The 2018 third quarter was relatively benign compared to the record catastrophe losses incurred by carriers last year. But hurricanes, wildfires, typhoons and more could still leave industry losses well above average, Morgan Stanley Research said in its new quarterly preview.
Catastrophe losses will likely pile up from a number of notable events, including Hurricane Florence ($5 billion), California wildfires ($1 billion), and Typhoon Jebi ($6 billion) flooding and earthquake in Japan. Morgan Stanley noted that these events, along with Typhoon Mangkhut in Southeast Asia and its $2 billion in industry losses, plus the recent earthquake and tsunami in Indonesia, could push industry losses well above the $13 billion average for the quarter.
It is unclear right now what individual companies will face in terms of exposure to these storms, Morgan Stanley added.
“The frequency and geographic diversity of these events make it difficult to assess individual companies’ exposure,” the firm noted.
So far, overall P/C insurance pricing remains stable, but Morgan Stanley has seen personal auto insurers reduce prices in a push for market share gain. The firm noted that workers compensation pricing is also declining, and property cat reinsurance rates are expected to be flat to down at January 1 renewals. But there are rising loss trends in some lines, such as higher legal costs in professional lines and greater claim frequency in workers compensation, according to the quarterly preview report.
Source: Morgan Stanley