NEW YORK:
Based on preliminary observations, S&P Global Ratings thinks the estimated insured losses covered by private insurers on the unusually severe Winter Storm Uri that began on Feb. 9, 2021, and swept through Texas and neighboring states are somewhat comparable with those from Hurricane Harvey, which was a Category 4 hurricane that made landfall on Texas and Louisiana in August 2017.
However, in a report published earlier today, "Insurers Moving Cautiously In The Aftermath Of Massive Texas Ice Storm Uri," we state that it's too early to accurately quantify the insured losses given the complexity of the event.
According to the catastrophe modelling agency Karen Clark & Co, Winter Storm Uri will cost the industry about $18 billion. In comparison, Hurricane Harvey caused $30 billion in industry insured losses in the U.S. and about $19 billion in Texas.
While Uri left more than 14 million people without power for days, the extreme cold temperature also caused enormous water damage to homes, schools, hospitals, and businesses due to frozen and burst pipes. This damage affects property-related coverage for businesses as much as for homeowners, although we could also see elevated claims on auto and general liability policies.
“Although expected losses are steep, we believe many of our rated insurers with robust capital and reinsurance protection have the resilience coming into 2021 to absorb the losses from Uri,'' S&P Global Ratings.
According to S&P Global Market Intelligence, the U.S. property/casualty industry statutory surplus grew nearly 6% through the first nine months of 2020, thanks largely to strong investment value appreciation.
But insurers with less-robust capital and more-concentrated geographical exposure prone to weather-related losses could be vulnerable to earnings and potential capital pressure, especially if the rest of the year sees even more natural catastrophe losses than in 2020