Best’s News & Research Service - February 19, 2021 05:32 PM (EST)
Best’s Commentary: Texas Insurers Face Potential Record Catastrophe Losses From Winter Storm Uri
- February 19, 2021 05:32 PM (EST)
Oldwick //BestWire// - AM Best believes that Winter Storm Uri and the damage it is causing in Texas and surrounding states may lead to record first-quarter property catastrophe losses for the insurance industry.
According to the Best’s Commentary, “Potential Record Catastrophe Losses for Texas Insurers Due to Winter Storm Uri,” this severe weather event and resulting power outages have created significant and immediate health and shelter concerns, with additional near-term challenges for homeowners, property owners and businesses, along with significant difficulties for personal and commercial lines insurers servicing Texas residents and businesses. AM Best believes the heaviest volume of claims will be in the homeowners, commercial property and auto insurance lines of business. Some insurers are part of the industry’s largest organizations, but others are smaller carriers whose profitability is likely to be impacted significantly by losses, depending on the adequacy of their reinsurance coverage. Additionally, 10 insurers’ entire commercial multiperil property portfolio is Texas-based; as a result, these insurers acutely are exposed to a multitude of potential losses, including ones derived from broken pipes that cause water damage or from businesses that deal with perishable goods.
Industry observers believe the ultimate damage and volume of claims stemming from insured losses will be substantial, as will the stress brought to bear on the state’s infrastructure, number of available contractors and associated resources could be substantial. According to the commentary, the first quarter of the year is usually the most benign quarter of the year for property catastrophe losses. However, Winter Storm Uri could potentially become the costliest winter weather event in Texas history. Although power has been restored to millions, 13 million, or nearly half of the state residents, do not have access to clean, running water at the time of this writing.
AM Best will continue monitoring the statements and financial results filed by rated insurance entities to determine whether the financial strength of any entity is affected to such a degree that its current ratings or rating outlooks may need to be reassessed.
To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=306185 .
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.