Will 2017’s Natural Catastrophes Affect Your Insurance Renewal?
Last year’s North Atlantic storm season was particularly devastating, with widespread losses and tragic loss of life in the US and Caribbean. The massive geographic footprint of Hurricanes Harvey, Irma, and Maria caused insured and uninsured losses across large swathes of the Caribbean and US. Combined insured losses from the storms are estimated to be US$93 billion.
Hurricane Harvey emerged as the most costly natural disaster of 2017, with estimated economic losses of approximately US$125 billion. Harvey was a Category 4 storm that made landfall in Texas, causing torrential rainfall. The rain over Houston was of the magnitude of a one-in-one-thousand-year occurrence.
The insurance industry has seen an influx of capacity over the past few years as well as benign catastrophe losses, leading to year-on-year reductions in rates. This year in markets that were affected by 2017’s losses, we are seeing a push for pricing increases to varying degrees.
However, regions that were largely unaffected by 2017 losses are seeing considerably less change, although the size of reductions has generally slowed or stopped. Year to date, we’ve seen insurers unable to achieve the rate adequacy they were expecting. This is driven by the overcapitalized nature of the industry, which is vastly different from what we saw following past catastrophes, such as September 11 and Hurricane Katrina.
As a result, even though 2017 will be one for the record books in terms of losses, it may not have a significant effect on your insurance cover.
How to Approach Your Renewal
For organizations that are looking to place or renew property cover for natural catastrophe exposures, recent events may prove worrying. However, by working with your broker and carefully considering your coverage, it is possible to find competitive pricing in the market.
- Start early: If your policies will be up for renewal soon, the earlier you can begin assessing your coverage and engaging with your broker and insurers, the easier it will be to negotiate having the right cover in place. Buyers have a lot of choice in the current market, and taking more time will help maximize your results.
- Consider your options: Markets worldwide are responding to recent events differently, particularly as those hit hard will likely respond with increases, but more favorable terms may be found in markets that have not been heavily affected by natural disaster in the past year.
- Review your coverage: Do you have the right levels of cover in place? Are your terms and conditions what you need for the windstorm season ahead? Now is the time to consider these questions.
Many organizations are now bracing themselves for coverage renewals and another windstorm season, but by working with your broker and insurers and reviewing your cover, it will be possible to weather the storms ahead.