AM Best estimates that insured losses from Hurricane Helene to be approximately $5 billion or more, given its wind span and destructive path across more densely populated regions surrounding Tallahassee, Fla., Atlanta and other urban inland areas.

According to a newly issued Best’s Commentary, titled “Hurricane Helene Challenges Insurers Dealing With Increased Losses and Higher Reinsurance Rates,” primary insurers underwriting property coverage will likely bear the brunt of those insured losses, given the recent trend by reinsurers to impose higher attachment points on that coverage. This hurricane could also be a key financial test for Florida property-catastrophe specialist writers, some of which are thinly capitalized. These specialists have been reporting higher loss ratios than the national property insurers writing coverage in Florida in each of the past five years, except for 2023. “While there was improvement in 2023, the market remains on the front end of this upswing with sustainability yet to be proven,” said Chris Draghi, director, AM Best.

In late August 2023, Hurricane Idalia struck the sparsely populated area of Florida’s Big Bend region. Based on insured loss estimates from Idalia, the strength of Hurricane Helene, and potential inland damage, AM Best believes insured losses will exceed $5 billion. “Helene’s strong wind fields stretched over a much wider area, accompanied by coastal storm surge and inland flooding,” said Jason Hopper, associate director, AM Best. The actual magnitude of insured losses will depend upon the determination of perils (i.e., flood versus wind), as well as potential business interruption losses.

Flood losses may affect the risk appetite of those insurers providing coverage within the fledgling private flood insurance market, in addition to impacting the National Flood Insurance Program (NFIP), which is expected to be extended before its expiration on Monday, Sept. 30, 2024.

Over the past few years, reinsurers have increased rates for their coverage, adjusted the capacity being made available, pushed for higher attachment points, and in some cases, sought lower loss limits to protect their financial positions. Primary insurers with higher levels of dependence on reinsurance have a greater sensitivity to changes in this pricing.

To access a complimentary copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=347227.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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