 "Debbie, Tropical Storm Debbie")
Representative image. Photo: Reuters
U.S. property and casualty insurance stocks tumbled Monday after Hurricane Milton strengthened to Category 4 strength on its way to Florida’s west coast, making it yet another costly disaster for the industry to cover this year.
Insurance companies are expected to face billions of dollars in catastrophe-related claims due to the devastating hurricane season.
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Catastrophe losses refer to the significant financial damage suffered by insurance companies due to large-scale natural or man-made disasters.
These events have been on the rise in recent years, causing significant damage to profits through extensive property damage, business interruption, and large liability claims.
The United States has already dealt with multiple major hurricanes in 2024, including Hurricane Debbie, which hit Florida in August, Francine, which made landfall in Louisiana in September, and most recently Hurricane Helen, which hit Florida in the same month. There is.
The S&P Insurance Select Industry Index fell 2.44% on Monday.
Increased losses
Severe and frequent natural disasters have exacerbated the industry’s retreat from high-risk areas, especially Florida.
Reinsurance costs are also rising rapidly in the state, increasing operating costs for insurance companies.
Michael Ashley Shulman, partner and chief information officer (CIO) at Running Point Capital Advisors, said, “Investors are not only concerned about short-term revenue hits, but also from increased weather changes and seasonal damage.” “We’re also thinking about the long-term impact this will have on the business.”
“While there has been little impact on credit ratings in the short term, if extreme weather events keep people away, it could impact long-term revenue models,” Schulman said.
Florida was preparing for its largest evacuation since 2017 on Monday as Milton, heading for the West Coast in the wake of devastating Hurricane Helen, gathered strength in the Gulf of Mexico. It could affect the areas already destroyed by Helen.
Heritage Insurance, which has a lot of influence in the state, was last down 27%. Universal Insurance and HCI Group fell 14% and 16%, respectively.
Insurance broker Aon said in a report late Sunday that it is too early to gauge the exact scale and location of the biggest impacts, but parts of Florida’s west coast are at increased risk of life-threatening storm surge and wind damage. said. Peninsula begins Tuesday night or early Wednesday morning.
Sector standard bearer Travelers Companies was last down 3%, while Allstate and Assurant were down 3.3% and 4%.
First published: October 7, 2024 | 10:40 PM IST
