LA wildfires spotlight protection gap: Howden Re
Howden Re says there is heightened pressure to address the natural catastrophe protection gap as risks and economic losses increase.
Head of industry analysis and strategic advisory David Flandro says the gap for the Los Angeles wildfires alone may be $US60-$US90 billion ($95-$142 billion), and the disaster will exacerbate secondary peril losses this year.
“The loss gap has been a massive topic of conversation over the past six months, especially with the LA wildfires,” Mr Flandro said.
“It’s an increasing trend worldwide where policyholders and cedents have difficulty obtaining coverage.”
A Howden Re 2024 global insurance carrier earnings analysis looks at market themes ahead of the April renewals.
Mr Flandro says underwriting performance last year outstripped the average of 2019-23 and that “in general, for everybody, combined ratios improved by about 3.6 percentage points”.
Underwriting results and investment returns led to capital growth, even after strong dividend growth and share buy-backs, helping to facilitate greater capacity levels on programs.
January reinsurance renewal volumes increased but were lower than a year earlier.
Howden Re head of business intelligence Michelle To said: “It is now clear that pricing is no longer that tailwind that it was. Carriers are achieving growth through increased exposure, although exposure remains low compared to long term averages.”
Howden Re says US liability reserve strengthening was seen last year, but that was more than offset by workers’ compensation, short-tail, speciality and “everything else”.