HAMILTON, Bermuda - An Insurance-Linked Securities (ILS) expert is predicting that Hurricane Milton, which caused widespread damage as it made its way through Miami on Thursday night, will change the strategic future of the property catastrophe market.
Florida has been reeling from insurance problems for years, including spikes in premiums for homeowners and insurers retreating completely from the state. There are fears that a major storm like Milton could erase any progress and send the market into a tailspin.
“I thought we had retired the word ‘unprecedented’ after the last pandemic, but this is an unprecedentedly large storm, and it is defying a lot of expectations from meteorologists and scientists,” said the chief executive of reinsurance ILS and innovation at Vantage Risk, Chris McKeown.
He told delegates that attended the ILS Bermuda Convergence 2024 Conference that ended here on Thursday, that the hurricane, which at times has been classified as a category five storm, will be a sizeable event for Florida, the state’s insurance industry and may well define the continued high relevancy of the insurance industry.
“Maybe we will not be as relevant as we should be in terms of covering loss, whether it is because of federal aid structures or because of non-take-up of insurance,” he said, adding “Milton will be yet another reminder of that.”
McKeown noted that at the start of the 2024 Atlantic Hurricane season, the forecast was that it would be active in the Atlantic and very quiet in the Pacific.
“That has not been the case. I do not know if the meteorologists have figured out why that is,” he said, adding that early hurricane predictions have limited usefulness for a variety of reasons, including that they come too late for insurers, who write 60 per cent of their portfolio exposed to North American wind in January.
