Hiscox has announced plans to increase its capacity by £450 million to a total £1.6 billion for 2018, in anticipation of a widespread market turn triggering improved market conditions, according to its Syndicate 33 business forecast for 2018.
This comes as a response to the 2017 period of significant catastrophe activity in which more than U.S. $100 billion of industry capital is estimated to have been destroyed.
The classes of business expected to see the biggest capacity growth are reinsurance and property, jumping from a forecasted £317 million last year to £437 million, and £289 million to £540 million respectively.
Most of the growth in reinsurance and property is the result of the series of catastrophes that pounded the re/insurer’s catastrophe budgets; reinsurance broker Aon Benfield’s Impact Forecasting, said the insured losses for 2017 third-quarter catastrophe events will likely make it one of the costliest quarters ever for natural disasters.
During the month of September, 2017, hurricanes Irma and Maria combined with other tropical storm and wildfire events around the world, as well as powerful earthquakes in Mexico, drove insured losses in the high tens of billions of dollars.
Specialist re/insurer Hiscox estimated its combined net loss from hurricane Harvey and hurricane Irma as approximately $225 million.
Commenting on the re/insurer’s losses, Hiscox Group CEO, Bronek Masojada, said; “These events are already having an impact on rates in the global insurance market, particularly in affected areas and specific sectors.
“After a number of years of rate reductions, we are starting to see price corrections, most acutely in affected lines such as large property insurance and catastrophe reinsurance, which we expect to spread to non-affected lines. Although these are huge insured events, sadly, they also highlight the lack of cover in places.”
The company’s decision to significantly increase its forecasted capacity for next year demonstrates its optimism that the market will see a surge in reinsurance demand as well as price increases following 2017 severe weather events.