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After several years of falling rates due to
competition and fewer natural disasters, steep losses from
hurricanes, typhoons and wildfires in 2017 and 2018 are driving
a reversal.
And as Hurricane Dorian ravages the Bahamas and bears down on
the United States, both Fitch and Standard & Poor's said some
rates could jump much higher.
S&P said rates would likely rise around 5%, while Fitch
predicted 1-2% in briefings ahead of the reinsurance industry's
annual conference in Monte Carlo which begins on Saturday.
Reinsurers such as Swiss Re, Munich Re and the Lloyd’s of London
market help insurers share the risks of disasters in return for
part of the premium.
"It's not a hard market but it's a hardening market, there's
more positive momentum," Ali Karakuyu, lead analyst at S&P
Global, told a media briefing.
Fellow analyst David Masters said the industry was likely to see
"mid-single digit price increases" as a result.
Insurers are increasingly concerned about the impact of bad
weather linked to climate change, with an increase in wildfires
in California among the most costly in recent years, something
S&P said could see rates there jump 30-70%.
"This market remains in disarray, which will fuel further rate
increases," a slide from the S&P presentation said.
Fitch Senior Director Graham Coutts said he expected average
rates to rise 1-2%, similar to the increases seen in January
2019, although further rises could be seen depending on the
scale of losses from Dorian and other hurricanes.
(Editing by Simon Jessop and Alexander Smith)
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