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24 November 2017

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PCS North American cat loss figures pass $70bn

Catrin Shi 14 November 2017

A tally of first-round PCS claims estimates for natural catastrophes in the US territories and the Caribbean puts total insured losses to $71.8bn for the year-to-date.

Excluding losses for Maria and the $4bn of Caribbean losses from Irma, US-only losses are currently pegged at $45.9bn by the data provider.

On either basis, the PCS figures far exceed a Munich Re tally for 2016 of $29bn in insured losses from North America and the Caribbean.

In 2016, the most serious event for the US and Caribbean was Hurricane Matthew, which generated just $6.4bn of insured losses.

The last time insured losses from the region passed $50bn was in 2012, when payouts incurred by Superstorm Sandy helped push total insured losses for the year up to $58bn, according to Munich Re.

This year is set to be one of the costliest on record for the global (re)insurance market.

Munich Re figures for the first half suggest that global insured losses from natural catastrophes totalled $19.5bn, of which $13.5bn stemmed from severe storms in the US.

Sister publication Trading Risk reported that those firms that had purchased remote-risk industry loss warranties (ILWs) on an occurrence basis would not be able to recoup losses .

With the PCS loss numbers for both Harvey and Irma currently below $20bn, even notable loss creep could see $30bn ILWs run clean.

While some aggregate covers were placed this year within trigger ranges of $40bn-$70bn, the scope of cover and whether Caribbean risks are included would be critical in determining payouts, Trading Risk reported.

Speaking at a Florida Chamber of Commerce event in early November, Aon Benfield president Andy Marcell said his firm was expecting loss ratios to surpass 300 percent for ILW portfolios and 400 percent for retro business.

Aon Benfield had tracked around $20bn of impacted retro limit, with around $9bn of collateral affected, he added.

Reinsurers such as RenaissanceRe, Everest Re and Validus have all indicated interest in writing more outwards retrocession in 2018 as the market is expected to pay significant rate increases.

The Insurance Insider reported that Scor was set to pay a rate rise of around 30 percent on a US aggregate deal that had been exhausted by the cat events, but more moderate hikes on its occurrence protections.

This article was published as part of issue November 2017/2

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