Hurricane Ian will cost insurers tens of billions of dollars

En Floride, seules 18 % des habitations sont couvertes contre le risque d'inondation.

Posted Oct 3, 2022, 6:16 PMUpdated Oct 3, 2022, 6:40 PM

Hurricane Ian will leave deep scars in the southeastern United States. Violent winds and torrential rains killed dozens across the Atlantic and plunged entire counties into desolation.

In Florida, the bill for insured property damage could reach between 30 and 40 billion dollars, advances the rating agency S&P. Its competitor Fitch expects 25 to 40 billion dollars.

Risk analysis firms make more gloomy forecasts, which also include South Carolina: up to 57 billion dollars for Verisk, 63 billion for Karen Clark & ​​Co, 65 billion for RSMI and even 67 billion for Enki Research .

Top 5 Natural Disasters

After four years of relative calm in Florida since Hurricane Michael in 2018, Ian is expected to cost more than Andrew, which cost insurers $15 billion in 2015. Nationally, the event could rise in the Top 5 most expensive natural disasters. A priori behind Katrina which hit Louisiana in 2005 ($65 billion) and neck and neck with hurricanes like Ida in 2021 ($36 billion). “It will take a number of weeks or months for insurers to have a reliable estimate of the losses incurred,” warns Moody’s.

Citizens Property Insurance has already come out of the woodwork by quantifying its losses at 3.8 billion dollars in Florida, where this public company controls 13% of the home insurance market. But not all victims will be compensated. According to the Insurance Information Institute, only 18% of homes in this state are covered against the risk of flooding, which is generally covered by federal programs.

The large private companies have meanwhile reduced their local presence in recent years, scalded by the recurrence of extreme events on the southeastern tip of the United States. Their losses should therefore be limited, believes S&P. Among the most exposed are Chubb, with 700 million premiums in property damage insurance, AIG (600 million) or the Swiss Zurich (400 million).

Present in the United States via its large risks subsidiary XL, AXA totals $133 million in damage premiums in Florida. The French group believes that it is too early to quantify the impact of the incident. Same answer at SCOR. The tricolor reinsurer, which reduced its exposure to this State during contract renewals in June, refers to the publication of its quarterly results in November.

Reinsurers more exposed

On average, reinsurers are particularly exposed because small Florida companies offload a significant portion of their risks to them, point S&P and Moody’s. Behind Florida’s public fund for natural disasters, the most exposed are the American Gen Re (Berkshire Hathaway), and the European Lloyd’s, Munich Re and Swiss Re, according to data from rating agencies.

Even before Ian, reinsurers had already suffered $29 billion in losses linked to natural events in the first half, according to Swiss Re. rising cost of weather-related disasters. A risk aggravated by the artificialization of the soil and the real estate frenzy in the coastal regions.


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