International insurance and reinsurance companies are expected to cover half of total insured losses from Superstorm Sandy, an industry association said Thursday.
Estimated losses from Superstorm Sandy currently stand at over $16 billion, as reported by publicly traded companies, according to the Association of Bermuda Insurers and Reinsurers (ABIR). Regardless of the final totals, international insurers and reinsurers are expected to cover roughly 50 percent of losses — estimated today at more than $8 billion and potentially reaching an estimated $10 billion.
Sandy underscores the important role that international reinsurers play in times of crisis, Brad Kading, president and executive director for the ABIR, said in a statement.
“Global reinsurers are financially strong and have substantial capacity to support U.S. insurance companies as they review their portfolios in light of claims,” he said.
“In fact, Bermuda’s reinsurers are the largest suppliers of catastrophe reinsurance to U.S. insurers and have an excellent record of claims payment. With the potential losses from extreme weather on the rise, the need for global reinsurance will continue to expand.”
Kading pointed to a recent report by the catastrophe risk management firm Karen Clark & Company that warns the United States can expect insured losses of at least an average of $10 billion from a hurricane every four years. The Karen Clark & Company report was based on an analysis of more than a century of hurricanes.
“Simply put, the less insurance capacity we have to remedy the damage from these storms, the higher the costs will be for US consumers,” Kading said.
“As we reflect on the disastrous events of last year and anticipate future catastrophes, it is clear that the nation needs a robust insurance market that is open to as many competitors as possible and encourages direct foreign investment. If perceptions of risk increase, or consumer demand is amplified, international reinsurers are ready to meet the market’s needs,” he said.
The Association of Bermuda Insurers and Reinsurers represent 22 international insurers and reinsurers. With headquarters and operations in Bermuda and with operating subsidiaries in the United States and Europe, these carriers derive business income from over 100 countries around the world. The ABIR represents the public policy interests of Bermuda’s Class 4 insurers and reinsurers around the world, giving special priority to regulatory action in Bermuda, Europe, U.S. and international regulatory forums; and to promote Bermuda’s Class 4 reinsurers as the best in the business in ceding insurer forums.
Source: The Association of Bermuda Insurers and Reinsurers