Insurance group The Progressive Corporation has reported its August catastrophe losses, including the impacts of hurricane Harvey, and the company has revealed auto insurance losses from the storm that are lower than analysts had forecast by quite a margin.
Hurricane Harvey flooding in Houston – Photo from ABC News
Progressive has reported total catastrophe losses of $254 million for August, with around 90% coming from hurricane Harvey.
Of that roughly $229 million hurricane Harvey loss, the majority are seen as being hurricane Harvey related, according to analysts at KBW and Credit Suisse, but this is significantly lower than the $500m+ that had been projected for Progressive.
In fact, Credit Suisse’s analysts suggest that based on the disclosure from Progressive they would now expect the hurricane Harvey private auto insurance loss to be as low as $2.2 billion, KBW suggest $2.5 billion, based on Progressive’s market share.
This is way down on the analyst firms initial projections of auto losses, which had been $4 billion or more for most of the companies that track the insurance business.
So what does this mean?
It could mean Progressive has been lucky and that its share of the losses have been lower than expected. Or it could mean that the auto insurance market is not going to face the huge loss that had been thought likely to emerge out of hurricane Harvey’s flood waters, with the early estimates proving wrong.
For reinsurers any dip in the auto component of the hurricane Harvey loss would be positive, with a smaller loss being passed onto them and more of the Harvey auto impact being retained at the major insurance firms, such as Progressive.
