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SAN DIEGO — It is still too early to determine whether hurricanes Harvey and Irma will lead to a hardening insurance market, but the catastrophic events should give the industry pause, experts say.
That was the consensus of speakers during a Sunday session at the Wholesale & Specialty Insurance Association’s annual marketplace.
The WSIA was formed by the merger of the National Association of Professional Surplus Lines Offices and the American Association of Managing General Agents, effective Aug. 1.
Estimates of insured damages for Harvey range from about $20 billion to $50 billion, said Peter J. Barrett, chairman of London-based Bell & Clements Ltd., a Lloyd’s of London broker and Munich Reinsurance Co. unit, speaking at the session on international market dynamics in the U.S. surplus lines industry.
“It will unquestionably be a very large and substantial loss,” he said. The question is what is insured or uninsured, he added.
Irma also “has the potential to be a very, very significant number,” whether talking about insured loss or economic loss, he said.
The hurricanes should “drive some thought processes,” he said. As to whether they will lead to a hardening market, “I wouldn’t dare say that, but I think people should at least give a pause for the thought the potential is there,” he said.
Because it is so soon, “We really don’t have a clue right now” as to the hurricanes’ impact, said Carlton W. Maner, CEO of U.S. property/casualty for Axis Insurance in Alpharetta, Georgia.
“Harvey definitely was such a unique thing,” said Thomas Hassel, Munich-based underwriter for global clients/North America for Munich Re.
Speakers were asked about the ways in which Bermuda, Europe and Lloyd’s perform better than other markets. In Bermuda, it is the market’s “willingness to operate quickly from an innovations/emerging issue standpoint,” said Mr. Maner. “They can move very quickly without much” in the way of traditional methods of doing business, he said.
It is also the place for “one-stop shopping,” with both insurance and reinsurance available, he said.
Munich Re can offers significant capacity, said Mr. Hassel. “That’s definitely an advantage of such a big corporate environment.”
Lloyd’s, for its part, has a “very powerful balance sheet and financial strength,” said Mr. Barrett. This was not true in the early 1990s, he said, referring to a time when the market experienced financial difficulties. “It was a tough lesson, but a good lesson learned for a lot of people, and things have changed dramatically since then,” he said.
The session, which was hosted by WSIA’s U40 group of under-40 members, was moderated by Adam J. Care, client care manager for the Hartford Steam Boiler Inspection & Insurance Co., a Munich Re unit, who is Houston-based.
Property losses in Texas due to the flooding caused by Hurricane Harvey’s record-breaking rainfall will be between $65 billion and $75 billion, catastrophe modeler AIR Worldwide said Wednesday.