Hurricane Harvey isn’t likely to trigger ratings downgrades for individual property and casualty insurers, according to Fitch Ratings.

The ratings agency said that it saw indications that Harvey would be “an earnings and not capital event for the industry.”

“We believe a large portion of economic losses will be uninsured or covered by the government’s National Flood Insurance Program (NFIP), as losses are likely to be more heavily flood-related than wind related,” Fitch said in a commentary. “Fitch-rated insurers typically have capital positions that can withstand significant catastrophe losses and their ratings incorporate an expectation of some catastrophe losses for insurers with known catastrophe exposures.”

Fitch predicted that personal-lines insurers would probably see less substantial insured losses from homeowners’ coverage than in past hurricanes because homeowners’ policies don’t usually cover flood damage. However, Fitch said insurers would likely see significant auto insurance claims, since flood damage is included in comprehensive auto coverage.

Insured losses from Harvey are also likely to tip more toward commercial lines than in past hurricanes, Fitch said.

“Flooding from Harvey has led to closures of broad transportation networks and numerous office and manufacturing facilities in the Houston area that will last for an indeterminate period, and property damage and lost business income will take some time to estimate,” Fitch said.

However, flood risk for homeowners is almost entirely covered by the NFIP.

“Figures from the NFIP indicate that most homes in counties affected by Harvey do not have flood insurance, but the event is still expected to generate a meaningful loss for the organisation,” Fitch said.


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