With Hurricane Wilma's possible insured loss impact still to be determined, one analyst said he thought if Florida escaped with damage under $7 billion, the larger insurance marketplace would be unaffected.
At the same time, his firm and another company noted that recent natural catastrophe events show insurers must look closer at their underwriting.
Donald Light, senior insurance analyst in the San Francisco office of Boston-based Celent, the research and consulting firm, said if Wilma damage to Florida were limited to "five, six or seven billion [dollars], I don't think it's a market-moving event."
Mr. Light said that assuming the hurricane season ends with no more major hurricanes making U.S. landfall, "I don't think the market as a whole will see a lot of change other than firming of price or stopping of new sales."
However, he said if the weather "is not kind" and "you get a bunch of regional and reinsurance companies failing," there could be a wide-ranging effect on insurance availability and price.
The industry, he noted, began this year with strong capitalization and underwriting profitability that it had not seen in 25 years, which was the best of circumstances for a year in which the nation was buffeted by catastrophes.
Mr. Light said this week's quarterly report by Allstate that it sustained an after-tax net of reinsurance catastrophe loss of $3.06 billion is a "sobering reminder that while the strongest insurers can weather this hurricane season, the industry as a whole must reassess what risks it understands well enough to underwrite successfully."
In a similar vein, Risk Management Solutions in Newark, Calif., said it had published a report emphasizing that the effects of Hurricane Katrina and the New Orleans flood, with estimated insured losses in excess of $34 billion, will lead to an increased focus on controlling exposure to other super-catastrophes.
RMS said its "Hurricane Katrina: Profile of a Super Cat" reports that leading companies will work with catastrophe modeling firms and internal and industry consultants to develop an agenda of important actions and priorities, including:
o Multiline accumulation management.
o Improved accuracy of exposure data.
oMore differentiated analysis of individual risks.
o A strategic view of hurricane activity.
o More holistic view of extreme events.
In Florida, Bob Lotane, a spokesman for the state's chief financial officer, Tom Gallagher, noted that despite four hurricane events in the state last year and even though Allstate and Nationwide have stopped renewing policyholders Florida, "we've had six new companies come into the state in the past year."
Most, he said, have taken business from Citizens, the state's insurer of last resort, and those policies, he advised, "are mostly on the coast."
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