Markets · · 1 min read

Hurricane Losses Will Be “Borne By Our Clients”: Marsh CEO

Hurricane Helene and Milton won't singnicantly impact reinsurers balance sheets.

Hurricane Losses Will Be “Borne By Our Clients”: Marsh CEO
Photo by Mick Haupt / Unsplash

Cutting risk, toughening terms and conditions, and exiting markets mean that reinsurers will escape significant losses from two recent hurricanes in Florida, leaving primary carriers and policyholders to bear the brunt of the aftermath, according to Marsh CEO Dean Klisura.

“I think the headline is that the majority of the catastrophe losses this year will be borne by our clients, given the high attachment points that were imposed after Hurricane Ian two years ago,” Klisura told analysts on an investor call last week.

As a result of reinsurers' constrained capital, Klisura said that Hurricane Helene may have the largest multiple of economic to insured loss of any U.S. storm, and that Hurricane Milton was shaping up to have a similar outcome.

Klisura added that although it will be several weeks before Marsh has complete claims data for loss estimates, preliminary loss estimates from catastrophe models point to a significant economic rather than industry loss.

“While the ultimate insured loss won't be known for some time, the impact of these storms will be significant,” he explained. “And given their wide path of destruction and close timing, they will put enormous pressure on resources available for recovery. Both hurricanes also highlight the meaningful disparity between economic loss and insured loss.”

Klisura added that while Hurricanes Helene and Milton were expected to have an impact on 2025 property insurance and reinsurance pricing, the effect would be muted because there was adequate capacity heading into the January catastrophe reinsurance renewals.

“It’s still early, but I think we see a flattening of pricing in the property catastrophe market,” he said. “If you think about lower and mid-level layers and programs, we kind of see risk-adjusted flattish at this point without all the data in, and you could still see some softening, some rate reductions in more remote risk layers and property catastrophe towers.”

“We think capacity in the marketplace will be adequate. We think the renewal will be manageable for most of our clients. The market is well-capitalized to trade forward and meet client demand,” he said.

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