Catastrophe losses thus far in the third quarter have been “tame but growing,” according to an analysis by Philadelphia-based Drexel Hamilton L.L.C.
In its second-quarter recap released Tuesday, the institutional broker-dealer said natural catastrophe losses during the first half of the year were “relatively low,” but smaller events — both natural and manmade — hurt some major insurers’ underwriting results. The analysis pointed out that increased fires as well as smaller hail and tornado events led to higher combined ratios for some unnamed underwriters.
But overall, most insurers “were able to show better underlying combined ratios as there was still some follow through on rate hikes, favorable prior year reserve development and expense controls,” Drexel Hamilton said in the analysis. More insurers are using big data to better understand and price for risk on a more granular level, “making agent/customer relationships more important than ever in client retention,” it said.
Drexel Hamilton said third-quarter catastrophe losses are “still tame but growing.” The earthquake around Napa, California, is not expected to trigger any catastrophe bonds, according to Drexel Hamilton. “The key to sizing up losses will be the degree of business interruption for wineries during harvest and tourist season,” according to the report.
It also noted that hurricane season, which has already spawned three Atlantic hurricanes, runs through the end of November, which makes it “too early to declare victory over the 2014 hurricane season.” But Drexel Hamilton said the property/casualty insurance industry’s capital remains strong and “it would likely take a major hit to move the pricing needle towards a tight market with higher pricing from here.”