2018 hurricane forecast ‘average’ according to Fitch

After severe losses in 2017, predictions for the 2018 hurricane season suggest that this year’s hurricane activity will not be anywhere near as bad, according to a new Fitch Report.

The rating agency’s US Hurricane Season 2018 report suggests that the 2018 US hurricane season will produce average hurricane frequency relative to long-term results, as environmental forces that serve to encourage the development of tropical storm activity appear to be relatively neutral and portend a near-average season.

The report notes that the 2017 hurricane season included a unique set of discrete events and devastating losses that primary property/casualty (P/C) insurers withstood reasonably well. However, in aggregate, this year likely represents a 1-in-10- to 20-year level of incurred losses, revealing the potential for more severe future hurricane losses.

The report also describes some of the consequences of the severe 2017 losses. These included higher premium rates in loss-affected primary insurance segments. “Market pricing data indicates that the soft market appears to have finally reached a bottom, with premium rate increases seen in more product segments, particularly property and catastrophe business,” the report suggests.

But it also notes that pricing improvements may ultimately prove short-lived as the level of rate increases achieved are falling below underwriter expectations, and competitive market dynamics are relatively unchanged.

It also notes that demand for insurance linked securities (ILS) and catastrophe bonds remained very strong in the first five months of 2018, despite the significant hurricane activity experienced last year.

“US wind risk remains the leading peril in the catastrophe bond market with nearly $3.6 billion of bonds exposed to named storms already issued this year. There was initial uncertainty as to whether the capital markets would return in full force following losses paid and trapped capital from lengthy claims settlements. However, investors have yet to show signs of being deterred,” the report says.

Make sure you are GDPR compliant and  confirm your email address to keep getting our daily emails

More of today's news

Glut of capacity makes for disappointing Florida cat renewals

Howden Broking Group appoints new CEO

BHSI appoints new UK & Europe leader; taps QBE CUO for Australasia

AM Best withdraws credit ratings of AEGIS Lloyd’s Syndicate 1225

Liberty creates new London Market claims role

McLarens strengths Australian team with three hires

Don't miss our insurtech email newsletter - sign up today