U.S. property and casualty insurers and reinsurers are well-prepared for what may be one of the most active hurricane seasons on record, according to Fitch Ratings‘ annual report on exposure to this peril.
Projections for 2024 consistently exceed the 30-year average. A major Florida landfall could challenge smaller, less-capitalized homeowner specialists.
However, the reinsurance industry‘s overall capital strength is expected to support it through a significant hurricane event in 2024, says Senior Director Gerry Glombicki.
Recent premium rate increases and legislative changes in Florida have enhanced market profit fundamentals.
“Stronger capital positions bolster insurers’ ability to withstand losses from major adverse events, including catastrophes.”
The full impact of recent legislative and regulatory actions in Florida remains to be seen.
Despite reductions in litigation, Florida continues to be highly exposed to catastrophes, having experienced significant losses since 2017, including years without major hurricane landfalls.
“Recent Florida’s reforms are unlikely to encourage the largest national homeowners insurers to increase their exposure in Florida due to a long history of volatility,” said Senior Director Brian Schneider.
Defense cost and containment ratios dropped significantly last year, suggesting that litigation reforms may be effective.
However, 2023 was a relatively calm year for hurricanes, and a clearer picture will likely emerge after an active hurricane season.
Triple-I projects a rise in P&C insurance growth to 3.4% in 2024, which is 1.2% higher than the Federal Reserve’s GDP growth forecast of 2.2%.
This growth trend is likely to continue enhancing the P&C insurance industry’s overall growth and performance over the next year.
Looking forward, Triple-I anticipates the P&C insurance sector will maintain its growth advantage over GDP through 2025 and 2026.
The expected average annual growth rate for the insurance sector will exceed U.S. GDP growth by about 2% over the next three years.
