Lloyd's of London boss: Hurricanes will cost $200bn - but that could help insurers

Emma Haslett
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Florida Prepares For Major Hit By Hurricane Irma
Hurricane Irma was bearing down on Florida this morning (Source: Getty)

As Hurricane Irma approached Florida this morning, the boss of insurance market Lloyd's of London has warned losses from the string of storms battering the US and Caribbean coasts this autumn could rack up losses of $200bn (£151bn).

But in an interview with the Sunday Times, Inga Beale said the sheer cost of the damage could serve to help insurers in the long-term.

“We had Harvey, which was an unusual type of storm with masses and masses of flooding. Then we have Irma, which we have said could cost $131bn, and then if you’ve got Jose and something else coming in behind it, you could end up with a series of events that could total $200bn.”

But she added that, "almost in a perverse way", the hurricanes could benefit the insurance sector, by allowing them to raise premiums and putting off competition, after firms including pension funds and other investors began offering protection against hurricanes and floods.

Irma bears down on Florida

Florida has declared a state of emergency as it prepares to be lashed by Hurricane Irma, which strengthened to a category four storm overnight.

Winds as fast as 160mph have been recorded on the northern coast of Cuba, according to the US National Hurricane Center, although the centre said it had measured winds as fast as 185mph.

Cost of catastrophes jump

‚ÄčA study by Swiss Re showed although the cost of disasters both natural and man-made jumped in 2016, insurance payouts were at average levels.

Natural catastrophes, including earthquakes in Japan, Ecuador and Tanzania, wildfires in the Canadian province of Saskatchewan and a hailstorm in Texas, which caused $3.5bn of damage as tennis ball-sized blocks of ice fell onto homes and cars, cost $175bn in 2016, 85 per cent higher than the year before.

But insurance claims fell back to average levels of just below a third of total damage, at $54bn. That put the gap between losses and the amount insured, known as the protection gap, at $121bn.

Read more: Irma set to land insurers with a bigger bill than Harvey

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