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Fires in California : the insurance will be less accessible ?

by

Hubert Roy

November 19, 2018 13:30

Photo : NASA (Joshua Stevens) – NASA Landsat 8 Operational Land Imager

The insurers are strong enough to fill the losses related to fires that ravage California, believes Standard & Poor’s. But will they have an appetite to take risks in the future, you ask ?

The analysts of the firm of notation, note that the issue of pricing of insurance has always been a touchy subject in the state the most populous in the United States. A bit like in automobile insurance in Ontario, the regulatory framework is strict. The insurers are limited as to the premiums that they may require, including to climate related disasters.

Stephen Guijarro, analyst of S&P, also believes that the insured losses of the fire Camp and Woolsey will be lower than those recorded a year ago in northern California, even if these two fires have already done nearly 80 dead, a record for this state, and that 1 000 people are missing. Aon also noted that more than 20 000 buildings have been destroyed by the fires.

3 insurers at risk

S&P, for its part, targeted three insurers that have a strong presence in the regions affected by fire : AIG, Chubb, and Farmers. This last insurer has met a few pitfalls over the last few quarters, the rating of financial strength with a negative outlook. In spite of all, S&P believes that the insurers will fare without too much difficulty.

Aon reminds us that the war treasure of the reinsurers is vast. In September 2018, Aon estimated $ 630 billion of the capital reserves held by reinsurers around the world.

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