Insurers fear $15bn hit from Hurricane Laura on top of Covid-19 woes
INSURERS could be hit with a bill of $15bn (£11bn) from the damage caused by Hurricane Laura, which battered Louisiana with winds of 150mph as it made landfall on Wednesday night.
The industry, which has already been knocked by a raft of claims relating to Covid-19, is also bracing for a financial hit from Californian wildfires that have put 100,000 buildings at risk. The hurricane, which matched record wind speeds from 1856, left more than 500,000 homes and businesses without power and could result in claims of $15bn, analysts at Wells Fargo said.
Fires raging on the west coast could cost the industry an additional $2bn to $15bn, analysts from UBS predicted.
The heavy losses come as insurers deal with the impact of Covid-19, which is set to be one of the industry’s biggest ever loss events.
The cost of paying out on Covid-19 claims could reach $107bn, according to Lloyd’s of London. The total effect could exceed $200bn after the pandemic-induced collapse in the value of insurers’ investments is factored in.
The majority of damage caused by Hurricane Laura is expected to be in Louisiana with about a fifth in Texas.
Insurers are expected to be able to afford to absorb the losses from Laura and the Californian fires but payouts will eat into the reserves they have earmarked for weather-based catastrophes.
Andreas van Embden, an insurance analyst at Peel Hunt, said: “Laura’s track moved through a high density of shallow water oil platforms and energy market losses may form a significant part of the overall insured loss.” As much as 80pc of oil output in the Gulf of Mexico was shut off in advance of the storm, pushing oil prices to fivemonth highs.
Reinsurance behemoths Munich Re and Swiss Re could face the biggest losses due to their large market share, UBS said. London-listed insurers Hiscox, Beazley and Lancashire are also expected to face claims.