OCTOBER 07, 2020 01:57 PM (EDT)
Best’s Commentary: Hurricane Delta Likely to Exacerbate Mexico Insurers’ COVID-19-Disrupted Claims Handling
|Elí Sánchez |
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FOR IMMEDIATE RELEASE
MEXICO CITY - OCTOBER 07, 2020 01:57 PM (EDT)
AM Best expects insurance companies operating in Mexico to withstand the impact of Hurricane Delta because of their strong reinsurance programs, although claims management could be a challenge given restrictions on mobility already hampered by the COVID-19 pandemic.
In a new Best’s Commentary, “Hurricane Delta Makes First Landfall in Yucatan Peninsula,” notes that Hurricane Delta passed by or over important Mexican tourist sites on the Yucatan Peninsula such as Cancun, Cozumel and Progreso. Mexico’s insurance industry retains approximately 15% of insured catastrophe exposure, with insurers tied to large financial institutions in the country holding around 30% of that net premium. Companies with this risk profile generally have strong reinsurance programs to face the effects catastrophes may have on their balance sheets. Insurers in Mexico partially have mitigated the drop in revenue this year because of the pandemic with lower claims frequency, but if retentions affect underwriting, the bottom-line results of some companies could be pressured. Hurricane Delta also has the potential to activate the Mexican Government IBRD/FONDEN catastrophe bond that was issued in March 2020; in particular, the USD125 million tranche of Class C notes.
AM Best will provide an update related to potential impact on the U.S. insurance industry as Hurricane Delta approaches the United States. To access the full copy of this commentary, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=301855 .
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.