Milton expected to shore up reinsurance rates

Insured losses from Hurricanes Milton and Helene are likely to stabilise reinsurance prices in the January 1 renewals, according to Moody's. 

The ratings agency said insured losses from Milton would rive catastrophe losses above $100 billion for the fifth consecutive year.

But barring another significant loss, annual catastrophe losses were expected to fall within budget, but they would knock earnings. 

Last week, Moody’s RMS Event Response said total private market losses from Hurricane Milton would be between $22 billion and $36 billion, with a best estimate of $26 billion.

"Earlier this year, it appeared that reinsurance pricing momentum had stalled," the agency said. "However, given the continued elevated level of insured catastrophe losses globally, we now think the large losses incurred from Hurricanes Helene and Milton will provide support for the stabilisation of property catastrophe reinsurance pricing going into the January 2025 renewals."

Moody's said it expected a "significant portion" of losses from Milton to be ceded to reinsurers, and it also expected them to maintain underwriting discipline by continuing to hold firm on terms and conditions in 2025. 

"This includes setting attachment points high enough to avoid frequency events and limitations on providing aggregate reinsurance coverages," the agency added. 

Helene and Milton would also test the efficacy of Florida’s legal reform efforts to reduce litigation costs that have plagued the state’s insurance market, resulting in the highest direct defence cost ratio historically in the US. The legislation eliminated “one-way attorney fees,” as well as the assignment of insurance benefits to third parties.

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