As Hurricane Irma blazes its trail across the Atlantic and wrecks havoc on the Caribbean Islands in its wake, re/insurers providing property and casualty protection in the area are expecting substantial losses, most of which will be passed on to financially strong reinsurers, according to A.M. Best.
A.M. Best explained that primary p&c insurers providing cover on the Hurricane-struck Islands have a net retention level of less than 10% of shareholder equity: “Reinsurance limits are also typically high enough to cover losses well above anything that has been experienced in the past.
“However, Irma is not just a typical modelled storm and, depending on the magnitude of damages sustained, losses from Irma could be considerably larger than anyone might have anticipated.
“With Hurricane José just days behind, primary carriers are often quick to reinstate reinsurance limits once the first event has occurred,” said A.M. Best.
However, despite re/insurers seemingly strong position, the rating agency added that a hurricane of this velocity and scale means that in its aftermath it will have to consider its impact before deciding whether rating actions will ensue.
Hurricane Irma intensified to a Category 5 storm with maximum winds of 185 mph at the time of landfall, pounding the Islands of Anguilla, Barbuda, and St. Martin as it continues its track towards the Virgin Islands and Puerto Rico, Turks & Caicos Islands, and the Bahamas before likely hitting Florida.
Irma has caused storm surges in excess of 10-15 feet, very heavy flooding, and catastrophic winds causing damage and power outages which could last for weeks and spur heavy business interruption claims.
The Dominican Republic, Haiti, and Cuba will feel its impact with storm conditions, and economic and insured losses are likely to be amplified by the additional threat of Hurricane Jose, following 3-5 days behind Irma on a similar trail.
