Guy Carpenter suggests major industry losses on-track for ~$100bn in 2021

Large insurance and reinsurance industry losses from catastrophes and other major events are already likely to be above $80 billion in 2021, while the run-rate suggests another $100 billion plus major loss year is easily in sight, according to data from Guy Carpenter.

Speaking during a media briefing held today, senior executives of the reinsurance broker provided some colour on what the industry may be looking at, in terms of a major loss and catastrophe bill for full-year 2021.

Guy Carpenter’s executives highlighted some of the biggest catastrophe events of the year so far, including the US winter storms from the first-quarter, as well as European losses in the summer months, and most recently hurricane Ida.

While loss calculations are ongoing for many of the events that have occurred this year, Guy Carpenter’s execs noted that the July flooding in Europe, particularly affecting Germany and Belgium, is an event which the reinsurance broker now believes the market is moving towards a consensus estimate of EUR 10 billion for.

Add in hurricane Ida, which is set to be a large and also challenging catastrophe loss, and Guy Carpenter sees major loss activity as already having cost the insurance market over $80 billion in 2021 so far, including an estimate for the full Q3.

The chart below (shared during today’s briefing) shows that Guy Carpenter estimates the first-half of the year at below $40 billion in major industry losses. But that the broker believes the third-quarter (which it’s important to point out is ongoing) is already likely on-track to outpace the first-half, at more than $40 billion, up to perhaps $45 billion.

This perhaps suggest the broker is looking at a hurricane Ida estimate in the range of $25 billion to $30 billion, which is aligned with where many in the market are now looking at this recent event, especially with the inclusion of all flood insured losses from the storm.

Adding on a 10-year average major insured loss-load for the fourth-quarter, takes the total for 2021 to just below the $100 billion mark already.

With some weeks still to run in Q3, recent losses still to develop and see their estimates firmed up, and a whole quarter of as-yet unknown impacts ahead in Q4, it is easy to see how the insurance and reinsurance market appears well on-track to experience another $100 billion plus major and catastrophe loss year in 2021.