RLI COO misses volcano reinsurance offer
US specialty insurer RLI Corporation was impacted by a $5.5 million net decrease to underwriting income in the second quarter due to volcanic activity in Hawaii, and chief operating officer Craig Kliethermes explained during the results conference call that there is no reinsurance cover available for such catastrophe events.
The Kilauea eruption is a long lasting event. Since early May 2018 a stream of frequent eruptions and thousands of earthquakes have hit Hawaii's Big Island. So far, 706 homes have been destroyed, according to the Hawaii County Civil Defense Agency.
“Most catastrophe treaties that I'm aware of have an hour’s clause,” Kliethermes said. “So those losses can only be accumulated through losses that have occurred within 128 hours or 172 hours whatever the timeframe may be. So, I mean, these (volcanic events) would accumulate over two months so there really is no catastrophe reinsurance that would be available unless it would be a complete volcanic eruption with losses occurred all within one or two or let’s say seven days,” he explained.
Kliethermes also noted that RLI’s market share in Hawaii is less than 3 percent and that the literally affected area by the volcanic eruption on the Hawaiian island is 0.3 percent of the square miles of that island.
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