ROME • Reinsurers jumped in European stock markets amid signs that payouts for damage caused by Hurricane Irma will be lower than expected after the hurricane weakened and the most dire predictions proved wrong.
Firms including Swiss Re and Munich Re were among the biggest gainers on the Stoxx 600 Insurance Price Index on Monday, gaining the most in more than a year. That’s after estimates for insured losses from Irma were revised to a maximum of US$40 billion (RM168 billion) from earlier worst-case scenarios of a direct hit to Miami, which could have cost the industry as much as US$131 billion.
Hannover Re and Swiss Re said yesterday that damage from Irma will cause reinsurance rates to stabilise, following years of decline. While it’s too early to estimate the costs to Hannover Re and the wider industry, the storm didn’t follow the path that would have created the greatest damage, CEO Ulrich Wallin said at a press conference in Monte Carlo.
“There will be loss-driven price increases in certain areas of the market” next year, Wallin said. “I don’t think we’ll have a market dislocation, but the hurricane season lasts until the end of November and climate conditions seem to be quite conducive to hurricanes.”
Barclays plc analysts including Ivan Bokhmat and Jay Gelb disagreed, saying that Irma and Harvey, another recent hurricane, are likely to cause dislocation in the reinsurance market because they’re expected to generate combined insured losses exceeding US$100 billion. Initial indications from the reinsurers meeting in Monte Carlo “are for January 2018 bellwether property catastrophe reinsurance renewal rates to be flat-to-slightly-up after declining for around six years,” the analysts said in a note to clients yesterday. — Bloomberg