US insurers brace for Idalia claims, UBS estimates $9.36 billion cost in Florida
investing.comBy Noor Zainab Hussain, Chibuike Oguh and Jonathan Stempel
(Reuters) -Insurers were expected to face claims for billions of dollars from Hurricane Idalia which made landfall in Florida on Wednesday, adding to a challenging year for the industry that could result in higher premiums for customers.
Hurricane Idalia plowed into Florida's Gulf Coast with fierce winds, torrential rains and pounding surf before weakening but turning its fury on southeastern Georgia, where floodwaters trapped some residents in their homes.
In Florida, UBS bank estimated average insured losses of $9.36 billion with a 50% chance of losses of over $4.05 billion and a 10% likelihood of losses of $25.6 billion, based on Aug. 28 data. The wide range reflected potential changes in the storm's intensity and path.
At about $10 billion, Idalia would cost insurers less than 10 of the costliest hurricanes to hit the United States.
Global insurers are facing a challenging 2023 as reinsurers hiked rates on key types of coverage by as much as 50% from July 1, blaming sharp losses from the Ukraine war and increasing wildfires and hurricanes in states such as California and Florida.
«Historically, what happens when you have these hurricanes is that everyone gets worried about the liability following the hurricane,» said Thomas Hayes, chairman and managing member of Great Hill Capital LLC in New York, adding that insurers typically end up being able to raise prices after such events.
The impact could have a knock-on effect on reinsurers, which insure insurance companies, and have been raising rates in recent years because of steepening losses that industry players partly attribute to the impact of climate change. Higher reinsurance rates can affect the
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