Losses from Hurricanes Milton and Helene look set to ensure returns won't be boosted this year by an absence of major North Atlantic hurricane claims as they were in 2023. Maintained retention rates will see primary insurers continue to bear a higher share of claims from secondary perils like floods and wildfires amid increasing demand for a more coordinated government approach to the challenge of climate change.
Charles Graham, BI Senior Industry Analyst (Insurance), commented: “The insured cost of natural catastrophe losses may exceed $150 billion this year. Gallagher Re estimates the cost of natural catastrophe events through September at $108 billion before the additional cost of claims from Hurricane Milton which made landfall on Oct. 9. Estimates of the cost of insurance claims from Milton range between $17-$50 billion.”
The US accounted for seven of the top 10 costliest insured-loss events through September, according to Gallagher Re estimates. Of these, Hurricane Helene is by far the largest, yet that's likely to be dwarfed in Q4 by claims from Hurricane Milton. Storm Boris, estimated to have cost insurers $3.1 billion in claims was the most expensive European loss and the Noto Peninsula earthquake in Japan the most expensive in Asia at $3 billion. Severe convective storms accounted for more than half of total insured losses.
Charles Graham continued: “The total economic cost of global catastrophe events likely exceeded $280 billion, $264 billion of which related to weather events. Economic losses in the US were at least $128 billion, of which about $78 billion was insured, including $57 billion related to convective-storm events.”
Hurricane Milton is a complex loss, the size of which will take time to assess. Early loss estimates for privately insured losses range from $17-$50 billion, with the majority of insured claims attributable to wind damage. Moody's RMS estimates put losses in a $22-$36-billion range, with a best estimate of $26 billion. That includes losses from wind, storm surge and precipitation-induced flooding. KCC puts the loss at close to $36 billion for damage to residential, commercial and industrial properties and automobiles, as well as business interruption, but not including damage to boats, offshore properties, or National Flood Insurance Protection scheme claims. CoreLogic's estimate is lower at $17-$28 billion and Verisk expects industry losses to be in a €30- €50 billion range.
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