Analysts with investment and financial services company UBS Group AG have revealed earlier this week that Hurricane Dorian could cost the insurance industry losses of up to $25 billion.
UBS analysts updated their model to reflect a wider potential industry insured loss range of $5 billion to $40 billion, Reuters reported. UBS also raised its base case to $25 billion from $15 billion, with solvency capital at risk.
An earlier projection made by an analyst with Barclays Insurance put insured losses resulting from Dorian at around $30 billion or more.
According to UBS, the insurance industry thankfully had some breathing room since the last large catastrophe event – there were relatively few major disasters since Hurricane Maria, which allowed the world’s biggest reinsurers to maintain excess capital of $30 billion.
Hurricane Dorian has been declared the most powerful storm to make landfall in the Atlantic since the 1935 Labor Day hurricane, the National Weather Service noted.
UBS also projected that 2019 will see a total of $70 billion of natural catastrophe losses, noting that this staggering amount could erode excess capital and force reinsurers to raise their prices.