With the U.S. Gulf Coast being a peak catastrophe zone for reinsurance companies, analysts at Moody’s have warned that the impact of Hurricane Ida could drive meaningful losses for those with exposure to Louisiana and surrounding states.
Hurricane Ida hit Louisiana on Sunday as a Category 4 hurricane with 150 mph sustained winds. The impacts have been significant to parts of southern Louisiana, with barrier islands and key energy facility Port Fourchon receiving a direct hit.
The storm brought damaging winds, storm surge and flash flooding from heavy rainfall, and is currently expected to drive an insurance and reinsurance industry loss in the double-digit billions.
As noted by analysts at Moody’s, it will take some time before the ultimate economic and insured loss is understood and the degree to which the event impacts primary insurers and regionally focused players, which are the most vulnerable.
Moody’s expects some of the losses to filter through to reinsurers via quota share and excess of loss arrangements but warns that for those with exposure to Louisiana and surrounding states, losses could be meaningful.
Based on direct premiums written, State Farm is the number one homeowners insurer in Louisiana, followed by Allstate and then USAA in third place.
But in spite of their leading market shares in the state, analysts expect these carriers to be able to withstand the impacts of Hurricane Ida, given “their careful monitoring of exposures, geographic diversification, high-quality reinsurance protection and strong capital bases”.
However, analysts continue to note that both regional carriers and state insurance funds “face greater negative effects based on their geographic concentrations.”
Initial estimates based on Hurricane Ida’s landfall and path suggests an insurance and reinsurance industry loss in the double-digit billions, with early reports pointing to an industry loss of up to or around $25 billion.
