Capital strength provides insurers with an ability to withstand losses from large adverse events, including catastrophes. Industry policyholders’ surplus (PHS) increased by 40% over the last three years and now exceeds $1 trillion
The June/July mid-year 2022 reinsurance renewals will be challenging for Florida primary underwriters with reduced reinsurance supply, reflecting recent adverse loss experience. Rate increases are expected to easily reach the double-digit levels, with many reinsurers limiting capacity in Florida to curtail volatility
Chicago/New York:
The sharp increase in inflation and potential for stagflation present additional challenges to U.S. property/casualty (P/C) insurers in the event of a landfalling hurricane, Fitch Ratings says.
Natural catastrophe losses, particularly severe weather-related events, represent a major source of loss volatility, but capital levels of large (re)insurers should absorb near-term large insured losses from an individual hurricane or other catastrophic event.
Early season forecasts predict that the North Atlantic Basin will again experience above-average hurricane frequency in 2022 relative to long-term results following the very active hurricane seasons of the past two years.
Capital strength provides insurers with an ability to withstand losses from large adverse events, including catastrophes. Industry policyholders’ surplus (PHS) increased by 40% over the last three years and now exceeds $1 trillion.
Florida homeowners’ insurance specialists reported continued performance deterioration and a decline in capitalization levels despite no hurricanes hitting the state since 2018. Many insurers in the state have experienced severe pressure regarding underwriting performance and capitalization levels, leading to the liquidation of a number of carriers. As a result, policyholders have found it increasingly difficult to find private market homeowners’ insurance coverage.
The June/July mid-year 2022 reinsurance renewals will be challenging for Florida primary underwriters with reduced reinsurance supply, reflecting recent adverse loss experience. Rate increases are expected to easily reach the double-digit levels, with many reinsurers limiting capacity in Florida to curtail volatility.
Fitch currently has a neutral sector outlook on the US P/C insurance industry and the global reinsurance sector. Capital strength of (re)insurers should allow them to absorb near-term large insured losses from an individual hurricane or other catastrophic event, but a confluence of large events in a short period may lead to capital reductions and ratings pressures.