Opinion: Continued uncertainty

Opinion: Continued uncertainty

Weather-worn (re)insurers will be fearing the worst but hoping for the best as Nate threatens to open up the fourth quarter with another set of insured losses from a US landfalling hurricane.

And their CEOs heading down to Colorado Springs this weekend may feel a little less prepared than usual for meetings with clients and brokers.

The Council of Insurance Agents & Brokers' annual Insurance Leadership Forum is typically about nurturing high-level relationships and setting expectations for the year ahead.

But as insurers, reinsurers and their retro providers pick through the debris of a devastating third quarter for cats, huge uncertainty over loss development means that clear messages might be in short supply at The Broadmoor.

Most underwriters are sure to be pushing for rate increases, both at the primary and reinsurance level.

And as we have reported, price rises are being sought at some of the early US property insurance renewals in the aftermath of Q3 storms.

However, the market is far from consistent, with some underwriters pushing hard, and others taking a much more measured approach.

That is probably because of the wide range of loss experience at individual companies.

The impact of hurricanes Harvey, Irma and Maria looks to be asymmetric across the industry, with some primary carriers and reinsurers much worse affected than others.

The flurry of early loss picks coming out before the third quarter results season appears to reflect that, while the caveats underwriters are expressing about their estimates point to continued uncertainty.

It's not helped by the wide range of industry loss projections - from the public numbers put out by vendor modelling firms to the private views of the biggest brokers.

There is a huge gap, for example, between the $85bn top-end estimate from AIR Worldwide for Maria and some very conservative numbers intermediaries have been prepared to share.

A lot of that is likely down to the interpretation of business interruption exposures and commercial flood losses.

If the worst Nate fears come to pass, loss amplification factors could be further exacerbated by the deepening loss adjuster crisis.

Anecdotal evidence suggests high inflation of loss adjuster day rates as resources are stretched across multiple geographies, which is increasing loss adjustment expenses and significantly delaying the claims process.

But there is also still a scarcity of basic claims information.

One senior source told The Insurance Insider that his company is now filling out the numbers next to the notices on Harvey claims, but still has many gaps for Irma.

And for Puerto Rico, where power and infrastructure issues are hampering efforts on the ground, notices are even lacking from expected sources in many instances.

As underwriters struggle to get to grips with their own exposures, it is no surprise that there is a lack of consistency as they approach the market on renewals.

That will make it harder than usual to set expectations for brokers and buyers down at The Broadmoor in the coming days.

 

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