With hurricane Michael forecast to make landfall as a major storm, analysts at Keefe, Bruyette & Woods (KBW) say that while it’s too early to provide a credible estimate, the firm expects the impact on the insurance and reinsurance industry to be manageable.
The latest forecast from the National Hurricane Center is for Michael to make landfall as a category 3+ storm along the Florida Panhandle area of the Gulf Coast. Uncertainty remains around the storm’s track and landfall intensity, but analysts say that it should modestly pressure exposed P&C re/insurers.
KBW notes that Florida’s fragmented property market makes heavy use of reinsurance which attaches at relatively low points, adding that it expects the sector’s overall insured losses to be manageable, and to have limited impact on property reinsurance pricing.
Hurricane Michael has now passed Cuba and is forecast to become a category 3+ storm with winds of more than 111 mph by Tuesday night, currently packing sustained winds close to 100 mph, according to the latest data.
It’s still early to speculate how the storm might behave and react, so there’s still uncertainty over the actual landfall strength. But currently, a category 3 or higher landfall in the Panhandle region looks likely, which will put insurers, reinsurers, and also insurance-linked securities (ILS) players and markets on watch for any potential losses.
