Best’s Commentary: Hurricane Ida Losses Manageable for the Insurance Industry

OLDWICK, N.J.--(BUSINESS WIRE)--Hurricane Ida’s trajectory and proximity toward the New Orleans area could tilt insured losses more to the insurance industry’s commercial lines sector, according to new AM Best report.

Property damage and business interruption losses may contribute more heavily to overall losses than did Hurricane Laura last year, which had a greater impact on personal lines business. Louisiana insurers are already trying to move past a 2020 spike in weather-related losses, with more than 300,000 claims attributable to Hurricanes Laura, Delta, and Zeta, according to the report.

The Best’s Commentary also notes that a surge in demand for materials and goods post-Hurricane Ida could increase the level of (re)insured losses meaningfully, especially in light of a 5.4% rise in the U.S. consumer price index from roughly a year ago.

Total losses from Hurricane Ida are not expected to impact overall capital levels due to the number of regional players in the market who will likely be able to cede off larger losses to the reinsurance sector.

However, the (re)insurance industry should be able to absorb the magnitude of losses without impacting their capital positions. Hurricane Ida will add to uncertainty about the growing frequency of weather events and provide momentum to reinsurance pricing.

Hurricane Ida, which made landfall on the 16^th anniversary of Hurricane Katrina, generated less severe storm surge. The infrastructure improvements made since 2005 may curtail losses as the new levee systems have thus far performed as expected.

To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=312194.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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