In­sur­ers fear $15bn hit from Hur­ri­cane Laura on top of Covid-19 woes

The Daily Telegraph - Business - - Business - By Michael O’Dwyer

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.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.