The cost to the world’s insurers and their reinsurers of the trio of hurricanes and the two Mexican earthquakes, coupled with Cyclone Debbie in Australia and a number of other smaller disasters looks certain to push losses to an all time high by the end of December. Swiss Re, one of the world’s biggest reinsurers, thinks that the trio of US hurricanes Harvey, Irma and Maria (but not Nate), plus those two recent earthquakes in Mexico will cost the industry about $US95 billion ($A121 billion).
That will push insured losses for 2017 towards $US120 to $US130 billion after the industry reported $US19.5 billion in the first six months of this year. Total losses for the first half were $US41 billion. The bill for the second half looks like topping $US180 to more than $US200 billion.
Seeing the previous record for insured losses was $US105 billion in 2011 (thanks to the earthquake, tsunami and the Fukushima nuclear disaster in Japan), the bad flooding in Queensland, Cyclone Yasi and the bad second NZ quake in Christchurch (the first was in late 2010).
The Zurich-based company however pointed out that says the claims are still coming in and estimates could rise. Swiss Re expects its own payouts linked to the natural disasters will be about $US3.6 billion, including $US175 million for the Mexico earthquakes alone.
But the statement on Friday didn’t break down the costs by hurricane.
CEO Christian Mumenthaler called the catastrophes "extremely powerful" and said Swiss Re "can support our clients when they need us most."
Zurich Insurance on Thursday said the three hurricanes would trigger claims of around $US700 million in the third quarter, net of reinsurance and before tax. This was after AIG put a cost on the storms if around $US3 billion, QBE’s was around $US600 million and Chubb an estimated $US1.3 billion.
Munich Re, the world’s biggest re-insurer has warned the cost could produce a third quarter loss and cut its full year result. Munich Re reports its third quarter figures on November 9.
Anther big re-insurer, Hannover Re said on Thursday it expected to see reinsurance prices rise to levels last seen in 2015 as a result of the recent catastrophe losses. Ulrich Wallen, Hannover Re chief executive, said it expected prices to rise in all markets, but in loss-affected areas prices could rise by as much as 40-50%.
Warren Buffett’s Berkshire Hathaway has already reported losses of at least $US152 million from Cyclone Debbie in its June quarter report.
For Australian primary insurers such as IAG and Suncorp (GIO, Suncorp and AAMI among others) the question is now how much their reinsurance costs will rise for 2018 and beyond.
