Irma to have impact on US property rates
“Already a few things about Irma are self-evident, and that’s without knowing if it will hit Tampa,” Tad Walker, CEO property/casualty at PartnerRe, told Monte Carlo Today. One of these, he said, is that it could cause some hardening of US property rates.
He explained that the US property market has generally been strained over the past several quarters. The earnings of many of the national and regional writers have been impacted by attritional cat losses such as hail, tornadoes, and winter storms: “things that don’t make the headlines but which mount up,” he said.
According to Walker, these losses have been at quite high levels this year. If you add Irma on top of that, there will be an impact, he said.
In addition, he stressed that Irma could generate a big storm surge loss. Put that on top of Harvey and an already weak National Flood Insurance Program (NFIP) and frankly something has to give, he said.
“The future of the NFIP means prognosticating on politics, because it is a politically-driven entity, so whether politicians are ready to say that subsidies need to be adjusted or moved is hard to guess,” Walker said.
“Certainly from a reinsurance standpoint what we’d like to see is quite clear—even more transfer to the private markets, and subsidies adjusted to make sense or even eliminated.”
Walker also wondered if storm surge as a risk could be added to the flood programme, as inland flooding and storm surge are two very different exposures.
“What would make sense would be to separate them and have the private market pick up more storm surge, because we know more about hurricane risk and modelling that risk,” he said.
Walker stressed that it was still too soon to estimate the nature of the impact and damage from Irma, but stated that at the very least it would have an impact on US national flood rates, resulting in hardening in that area of the market.
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