Fitch Ratings says that forecasters are expecting an above-average hurricane season this year, but that the insurance industry should be able to withstand potential losses.
The rating agency reports that early forecasts for the 2013 U.S. hurricane season predict a higher-than-average number of storms this year, relative to long-term results. Nonetheless, it says that there’s enough capacity in the (re)insurance markets to “provide sufficient coverage and withstand potential losses”.
Fitch notes that pricing in the sector has generally improved following the losses experienced due to Superstorm Sandy and Hurricane Isaac in 2012. “The emergence of losses related to these events has been a catalyst for positive pricing movement in the primary U.S. property insurance market, specifically in regions and lines of business with significant catastrophe exposure,” it says.
Additionally, it says that the capital markets “remain a strong and growing presence in the market for underwriting and offering protection from catastrophe risks.”
“The continued low interest rate environment, along with the desire of (re)insurance companies to utilize alternatives to the traditional insurance risk transfer market, has generated significant growth in new capital from third-party investors,” it notes.