Weather-related losses are plaguing the U.S. insurance industry as unexpectedly fierce hail storms sweep across the country. Weather affects multiple corners of the insurance market, from auto insurance, to homeowners insurance, depending on what gets damaged. Insurance professionals expected the adverse weather to have an affect on the market, but the fiscal damage is just now starting to become quantified.
The Travelers Companies Inc. reported a 10.4% drop in second-quarter profit, following an increase in higher catastrophe weather-related losses. According to Reuters, Travelers informed them that those losses, net of reinsurance, rose to $403 million in the second quarter, from $333 million a year earlier, mainly due to wind and hailstorms across the United States.
The Travelers Companies Inc. is simply the first major insurance provider to report their concrete numbers from the previous quarter. Industry analysts expect other insurers like American International Group Inc, Allstate Corp, Hartford Financial Services Group Inc and Arch Capital Group Ltd to report similar losses as their numbers are released in the coming weeks.
Reuters spoke with Aon Benfield meteorologist, Steve Bowen, about the recent surge in bad weather, and he reported that there was no sign of it stopping anytime soon. According to the Reuters article, Steve said that “A steady stream of storm systems that trigger hail and fierce winds has traveled out of the Rocky Mountains and into parts of the central and eastern United States…A warmer-than-usual Gulf of Mexico has also helped fuel storms.”.
While adverse weather is, of course, factored in for most insurance companies, the frequency and proximity to major urban centers of the 2017 weather patterns have already set this year apart from years past. The urban proximity has drastically raised the fiscal toll of the weather.
What does this all mean? For the average American consumer, not much. The only real effect on the average joe would be a modest raise in insurance premiums in some of the most affected regions.
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