Among executives, 87% said they were significantly or somewhat concerned about future SCS losses. (Credit: Sabphoto/Adobe Stock)
Insurance executives say severe convective storms (SCS) are the top peril impacting their balance sheets, according to a new American Property Casualty Insurance Association member survey.
Respondents ranked perils based on their impact on the company’s annual earnings after reinsurance recoveries. SCS ranked first, followed by fire (other than wildfire), natural catastrophes such as hurricanes and tropical storms, wildfire, and flood.
Among those surveyed, 87% said they were significantly or somewhat concerned about future SCS losses. Respondents said their primary risk transfer option for SCS losses is traditional reinsurance, which can come with high attachment points.
Insurance executives said they were open to other risk transfer options, which could help lower SCS-related losses. Among those surveyed, 63% said they would purchase aggregate working-layer cover if it were available, and 49% said they were investigating or might investigate that option.
“Obviously, insurance companies can go out and buy a traditional, property catastrophe tower to protect them against the severity of an individual loss,” said Jim Botsis, head of the Chicago office for reinsurance broker Acrisure Re, in a webinar launching the survey. “But the concern has always been what happens to all the net losses that a company can take, where it may be eroding their surplus. It is about making sure that you take your entire reinsurance program and put it together as a puzzle, so it works in a number of different ways for you.”
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