Hurricane Sandy may harden reinsurance market
Hurricane Sandy is expected to rack up claims for captives covering natural catastrophe, property and liability exposures this week.
James Auden, managing director of insurance at Fitch Ratings, said captives should have the capital to cover the category 1 hurricane losses, which will be borne mostly by primary insurers. However, captives may see more of an impact on the reinsurance market.
“There certainly could be some additional push towards a hardening reinsurance market, which may move more captive insurers to purchase more property coverage on the commercial market,” said Auden.
Hurricane Sandy has the potential to produce losses similar to Hurricane Irene, which struck the East Coast in 2011 and generated insured losses of between $4bn to $5bn, according to Fitch Ratings.
“Total storm-related costs will be dependent on the final path of the storm with more updated estimates likely to be published on Tuesday and Wednesday,” said Fitch Ratings.