The past few years have been relatively quiet in terms of the number of hurricanes that have made landfall in the U.S., following the major problems caused as Hurricane Sandy rampaged up the East Coast in 2012 and did significant damage. Now, it seems that trend of quieter hurricane seasons will continue this year as well, and that's likely to be very good news for homeowners and property and casualty insurers alike.
All the evidence currently available from weather forecasters shows that "moderate El Nino conditions" are expected to persist over the entirety of the summer and into early fall, meaning that it will be very difficult for major hurricanes, or even tropical storms, to form in the Atlantic, according to a report from the Insurance Journal based on the latest analysis from Fitch Ratings. That, in turn, likely means that P&C insurers are not likely to face significant losses as a result of such storms, which will be good for their bottom lines going forward.
Christopher Grimes, a director for Fitch Ratings, noted that in general where tropical storms and hurricanes make landfall, as well as how strong they are when they do so, plays a major role in the size of the losses P&C companies generally face during this season, the report said. As such, even if only one or two major storms develop, there could be a significant issue depending on what part of the country they hit, as some may be more vulnerable than others. Overall, though, the risk of that happening seems minimal at this point.
What else could help the industry?
Moreover, it seems that the huge losses suffered in 2012 as a result of Sandy (and other storms) have generally served to better prepare the industry for similar incidents in the future, even if they're not likely this year, the report said. Many are now using capital markets as a means of protecting themselves from risk in the broader market overall.
Those in the property and casualty industry might want to consider if there are other ways in which they can shore up their insulation from risk, even if they don't necessarily need to do it next year. The more diverse the options in this regard, the more protected they may be from future incidents that could have otherwise served to put their bottom lines in peril.