Active hurricane season to help stop rates falling

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Both A.M. Best and Standard & Poor’s have said that the combination of the active hurricane season and the natural catastrophe losses already experienced this year will help to stop rates dropping further and could even force them upwards.

Should one of the storms to come cause another major loss then we will definitely see a rate rise. On the flip side if we see more losses of the size of Gustav (now estimated at between $2 and $7 billion) we probably won’t see any significant triggering of a catastrophe bond (unless there is a direct hit on an exposed area.

So, re/insurers will be pleased with the news on rates and cat bond investors will be nervously eyeing any approaching storms and hoping we don’t see anything bigger than Gustav this year. Meanwhile policyholders in exposed states will be dreading further property insurance rate rises which will help to further the cause of the proposed national catastrophe fund.

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