Swiss Re Insurance-Linked Fund Management

Original Risk: A Society for Change Agents

Reinsurance broker Holborn puts Sandy industry loss estimate at $30 billion


The estimates of re/insurance industry losses from hurricane and superstorm Sandy continue to rise with the latest, and largest to date, loss estimate coming from independent reinsurance broker Holborn. So far the highest insured loss estimate has been from risk modeller RMS who said they believe Sandy will result in losses of $20 billion to $25 billion for insurers and reinsurers. Reinsurance broker Holborn believe that insured losses could be higher, saying they believe the toll could reach as much as $30 billion.

Holborn’s estimate is now the highest estimate of losses given by an organisation for the insurance and reinsurance industry from hurricane Sandy. Holborn explains the rational for the higher loss estimate as due to the unusual nature of the storm and the amount of unmodelled loss that will eventually hit the re/insurance markets. Holborn says Sandy is proving a challenge for risk modellers and that estimates of personal lines losses might be higher than reality, while estimates of commercial lines losses may be too low.

Holborn said that they believe that commercial flood insurance take-up is higher than modellers have allowed for so far. They also believe that personal lines losses may have been over exaggerated due to complicated fall-out post-Sandy and confusion over where some flood losses should be attributed.

Holborn also suggested it could be many months, or even over a year, before the final loss total from Sandy is known. They have seen a lot of complicated claims which will not settle quickly.

Out of the potential $30 billion in industry losses Holborn said that they believe that the reinsurance market will pick up between $5 billion and $10 billion of the bill while primary insurers will retain between $15 billion and $20 billion of losses.

Here’s a reminder of the other main insured loss estimates as they stand currently:

EQECAT at $10 billion to $20 billion

RMS at $20 billion to $25 billion

PCS initial estimate at $11 billion

AIR Worldwide at $16 billion to $22 billion

Register today for ILS NYC 2023, our next insurance-linked securities (ILS) market conference. Held in New York City, February 10th, 2023.

Artemis ILS NYC 2023 - Insurance-linked securities conference in New York City

Get a ticket soon to ensure you can attend. Secure your place at the event here!

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.