The Bermuda Monetary Authority (BMA) has said that Bermuda insurers and reinsurers are set to incur gross claim losses of $2.7 billion as payments to U.S. policyholders and cedents as a result of the impacts of winter storm Uri.
The devastating storm arrived on the country’s President’s Day weekend bringing damaging ice in the Northwest and snow across the Midwest and Northeast.
Winter storms and freezing weather caused by a polar vortex saw over 70% of the continental U.S. impacted with freezing temperatures, snow, and ice.
Currently, insurance and reinsurance industry loss estimates range from $10 billion to $20 billion.
Today’s estimate from the BMA concerns only expected gross claims losses incurred by Bermuda re/insurers as payments to US clients to cover the impacts of the event.
At a total of $2.7 billion, which is according to commercial market claims data collected by the BMA in May 2021, Bermuda-based carriers could end up paying as much as 20% of the industry loss from the winter storm, says the authority.
As of March 31st, 2021, the BMA says reinsurers had paid losses relating to the event of $62 million.
“The $2.7 billion or potentially 20% of Winter Storm Uri losses expected to be incurred by Bermuda (re)insurers demonstrates the key role Bermuda plays in the supply of risk capacity to the US,” said Gerald Gakundi, Director, Insurance Supervision.
“These survey results, together with the BMA’s 2017 survey, which revealed that Bermuda reinsurers picked up 30% of the Hurricanes Harvey, Irma and Maria industry losses from the 2017 record-setting hurricane season, show the significance of the Bermuda (re)insurance market’s contribution to the US. The ability of US insurers to cede risk to Bermuda enables diversification of risk globally, making the cost of buying insurance—particularly property/catastrophe insurance—more affordable to customers living in US danger zones,” he added.
Many insurers and reinsurers reported Uri losses in their first-quarter 2021 financial results.
Back in February, catastrophe risk modeller AIR provided an insurance and reinsurance industry loss estimate of more than $10 billion. While Karen Clark & Company updated its re/insurance industry loss for U.S. winter storm Uri to $18 billion.