Press Release - AUGUST 30, 2019
Best’s Commentary: Intensifying Hurricane Dorian Poses Significant Threat to Florida’s Atlantic Coast
FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 30, 2019
On its current path, Dorian will threaten parts of the Bahamas and the Southeast U.S. over Labor Day weekend. After making landfall, the storm is expected to pose prolonged danger to Florida and its surrounding region that may last days, with potential for the storm to re-emerge in the Gulf of Mexico.
The Best’s Commentary, titled, “Intensifying Hurricane Dorian Poses Significant Threat to Florida’s Atlantic Coast,” notes that home and auto losses have the potential to be substantial, particularly if the storm moves across central and southern Florida. However, it is too early to determine the impact of this event on Florida’s personal lines segment, which has been pressured by escalated losses associated with the Assignment of Benefits (AOB), although recent legislation may temper its impact going forward.
Many of the local, Florida-only property insurers that are significantly exposed to catastrophes affecting the state are not rated by AM Best. For the most part, the Florida regional companies rated by AM Best maintain appropriate levels of capitalization and purchase significant catastrophe reinsurance protection. The reliability of these programs was most recently tested by Hurricanes Irma and Michael, which was the first Category 5 hurricane to make landfall in the continental U.S. since Hurricane Andrew in 1992.
Florida’s commercial insurance segment is likely to experience significant claims for both direct property losses and business interruption if Dorian makes landfall with the forecasted intensity, particularly if it continues to move at a relatively slow pace.
As for reinsurers, there remains too much uncertainty to reasonably estimate the financial impact to rated reinsurers at this time. AM Best believes the impact will greatly depend on the ultimate track and characteristics of the storm, cedents’ retention levels, as well as the amount of losses absorbed by third-party capital.
AM Best expects Dorian to be more of an earnings event, as balance sheets are extremely strong and have been stress-tested sufficiently to absorb extreme losses. AM Best will continue to monitor closely the financial impact of Hurricane Dorian on the entities that it rates and will provide updates on ratings as necessary.
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=289327 .
AM Best is a global rating agency and information provider with a unique focus on the insurance industry.