As the UK recovers from an unusually warm and sunny August bank holiday, Harvey continues its destruction in Texas. The videos on the BBC, CNN and other media outlets show the scale of the destruction, and it is still not over.
Reinsurers are of course anxiously watching events as they occur. Claims teams, loss adjusters, forensic accountants and even lawyers are gearing up on how to assist clients with the losses that will result. In these early days, speculation is of course dangerous. The precise facts are yet to emerge but the rush to press has been significant, companies keen to tell investors and markets what the impact is.
We have thus far already seen:
• The focus seems to be on the catastrophe covers in place, but query whether the real impact will be faced at a primary/facultative reinsurance level, in particular commercial property and BI losses?
• There are varying loss estimates (from low single digit $billions, to over $30bn);
• Tropical Storm? Hurricane? Or both?
• Causation issues: are the losses wind related, or storm surge/flood? Does the Addicks dam overspill influence the cause of the loss?
• How will the “hours clause” respond
As with similar prior natural disasters, it is far too early to answer any of these questions. The destruction is still ongoing, and it will take weeks before the true picture emerges. And when it does, like with many other natural catastrophes, understanding precisely what happened and when will play a critical role in determining coverage. We will continue to monitor and comment on developments on www.inceinsurance.com.