The consensus among experts speaking at the Reinsurance Rendevzous event in Monte Carlo this week seems to be that Hurricane Dorian will result in an overall insured loss of less than $10 billion.
Asked about the impact of Dorian, representatives from rating agencies and large reinsurers said that the storm was likely to be a significant event, but well within budgets for the hurricane season.
“We’re still waiting for all the estimates to come through, but we’re basically thinking that it will be less than a $10 billion event when it’s all said and done,” said Graham Coutts, Director at Fitch Ratings.
“So a significant event but not a large loss,” he noted. “But we do still have the rest of the hurricane season to run and another couple of months of that, so we could see some more major hurricanes.”
“I don’t think it will go above $10 billion,” concurred Robert DeRose, Vice President at AM Best, who acknowledged that “obviously the potential was there for it to be huge.”
Torsten Jeworrek, member of the board of management at Munich Re, also voiced some thoughts about the potential impact of Dorian on the re/insurance market.
“My guess would be something like a middle-single-digit billion US dollar event, in terms of insured market loss,” he said. “So a bad event but in line with normal hurricane seasons I would say.”
Karen Clark & Company (KCC) is currently the only catastrophe risk modeller to have released an estimate for the total insured cost of Hurricane Dorian, putting the figure at $5.2 billion.
This reflects a $3.6 billion loss in the Caribbean and a $1.5 billion loss in the US, as well as losses of $23 million in Puerto Rico and $84 million in the US Virgin Islands.
RMS, meanwhile, believes losses in the Caribbean alone will be between $3.5 billion and $6.5 billion, while AIR Worldwide was more conservative, with an industry loss estimate of between $1.5 billion and $3 billion for the Caribbean.
“These kinds of event, considering the market loss I mentioned, are a stretch as they are but very much expected within the annual hurricane season’s budget,” Jeworrek continued.
“And one could say it could have been worse,” he added. “In the Bahamas you see very bad pictures where people lost their lives, people lost their loved ones, lost their families, lost their properties – it was a very bad event.”
“But its still not the highest populated area in the Bahamas, so it could have been worse even in the Bahamas. Then it was projected that Dorian could have gone on to Miami or to Florida. That did not happen. The weather patterns did change, it moved and crossed parallel to the US coast.”
Coutts also noted that, while Dorian is likely to be a very manageable event for the industry, the potential for it to have been much worse may help to support positive pricing changes.
“I think it will at least keep the conversation going that rates need to increase, given that it could have been a much bigger event,” he said.
“Rates are not up to where they need to be in that market so it provides additional momentum for increases.”