Speaking at the 2017 Bermuda Reinsurance conference, organised by S&P Global Rating and PwC Bermuda, panelists suggested that the catastrophes could affect the roles of traditional reinsurers and alternative capital, ultimately giving reinsurers greater pricing power.
Although this would not be immediate, speakers suggested that it would be a good thing for both primary insurers and reinsurers.
Jim Fiore, president at Equator Reinsurance, a subsidiary of QBE Insurance Group, said: "I think it's clear everybody wants to see pricing go up."
He added: "Everybody will benefit, and the market's going to move in that direction."
Fiore noted that it is important for market players to try to sell products that buyers of coverage want, not just those they want to sell.
He said: "There's a price for everything, and you can sit at a table and figure out whether you want more coverage or less coverage at a particular price. We need to have that dialogue about what the right price is."
S&P added that the events won’t necessarily affect the creditworthiness of US property and casualty insurers, as the sector is well capitalised with high surplus levels.
Beyond this, however, the ratings agency said reinsurance pricing will likely increase for the affected regions and business lines. Before the events, S&P expected a rate decline of 0 to 5 percent, however it is currently forecasting a 0 to 5 percent rate increase.
Accumulated losses will affect the earnings of US property and casualty insurers. S&P was already anticipating an industry combined ratio of over 100 percent, “primarily due to competitive pricing, auto woes, and a diminishing reserve cushion in our baseline forecast”.
The ratings agency said: “We assume most property and casualty insurers' initial catastrophe budgets in the first nine months of the year have already been exhausted.”