Estimated losses from Hurricane Sandy currently stand at over $16bn but are anticipated to reach $20bn. Regardless of the final totals, international insurance companies are expected to cover roughly 50% of losses, estimated. In response, Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers (ABIR), issued the following statement during this week's Insurance Regulation Forum in New York:
"Hurricane Sandy underscores the important role that international reinsurers play in times of crisis. Global reinsurers are financially strong and have substantial capacity to support US insurance companies as they review their portfolios in light of claims. In fact, Bermudas reinsurers are the largest suppliers of catastrophe reinsurance to US insurers and have an excellent record of claims payment. With the potential losses from extreme weather on the rise, the need for global reinsurance will continue to expand.
A recent report by the catastrophe risk management firm Karen Clark & Company, based on an analysis of more than a century of hurricanes, warns that the US can expect insured losses of at least an average of $10bn from a hurricane every four years. Simply put, the less insurance capacity we have to remedy the damage from these storms, the higher the costs will be for US consumers.
Given Bermuda's location in hurricane alley, we sympathize with the residents of the East Coast who continue the rebuild from the devastation left by Hurricane Sandy. As we reflect on the disastrous events of last year and anticipate future catastrophes, it is clear that the nation needs a robust insurance market that is open to as many competitors as possible and encourages direct foreign investment. If perceptions of risk increase, or consumer demand is amplified, international reinsurers are ready to meet the markets needs."
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