Reinsurers have seen unusual rises in loss adjustment expenses and reopened claims related to the devastating hurricanes of 2017.

The trend forced many reinsurers to increase previous estimated losses from Harvey, Irma and Maria, creating a drag on the full-year 2018 earnings that will be announced over the coming weeks.

An executive of Bermudian reinsurer PartnerRe spoke with Best’s News Service on the rise in loss adjustment expenses.

Joseph Hooks, North America property/casualty senior vice-president and North America property catastrophe manager, PartnerRe Ltd said it was a trend the company had been seeing over the past couple of years.

“Specifically, on the LAE side it started right away with the multiple events of the year impacting Florida, where you have a number of insurers that don’t have large claims teams,” Mr Hooks told Best’s. “They’re totally reliant on third-party claims handlers, which creates a bit of a bidding war.”

Mr Hooks said Irma’s insured losses had risen from $19.5 billion to $22 billion, excluding loss adjustment expenses, as a result of increased severity of reopened claims.

“The fee schedule for the claims handlers is unusual,” Mr Hooks said. “From 2005, after Wilma went through Florida, claims that may have been settled for $15,000 to $20,000 in the past, are now a multiple of that.”

Mr Hooks noted “where clients were able to make repairs on certain roofs previously, post-Wilma, insureds are now being told they should be getting an entirely new roof”.

“Just to set up a file you’re talking over $1,000 before you even see a claim, which could be below the deductible, excluding a peril like flood. So you incur the cost without any paid indemnity.”

This was mainly a Florida phenomenon, Mr Hooks added, something he attributed

to large national US insurers not having as high a market share as they have in other states.

“They’re the ones with the army of in-house adjusters,” Mr Hooks said.

“They can tackle claims quickly and more efficiently than the Florida specialists, which are much smaller operations with a limited number of claims professionals,” he said. “I think that does make it especially unique.”