2017 has taken some big hits when it comes to natural disasters, not in numbers but in size and the ferocious time scale of them all. Harvey was followed in quick succession by Irma and Maria, it was all too quick, leaving thousands of communities with no home, water, and food for weeks.

The rebuilding of these communities relies on insurance, fundraising and the generosity of kind people. No one really knows what will happen in the future, The Huffington Post has stated; “What happens next determines whether people in post-hurricane regions will experience vulnerabilities that increase the likelihood for human trafficking such a migration, a flux in population, a fractured local infrastructure, cripples law enforcement, and un-or under-monitoring of temporary worker visas during the rebuilding process.”

Places affected where they are more financially stable such as Florida, who was hit by hurricane Irma, have made an extraordinarily fast recovery with seriously damaged areas such as Key West already back on its feet less than a month after the hit. However, areas in Puerto Rico, where they were already suffering from a financial crisis, are still without drinking water, showing just how big the gap is.  

The only real figures that we can see coming through are the impact the hurricanes have had on the insurance market. According to Dominick Hoare, the chief underwriting officer of Munich Re’s syndicate at Lloyd’s, wrote on LinkedIn, “Lloyd’s has announced a net incurred loss of $4.5bn for Harvey and Irma”, Maria is yet to be included in the figure. These figures are having a domino effect on the reinsurance market as capital bases are bled dry. However, since this statement, Lloyd’s has recalculated the net claims estimates for Harvey and Irma to $3.9 million, $900 million for hurricane Maria and they are said to have already paid $900 million in claims out for the three hurricanes.

It’s not just Lloyd’s taking a hit, The Financial Times reported, “The wider impact of the losses on the industry is becoming clearer as insurers have updated investors on their exposure in recent weeks. This week SCOR, the France-based reinsurer, put its exposure at €430m.” They go on to say that analysts have only managed to halve the potential losses thanks to retrocession; the insurance that reinsurers buy.

This is the case for most companies it seems, survival through retrocession. Although looking again at Dominick Hoare, and you will see a less rosy outlook. “There will be a material number of (re)insurer failures,” predicts Hoare. “And in addition to many (re)insurers will have to retract their underwriting due to capital constraints.”

No matter the outcome, Lloyd’s looks to remain stable, Jon Hancock, Lloyd’s Performance Management Director, said, “This is a developing situation and there continues to be a high degree of uncertainty around any claims estimate.” He goes on to say; “The devastation caused by these disasters will certainly have an impact on the reinsurance sector as a whole. It also serves as a reminder to all companies that, even in a highly competitive market, they must maintain adequate and sustainable pricing for the risks they are insuring.” As Lloyd’s is built for times like these, we can be confident that they can meet the claims without too much damage to their overall capital. However, what these hurricanes have been, is a lesson to ruthless reinsurance companies that risk bonds aren’t to be taken lightly as Mother Nature is impossible to predict.

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