Hurricane Harvey will cost insurer Hiscox PLC (LON:HSX) at least US$150mln in claims the insurer warned, adding 2017 will be an ‘expensive year’ for the industry due to the run of natural catastrophes.
Hiscox said its estimate was net and based on an insured market loss of US$25bn but was within its expectations for claims from an event of this magnitude. Reinsurance protections for the group were substantially intact.
Harvey sparked widespread flooding in Texas around Houston and has been followed by Hurricane Irma, which swept through the Caribbean before hitting Florida.
Another major storm, Hurricane Maria, is now threatening the Caribbean.
Hiscox has two principal areas of exposure to Harvey through reinsurance business and insurance lines, including flood cover for homeowners and businesses.
It is the first major hurricane to hit the US mainland for 12 years.
Bronek Masojada, chief executive, said its priority was to pay claims as quickly as possible, though Harvey had highlighted the lack of flood cover for large parts of the US market.
"2017 will be an expensive year for natural catastrophes but the industry can cope. Insurance remains a cyclical business and after a long period of price reductions, insurance rates in the affected areas and in specific sectors such as large property are likely to increase.
“In the wider global insurance market for large risks, we expect rates to stabilise and begin to increase."
Shares eased 1% to 1,238p.