Reinsurers will have some meaningful losses from Hurricane Milton but a replay of the shocking price hikes cedents experienced during Jan. 1, 2023 renewals isn’t likely to repeat for 2025, Fitch Ratings said.

A day after Milton made landfall as a Category 3 near Siesta Key, Fla., Fitch noted that Milton will push insurance industry catastrophe losses over $100 billion for the fifth straight year, with Fitch estimating Milton’s insured loss total to fall in a $30 billion-$50 billion range.

Likely ranking as the largest insured loss since Hurricane Ian, a strong Category 4 that caused $60 billion of losses, Fitch said Milton will be a fourth-quarter and 2024 earnings event for large rated insurers with Florida exposure, but not a capital event.

“The insurance losses will hit reinsurance attachment points, shifting a meaningful amount of losses to the reinsurance market, particularly from the Florida specialist companies with lower retentions,” Fitch said.

With Milton pushing up the overall level of global catastrophe losses, the potential for reinsurance rate declines for property-catastrophe business in 2025 is limited, Fitch said, referring to reinsurers’ actions to maintain underwriting discipline. At midyear in 2024, Florida property had experienced flat to 10 percent rate declines on reinsurance renewals—a reflection of the limited impact of the 2023 hurricane season on reinsurers.

Price hardening is now possible in the property reinsurance market, particularly if more catastrophes occur after Milton to add to the loss total in the remainder of 2024. “However, the sizable property reinsurance price increases experienced in 2023 are unlikely given the more adequate current pricing environment,” Fitch stated.

All told, Hurricane Milton is not expected to impact ratings of property/casualty insurers and global reinsurers, which carry Fitch credit ratings. Unrated Florida property insurance specialists, however, “are vulnerable to the extent the major hurricane generates losses in excess of reinsurance limits.”

Citing the $30 billion to $50 billion early estimate of Milton’s industrywide losses, Fitch noted that demand surge will be a factor determining the ultimate loss total, with Milton coming so close behind Hurricane Helene. “Higher demand and limited supply of labor and materials needed to adjust claims and repair/rebuild following multiple large-scale disasters can increase insured losses by 20 percent or more, Fitch said.

Commenting on Florida homeowners insurance specialists, Fitch suggested that some may be hobbled as Milton losses mount. “We do not expect Milton’s losses to exhaust catastrophe reinsurance protection for most Florida specialists; although individual insurers with unique risk concentrations or meaningful modeling errors may report higher-than-expected gross losses,” Fitch said, adding that insurers remain exposed should additional hurricanes cause more damage this year.