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Hurricane Ian bill for Bermuda reinsurers estimated at $13bn

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An aerial view of damaged homes and debris in Fort Myers, Florida, after Hurricane Ian struck in September. (Photograph from AP)

Bermudian-based re/insurers estimate that they will incur gross claim losses of more than $13 billion in payments to policyholders and cedants in the United States to cover the damaging effects of Hurricane Ian.

The hurricane made landfall in Florida and the Carolinas in September, causing catastrophic damage to property and loss of human life.

The loss estimate is according to commercial insurers’ market claims data collected by the Bermuda Monetary Authority in November.

Steadfast role: Craig Swan, BMA chief executive officer (File photograph)

The BMA said the data does not include exposure to Hurricane Ian losses covered by the majority of insurers in Bermuda’s insurance-linked securities sector.

Including losses covered by this sector in the data would result in even larger estimates of incurred gross losses and claims paid, it said.

Based on publicly available estimates from catastrophe risk modellers and insurance industry analysts, the BMA said, re/insurance losses resulting from Hurricane Ian are expected to total between $50 billion and $75 billion.

Consequently, Bermuda re/insurers may incur as much as 25 per cent of the industry losses.

The overall industry loss estimate for Hurricane Ian includes wind, storm surge and inland flooding losses in Florida, South Carolina, North Carolina, Georgia and Virginia.

Craig Swan, the BMA chief executive, said: “The survey results demonstrate Bermuda’s steadfast role in supplying risk capacity to the US and other catastrophe-exposed parts of the world.

“This role’s importance is heightened by the increasing frequency and intensity of extreme weather events, which continue to exact tremendous human and financial tolls.

“The ability of US insurers to cede risk to Bermuda enables diversification of risk globally and it helps stabilise the cost of buying insurance — particularly property and catastrophe insurance — for customers living in catastrophe danger zones. Such a partnership bolsters policyholder protection and contributes to closing the protection gap.”

The BMA said Bermuda has a proven track record of standing by US policyholders when catastrophes occur, with the island’s re/insurers paying significant portions of insured losses for the costliest weather events in recent history.

For example, it said, Bermuda re/insurers picked up 30 per cent of hurricanes Harvey, Irma and Maria industry losses from the 2017 record-setting hurricane season; in 2021, Bermuda re/insurers estimated paying 30 per cent of Hurricane Ida losses and 20 per cent of industry losses for the Texas Winter Storm Uri.

Gerald Gakundi, the director of insurance supervision at the BMA, said: “We are deeply mindful that the most important consideration after a natural disaster is rebuilding — for the community and the people who comprise it.

“During such challenging times, Bermuda re/insurers’ ability to respond quickly in settling potential claims obligations allows for these critical efforts and enhances climate resilience.”

The information comes from the BMA’s US Data Claims Survey completed last month.

The loss information includes direct insurance and reinsurance, with 69 re/insurance companies responding to the survey.

“The authority is grateful to the companies that took part in the survey,” Mr Gakundi said.

Enhanced climate resilience: Gerald Gakundi, the director of insurance supervision at the BMA (File photograph)

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Published December 07, 2022 at 7:59 am (Updated December 07, 2022 at 7:47 pm)

Hurricane Ian bill for Bermuda reinsurers estimated at $13bn

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