Analysts at Fitch Ratings have increased their estimate for re/insurance industry losses from Hurricane Ian to a range of $35 billion to $55 billion.
The new range represents an increase on the estimate of $25 billion to $40 billion previously released by Fitch, although the earlier figures did apply to Florida only, whereas the new range is for total losses, Fitch says.
At the updated level, Fitch’s range is more in line with recent loss estimates from catastrophe modellers such as CoreLogic, which estimated a $31 billion to $53 billion range.
It also roughly aligns with the $42 billion to $57 billion range put out by Verisk and the $29.9 billion to $62.1 billion released by KatRisk, but remains well below RMS’s range of $53 billion to $74 billion.
Fitch notes that insurance-linked securities (ILS) capacity will likely absorb a significant chunk of the overall re/insured loss from Ian, and suggested that this could have implications for investment in this sector going forward.
“Reinsurers facing shrinking balance sheets amid rising rates and increasingly volatile catastrophic losses have effectively utilized the insurance-linked securities (ILS) market to manage risks and to pay insured losses,” analysts explained.
“However, ILS investors not properly compensated for risk or facing elevated losses amid fallout from Hurricane Ian may choose to reinvest capital elsewhere, which would exacerbate the demand/supply imbalance of the reinsurance sector, which is especially acute in the Florida property market.”
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