Local reinsurers to pay billions for winter storm
Bermuda-based re/insurers estimate they will incur gross claim losses of $2.7 billion as payments to United States policyholders/cedants to cover the damaging effects of Winter Storm Uri, which wreaked havoc in the southern region of the US, particularly Texas.
This is according to commercial market claims data collected by the Bermuda Monetary Authority in May.
The BMA said that, as of March 31, reinsurers had paid losses relating to Uri totalling $62 million.
Based on publicly available estimates from catastrophe risk modellers and insurance industry analysts, re/insurance losses resulting from Uri are expected to be in the $10 billion to $20 billion range, the BMA said.
Consequently, Bermuda re/insurers may end up incurring as much as 20 per cent of the industry losses from Uri.
Gerald Gakundi, director, Insurance Supervision, at the BMA, said: “The $2.7 billion or potentially 20 per cent of Winter Storm Uri losses expected to be incurred by Bermuda re/insurers demonstrates the key role Bermuda plays in the supply of risk capacity to the US.
“These survey results, together with the BMA’s 2017 survey, which revealed that Bermuda reinsurers picked up 30 per cent of the Hurricanes Harvey, Irma and Maria industry losses from the 2017 record-setting hurricane season, show the significance of the Bermuda re/insurance market’s contribution to the US.
“The ability of US insurers to cede risk to Bermuda enables diversification of risk globally, making the cost of buying insurance – particularly property/catastrophe insurance – more affordable to customers living in US danger zones.”
The information comes from the BMA’s US Data Claims Survey completed in May. The loss information includes both direct insurance and reinsurance, with 42 commercial re/insurance companies responding to the survey.
Mr Gakundi said: “The Authority is grateful to the companies that took part in the survey.”