Losses in Puerto Rico from Hurricane Ernesto are expected to be absorbed by the island’s domiciled insurers, according to industry rating AM Best.
Initial feedback from AM Best-rated insurers—though it is early in the claims process—indicates that property losses from the storm will be moderate and contained within reinsurance limits. It appears as though most of the damage is the result of storm surge and flooding, the latter of which is not covered by the standard homeowners’ policy.
Jason Hopper, associate director, Industry Research and Analytics at AM Best said there remains some uncertainty regarding business interruption losses due to widespread power outages reported in the country.
“Many unaffiliated domestic carriers that underwrite commercial policies and offer power-outage endorsements have stated that a good percentage of insureds do not pick up this endorsement,” AM Best said.
The rating agency said premiums in Puerto Rico had been flat for years prior to hurricanes Maria and Irma in 2017. Since, net premiums written have grown an average of 6% annually. Also, unaffiliated Puerto Rico-domiciled companies have accounted for a growing share of total Puerto Rico NPW. These companies had a 78% market share in 2023 compared to 68% in 2018. Additionally, premium ceded for the unaffiliated Puerto Rico-domiciled companies to reinsurance companies has more than doubled since 2017.
Photo: Broken electricity lines above homes damaged after Tropical Storm Ernesto hit Fajardo, Puerto Rico, on Aug. 14, 2024. Photographer: Jaydee Lee Serrano/AFP/Getty Images
Topics Catastrophe Natural Disasters Carriers Profit Loss Hurricane AM Best
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