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Insured cat losses above average, to exceed 2021 budgets: Jefferies

20th August 2021 - Author: Katie Baker

According to a new report by Jefferies, insured catastrophe losses are running 41% above the long-term average and with the Atlantic hurricane season escalating, it’s becoming increasingly likely that corporate catastrophe loss ratios will exceed 2021 budgets.

JefferiesSo far this year, the most notable insured losses were European floods, US severe weather, Hurricane Elsa and the West Coast wildfires.

Its insured loss estimate for the first half of 2021 are in line with the industry, as it estimated losses of $39.1bn which line up with recent industry estimates ranging from $40bn-$42bn.

Catastrophe claims are reportedly being run at 41% above average, relative to the long-term average, natural catastrophe losses year-to-date are running 41% above, or 36% above the 10-year average.

Consequently, while the second quarter was markedly more benign than the first quarter, July has been a tough start to the third quarter, driven by large European floods.

Recent flooding in Western and Central Europe stands out as one of the most costly perils in July 2021, although Jefferies’ weather data shows that extreme European wind and rain days were below the long-term July average.

Those losses appear to be the result of severity rather than frequency.

Its original estimate of $8.6 billion is marginally higher than Aon’s Reinsurance Solutions recent estimate of $7.7bn, which they expect that reinsurance deductibles will be exceeded in Germany, Belgium, Switzerland and Austria, with a higher proportion of net losses falling on reinsurers.

Ultimately, this is expected to add additional rate rises in European property excess of loss contracts.

The report also shows that in 2021, estimates have already exceeded $50bn compared to the previous two years, all of which were under $40bn.

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