TEXT-Fitch: Hurricane Sandy reported losses approach $20 bln
Jan 8 - Link to Fitch Ratings' Report: Hurricane Sandy Update (Company Loss Estimates Indicate More than $20B of Insured Losses)Jan 8 - The insurance industry will likely see losses of $20 billion or more from Hurricane Sandy, according to a new report by Fitch Ratings. Fitch based the expected total on the approximately $16-$17 billion in loss estimates reported by individual companies thus far. This would put the total industry loss just below the high end of the range of the most recent insured losses estimated by third-party catastrophe modelers. Fitch notes that the complexity of assessing insurance losses from such a large and intense storm over a widespread region, particularly with respect to the impact of flooding and business interruption claims, has created uncertainty in estimating ultimate insured losses from Sandy. As such, many (re)insurance companies were unable to release credible loss estimates until almost two months after the storm hit on Oct. 29, with several larger insurers still having not reported at the time of report publication. This could potentially add another $5 billion or more in losses to the industry. Due to the size and nature of Sandy, a larger proportion of losses were incurred from commercial lines versus personal lines. Primary writers with substantial Northeast catastrophe exposures are incurring the most significant losses, with reinsurers taking a more reduced, although still meaningful share. While many of the typical property lines of insurance are being impacted, it was a particularly outsized event for auto losses and marine insurance. In nearly all cases, Hurricane Sandy demonstrated the favorable spread of loss and limited concentration risk among individual insurance companies resulting in manageable losses to insurers. However, despite robust modeling available for the Northeast U.S., there were several areas related to flooding risk exposure that the models did not fully capture and companies did not fully anticipate. Based on Fitch's analysis, Hurricane Sandy is not likely to change market underwriting capacity and tip the balance to a hard property market. Initial reports on reinsurance pricing at the Jan. 1 renewals indicate that Sandy helped to stabilize rates, with U.S. property catastrophe pricing flat to up slightly overall, although loss impacted business experienced more significant rate increases. The full report, 'Hurricane Sandy Update' is available at 'www.fitchratings.com' under 'Insurance' and 'Research'. Additional information is available at 'www.fitchratings.com' Applicable Criteria and Related Research: --Hurricane Sandy - Sensitivity Analysis of Insured Loss Scenarios (November 2012); --Insurance Rating Methodology (October 2012). Applicable Criteria and Related Research: Hurricane Sandy - Sensitivity Analysis of Insured Loss Scenarios Insurance Rating Methodology - Amended
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