How much of an impact will Hurricane Beryl have on P&C insurers?

How much of an impact will Hurricane Beryl have on P&C insurers? | Insurance Business America

Property

How much of an impact will Hurricane Beryl have on P&C insurers?

Moody’s Ratings weighs in

Property

By
Terry Gangcuangco

Moody’s Ratings has weighed in on the likely impact of Hurricane Beryl on property and casualty insurers, saying the weather event’s effects will be readily manageable.

“The magnitude and allocation of insured damages will take time to determine,” Moody’s Ratings said in a sector comment. “However, we expect that insurers’ losses from Hurricane Beryl will be low and readily absorbed by their earnings.”

The credit rating agency, meanwhile, noted that State Farm, Allstate, and USAA (United Services Automobile Association) are the homeowners’ insurers expected to be most affected, based on their premium volumes in Texas.

“Commercial property insurers… are likely to experience some losses as well,” it stated. “Large national carriers have ample capacity to withstand much larger storms based on their careful monitoring of coastal exposure, geographic diversification, high-quality reinsurance protection, and strong capital bases.”

The top commercial property insurers in Texas, according to Moody’s Ratings, are Chubb, Berkshire, and Sompo.

The company added: “US primary insurers have been retaining a higher proportion of catastrophe risk in recent years (particularly at lower return periods) as reinsurers have raised pricing and attachment points and pulled back on aggregate covers. We expect that primary insurers will retain most of the losses from Hurricane Beryl.

“Losses along the Texas coast will be absorbed by the Texas Windstorm Insurance Association (TWIA), the state’s insurer of last resort. TWIA policies provide coverage for property damage caused directly by wind and hail but do not cover damage from flooding and storm surge.

“As of April 30, 2024, TWIA had more than a quarter million policies in place with more than $100 billion of insured exposure. TWIA’s total payment capacity is about $6.5 billion, which it estimates will cover a one-in-100-year hurricane, a much more severe event than Hurricane Beryl.”

Hurricane Beryl made landfall near Matagorda Bay, Texas on July 8 as a Category 1 hurricane after initially making landfall at the start of the month as a Category 4 major hurricane over Grenada’s Carriacou Island.

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