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Fitch: reinsurers brace for active hurricane season

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Hurricane Ian caused so much damage to Captiva Island, Florida, that people were stopped from entering for several weeks (File photograph)

With the hurricane forecast predicted to be above the 30-year-average, insurers are braced for what could be one of the busiest hurricane seasons on record.

According to a new Fitch Ratings report on hurricane exposure, reinsurers appear to be ready.

Fitch senior director Gerry Glombicki said: “A Florida landfall with substantial damage could present problems for individual homeowner specialists that are more thinly capitalised.

“That said, the industry’s capital strength provides overall support to withstand a significant hurricane event in 2024.”

Mr Glombicki said that recent premium rate increases, combined with benefits from legislative changes to the Florida market had improved market profit fundamentals.

Bermuda accounts for a large percentage of reinsurance capacity bought by Florida property insurers.

Mr Glombicki said: “Better capital strength bolsters insurers’ capability to withstand losses from large adverse events, including catastrophes.”

He added that the full effects of recent legislative and regulatory action taken in Florida still needed to be assessed.

“Despite declines in litigation activity, Florida remains a heavily exposed catastrophe state that has experienced substantial losses since 2017, including years without a material hurricane landfall,” he said.

Brian Schneider: senior director, insurance at Fitch Ratings (File photograph)

Fitch senior director Brian Schneider thought recent reforms were unlikely to induce the largest national homeowners writers to increase exposure in the Florida market given a longer history of volatility.

“Defence cost and containment ratios more than halved last year in a possible sign that litigation reforms may have helped,” Mr Schneider said. “However, 2023 was a fairly calm year from a hurricane perspective with a more telling figure likely to emerge after an active hurricane season.”

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Published May 30, 2024 at 7:58 am (Updated May 30, 2024 at 7:18 am)

Fitch: reinsurers brace for active hurricane season

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