Homeowners on the Atlantic Coast as well as home insurance companies in these areas may breathe a small sigh of relief at new hurricane predictions, and those in the insurance and reinsurance markets may find optimism in recent market trends, according to a report released this week by Kroll Bond Rating Agency (KBRA).
Colorado State University (CSU), one of the leading hurricane forecasters, is predicting “below average activity” for the 2018 hurricane season, having just revised its previous forecast, according to KBRA.
The CSU forecast predicts that 11 named storms will occur during this year’s hurricane season, which includes the months of June through November. Four of the 11 storms will be hurricanes, and one will be “a major hurricane,” according to CSU predictions.
“With the decrease in our forecast, the probability for major hurricanes making landfall along the United States coastline and in the Caribbean has decreased as well,” KBRA quoted the CSU report, which predicts two “major hurricane days for the entire season.”
However, there is a 39 percent chance of a major hurricane making landfall somewhere on the U.S. coastline, and “CSU always cautions that it only takes one hurricane making landfall to make it an active season for those residents,” according to KBRA.
This is not only notable to homeowners but also insurers and reinsurers as well, KBRA noted. “Hurricane landfalls, and not just the number of named storms, is the greatest concern for property insurers, reinsurers, and homeowners,” it said.
“Fortunately, the landfall probabilities for 2018 were significantly reduced from the April forecast and are well below the historical average,” the report said.
The catastrophe reinsurance market, which sells insurance for insurers, entered 2017 with pricing the lowest seen in decades and availability at all-time highs, according to KBRA.
While some predicted the losses incurred in 2017 would lead to price increases in the reinsurance market—as has often been the case in the past—this hasn’t quite played out.
In fact, the reinsurance and insurance-linked securities markets are performing well, according to research released by JLT Re, the fourth-largest reinsurance broker in the world, at the start of the month.
JLT Re noted “dedicated reinsurance capital at record levels despite biggest catastrophe loss year ever in 2017,” and characterized the reinsurance market as “awash with capacity.”