co.uk or Adrian Tapping at atapping@newtonmedia.co.uk