Data collected by the Bermuda Monetary Authority (BMA) suggests that re/insurers in the area will incur gross claim losses of more than $13bn in payments to policyholders and cedants in the US due to Hurricane Ian.
The BMA said that based on publicly available estimates from catastrophe risk modellers and insurance industry analysts, (re)insurance losses resulting from Hurricane Ian are expected to total between $50bn and $75bn.
Consequently, Bermuda (re)insurers may incur as much as 25% of the industry losses. The overall industry loss estimate for Hurricane Ian includes wind, storm surge and inland flooding losses in Florida, South Carolina, North Carolina, Georgia, and Virginia.
Craig Swan, CEO of the BMA, said: “The survey results demonstrate Bermuda’s steadfast role in supplying risk capacity to the US and other catastrophe-exposed parts of the world. This role’s importance is heightened by the increasing frequency and intensity of extreme weather events, which continue to exact tremendous human and financial tolls.”
He added: “The ability of US insurers to cede risk to Bermuda enables diversification of risk globally and it helps stabilise the cost of buying insurance—particularly property and catastrophe insurance—for customers living in catastrophe danger zones. Such a partnership bolsters policyholder protection and contributes to closing the protection gap.”
This information comes from the BMA’s US Data Claims Survey completed in November 2022. The loss information includes direct insurance and reinsurance, with 69 (re)insurance companies responding to the survey.
The BMA’s figures come the same week that Fitch Ratings said that Hurricane Ian had weakened Florida’s insurance market further.
The rating agency suggested that losses will resonate through the primary and assumed reinsurance markets with expectations of sharp changes in pricing and underwriting terms. Alongside this, the future primary market capacity and reinsurer risk appetite will grow increasingly uncertain.
Fitch noted that the broader concern is that a lack of property coverage availability for Florida residents could promote economic repercussions affecting the state’s real estate, mortgage, and labour markets.
Further, Hurricane Ian could lead to more market exits by Florida homeowners’ insurers, as many private carriers face capital concerns, coupled with reduced availability and sharply higher costs for reinsurance.
Various catastrophe modelling experts have pegged insured loss estimates for Ian of up to $73bn, with economic losses from the event likely exceeding $100bn.
