How will the 2024 Atlantic hurricane season impact insurers?
How will the 2024 Atlantic hurricane season impact insurers? | Insurance Business America
Catastrophe & Flood
How will the 2024 Atlantic hurricane season impact insurers?
Analysts examine expected losses from Beryl and overall season
Catastrophe & Flood
By
Terry Gangcuangco
Analysts at Morningstar DBRS expect insured losses from Hurricane Beryl to be manageable, while the whole Atlantic hurricane season of 2024 has the potential to be an expensive period.
“Despite the strength of Hurricane Beryl, its damage trajectory avoided most of the critical tourist infrastructure of Cancun and surrounding areas, which could have ended up in vastly different insured losses,” noted Morningstar DBRS in a commentary.
According to analysts, they do not foresee material insured losses despite some industries being adversely affected for several days. These sectors include oil production and refining.
It was also pointed out that, given the low penetration of insurance coverage in the affected countries in the Caribbean, only a relative small fraction of the economic losses will be ultimately borne by the insurance market.
As for the entire season, from June 1 to November 30, the expectation is towards the expensive side, depending on a number of factors.
“If the prediction of an active hurricane season materializes, we anticipate that US P&C (property and casualty) insurers exposed to hurricane risk will experience a higher level of claims depending on the type of products they offer and the geographic concentration of premiums written,” Morningstar DBRS said.
“Ultimately, the impact of an above-average hurricane season on US insurers’ bottom line will also depend on their reinsurance and risk retention strategies.
“With continued coastal population increases and infrastructure development along the hurricane-prone Atlantic and Gulf of Mexico coastal areas, our expectation is that economic damages and insured losses as a result of hurricanes will continue rising over time.”
The US National Oceanic and Atmospheric Administration predicts an above-normal Atlantic hurricane season this year due to factors such as near-record warm ocean temperatures in the Atlantic Ocean and the development of La Niña.
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