US property and casualty re/insurers are reportedly braced for large potential catastrophe losses as another above-average hurricane season approaches, according to a new Fitch Ratings report.
Fitch notes how both P/C insurers and global reinsurers are largely well capitalised following the global pandemic last year, and generally well positioned to withstand a significant hurricane event in 2021; as such, a Stable Rating Outlook for the P/C and global reinsurance sectors has been provided.
“Recent active hurricane seasons have generated an accumulation of insured losses that have led to substantially higher premiums for coastal property insurance,” said Director Christopher Grimes.
“Better pricing is attracting additional capital, including a recent influx of hurricane-exposed catastrophe bonds that helps absorb losses and maintain availability of coverage.”
Despite Florida being spared any significant landfall events and losses in 2020, specialty homeowners’ writers that collectively hold large market share in the segment suffered further large underwriting losses tied to claims litigation activity that greatly exceeds other states.
Fitch also notes how recent premium rate increases and state legislative actions to curb litigation may take some time to influence results.
“Florida homeowners’ writer’s less favorable capital position creates a strong dependence on global reinsurers and the state sponsored Florida Hurricane Catastrophe Fund for underwriting capacity and protection against severe hurricane events,” said Senior Director Brian Schneider.
