The impacts on insurers from Hurricane Ian are likely to be material but manageable, according to a report from global rating agency KBRA.
Hurricane Ian, which made landfall in Cayo Costa, Florida, as a Category 4 storm on September 28, dropped 14.4 inches of rain and produced a storm surge of more than 12 feet in some areas. The storm made a second landfall near Caines, South Carolina, as a Category 1 hurricane on September 30.
KBRA cited estimates of Hurricane Ian’s economic damage from as high as $100 billion. This figure would include uninsured properties, damage to infrastructure, and other cleanup and recovery costs.
KBRA identified a number of key takeaways from the storm: at a minimum, all insurers with exposure in the affected areas will experience at least an earnings impact, with some seeing capital impact. Gross losses so far appear likely to remain within the upper limits of most individual company reinsurance programs, the report said.
KBRA pointed to its previous forecast that Hurricane Ian in combination with the other storms that have impacted the area in the last four to five years will put additional strain on the availability of reinsurance coverage in Florida. This could mean that primary insurers will need to adjust their underwriting strategies and risk appetites, KBRA said.
KBRA also recalled the announcements from several prominent reinsurers that they would leave or significantly reduce their exposure to the property catastrophe market. The few reinsurers to increase writings in property/casualty have focused more on casualty lines, it said.
KBRA said Hurricane Ian will further complicate the upcoming 1/1 reinsurance renewal season which was already challenged by supply and demand issues, persistent inflation, increased cat losses, asset write-downs, and pullback from the insurance-linked securities (ILS) market. The negative impacts from Hurricane Ian may further constrain capacity and contribute to more price increases to the detriment of reinsurance purchasers looking to reduce retentions, according to the report.
