P&C insurers to retain majority of losses from Hurricane Francine: Moody’s
According to a recent Moody’s Ratings report, property and casualty (P&C) insurers are expected to absorb most of the losses from Hurricane Francine, which made landfall in Terrebonne Parish, Louisiana, on September 11, 2024.
Hurricane Francine, a Category 2 storm with winds reaching 100 miles per hour, caused significant damage with strong winds, storm surge, and flash flooding across Louisiana, Mississippi, and neighbouring states.
Hurricane Francine is the sixth named storm and fourth hurricane of the 2024 Atlantic hurricane season.
Moody’s analysts indicate that it will take time to fully assess the insured losses and determine how the hurricane will impact P&C insurers.
Recent trends show that U.S. primary insurers are retaining a larger share of catastrophe risk as reinsurers have raised pricing and attachment points and pulled back from providing aggregate reinsurance covers. As a result, P&C insurers are expected to shoulder most of the losses from this event.
Moody’s also notes that while the top 10 homeowners insurers in Louisiana, based on 2023 direct premiums, are well-positioned to manage major catastrophes, regional insurers may be more affected due to their geographic concentrations.
Beyond property losses, commercial insurance policies typically cover business interruption claims, which could be sizable if the hurricane disrupts critical infrastructure, causes extended power outages, or blocks access to covered properties.
Moody’s anticipates that a substantial portion of the losses along the Louisiana coast will be absorbed by Louisiana Citizens Property Insurance Corporation (LA Citizens). As the state-sponsored insurer of last resort, LA Citizens provides coverage to residents and small businesses unable to secure insurance through the voluntary market.
Additionally, P&C insurers may face claims related to private passenger and commercial vehicles, watercraft, and other insured assets.
If you recall, analysts from RBC Capital Markets recently said that Francine’s losses are expected to be manageable for property and casualty insurers, while minimal impacts are expected to the reinsurance market
Furthermore, privately insured losses from Hurricane Francine have been initially estimated as close to $1.5 billion, according to catastrophe risk modelling specialist Karen Clark & Company (KCC).
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