Two US insurers say reinsurance will absorb hurricane Ian losses

With analysts revising losses from hurricane Ian upwards, individual US insurers have started to disclose their own exposure to the storm and believe their reinsurers will pick up most the bill.

US insurers HCI Group and Universal Insurance Holdings both said their reinsurance protection will cover the event and will not be exhausted by the losses.

Universal said its gross losses could top $1bn and has reinsurance cover in place for $3bn. It said net exposure will be limited to retentions at its insurance and captive insurance subsidiaries.

The insurer has received 18,000 claims since the hurricane made landfall in Florida on 28 September. Universal said this is about half the number of claims from hurricane Irma at the same point. The insurer holds an almost 8% share of the Florida property insurance market but its exposure is lower, almost 4%, to properties in the four Florida counties most affected by hurricane Ian.

Stephen Donaghy, CEO at Universal, said: “With our dedicated staff, our disaster preparedness planning and conservative reinsurance programme, we’re well prepared for this event and maintain substantial reinsurance protection for any subsequent events.”

HCI Group, which owns Florida property and casualty insurer Homeowners Choice, said its maximum net loss from hurricane Ian will total $78m, with its programme of four reinsurance towers picking up the rest of the bill. In a video update following the storm, CEO Paresh Patel said the group has received 10,000 claims and is expecting a further 2,000.

Patel made moves to assure the market of its strong reinsurance position. “We can sustain a much greater loss than Ian has dealt to us, both from a capital position as a company and as a reinsurance capacity in the towers we conservatively bought back in May,” he said.

He added that HCI Global’s reinsurance strategy has paid off. “Long-term traditional relationships matter. In all of HCI’s history, we have never bought ILWs, cat bonds or any of those products. We have dealt with traditional reinsurance partners and the reason for that is about to become apparent,” he said.

Patel also quashed reports that the Florida Hurricane Catastrophe Fund (FHCF) could be exhausted by hurricane Ian. “While some carriers may exhaust their FHCF limits, others will hardly touch it at all and that capacity will be there to be utilised in 2023. So from what we can see, we think there will be a significant amount of FHCF dollars still left in 2023,” he said.

At as 11 October, the Florida Office of Insurance Regulation recorded more than 471,783 claims across multiple lines of private and commercial insurance from hurricane Ian, with an estimated insured loss of $4.48bn.

Of the claims reported, the majority at 337,128 have been for residential property, with a further 13,359 claims for commercial property and 210 claims for business interruption.