Harvey unlikely to reverse declining cat pricing trends
Based on a company specific loss analysis, Hurricane Harvey is not “the catastrophe” the industry has been waiting for that could reverse pricing declines in the ultra-soft commercial property market, Credit Suisse analysts said in an Aug. 29 note.
Hurricane Harvey developed into a Category 4 and made landfall near Rockport, Texas on Friday, Aug. 25. In addition to direct losses, the storm is causing heavy rainfall and storm surge-related losses along coastal Texas.
Credit Suisse estimates insured losses in the range of $7.5 billion to $15 billion. If realistic, this projection is unlikely to cause a meaningful dent in industry excess capital and as a consequence reverse pricing declines in the property market, according to the analysts.
“We do not expect those taking losses to be rewarded with higher rates going forward,” the research note said.
Even with somewhat favourable catastrophes over the remainder of the year, the US P&C primary insurers appear likely to have an above average catastrophe year, which may have some impact on capital management programmes versus expectations, the analysts commented.
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