Another big Cat year in the making, renewed uncertainty for reinsurance pricing
The very latest on Hurricane Idalia and Ian claims, how natural catastrophes are on track to set another record this year, the impact of those natural disasters on both the insurance and reinsurance industry, plus the latest drafts of a nationwide data call and a model bulletin on how insurance companies should govern themselves on the use of artificial intelligence. It’s all in this week’s Property Insurance News.
Emergency erosion control work on Sunset Beach, FL., October 17, 2023. Courtesy, Pinellas County
Hurricane Claims Update: The Florida Office of Insurance Regulation (OIR) last week released updated claims figures for Hurricanes Idalia and Ian. Idalia’s total estimated insured losses are now $269.3 million on 23,845 claims (up from $244.6 million on 22,763 claims from our last newsletter) with 69% of claims closed (up from 61%) and maintaining a paid to unpaid ratio of 3:2. FEMA has extended the application deadline for federal assistance to November 29 for homeowners and renters in 18 counties who had uninsured losses. Meanwhile, Pinellas County is now spending $20 million on emergency erosion control at its beaches that suffered extensive erosion from Idalia and the four tornadoes that touched down on October 12.
Ian’s total estimated insured losses as of October 9 are now $19.4 billion (up from the $18.7 billion we just reported from mid-Sept) on 758,644 claims (up from 757,426 claims). Just over 90% of claims are now closed (up from 89%) with 71% with payment and 29% without payment (unchanged).
Another Big Cat Year: Gallagher Re reports that annual insured losses from natural catastrophes across the globe are on track to surpass $100 billion this year, which would make it the sixth year in a row to exceed that figure. Its Q3 Natural Catastrophe Report shows insured losses to date of $93 billion with total economic losses of $290 billion. The U.S. accounted for 74% of all global insured losses through September, including 23 of the 29 $1 billion natural disaster insured loss events. It’s worth noting that Idalia is the only hurricane to make landfall in the U.S. so far this year.
Insurance & Reinsurance Resiliency: Despite another year of record catastrophe claim losses, both the insurance and reinsurance industry are holding their own – and then some. The Insurance Information Institute (Triple-I) Insurance Economic Outlook says that the economic drivers of the U.S. property & casualty insurance industry could grow faster than the Gross Domestic Product (GDP) in 2024 and may outperform the U.S. economy by 2025.
The reinsurance industry is doing quite well. The Swiss Re catastrophe bond index has surpassed 16% so far this year, beating its previous record and according to Reinsurance News is on track to deliver an investment return that might surpass 20% by year-end. While reinsurers celebrate, we as the ultimate policyholders who pay premiums commensurate.
NAIC News: In our August 21, 2023 newsletter we reported that the National Association of Insurance Commissioners (NAIC) was planning to issue a nationwide data call that’s meant to better understand – toward resolving – the challenges of property insurance availability and affordability. Last week the NAIC shared a draft of the data call template and is soliciting input.
The NAIC has also released an initial version of a model bulletin on the use of artificial intelligence (AI) systems by insurance companies. The proposal is meant to be instituted by state departments of insurance and includes various regulatory expectations on how insurance companies should govern themselves in the development, acquisition, and use of AI.
LMA Newsletter of 10-23-23
