Palomar Insurance Holdings, the speciality California-headquartered insurer that provides largely catastrophe exposed property products, has said that it expects its reinsurance program to respond to the losses it will face from winter storm Uri’s impacts in Texas.
Texas was the state hardest hit by winter storm Uri’s freezing weather, with significant impacts to properties and also a significant business interruption loss expected, given the shutting down of electrical and gas utilities by the storm and the knock-on effects that will have.
While catastrophe risk modelling specialist Karen Clark & Company estimated the insurance and reinsurance market losses from the winter storm event in the United States at around $18 billion, the company had said that it anticipated more than half of the loss coming from the state of Texas.
Palomar has a significant footprint in property insurance in Texas and so considers itself particularly exposed to the impacts of this winter storm event.
Mac Armstrong, Chairman and Chief Executive Officer, explained, “I would like to address the severe weather activity throughout the country this past week, specifically Winter Storm Uri in Texas where Palomar has a considerable market presence. I want to tell our policyholders in Texas that our thoughts are with them, we stand ready to support them and we are here to help them rebound.”
Armstrong went on to explain that the company is well-protected by its reinsurance program, to help it pay its claims in Texas from the winter storm.
“Palomar has substantial resources in place to support both residential and commercial policyholders in Texas, including comprehensive reinsurance coverage on both an excess of loss and quota share basis,” Armstrong said.
Adding that, “Both our commercial and residential quota shares will apply to this event from the first dollar of loss, and as such we do not expect to incur material losses from the storm.”
As a result, it appears that any reinsurance capital backing Palomar’s quota shares will participate in the losses the carrier faces from winter storm Uri.
While its excess of loss reinsurance also remains available, should the losses from the winter storm reach its attachment point.
However, Palomar’s per-occurrence reinsurance tower covers wind events, attaching excess of $10m of losses and providing $600 million of shared cover. But it’s not immediately clear if this tower covers named winter storms as well. If it does, it seems likely to be triggered, given the size of the industry loss event.