Global Nat Cat Losses Soar to $120 billion in 2024  October 22nd 2024

Global nat cat losses soar to $120 billion in 2024, Munich Re reports

Climate-driven events escalate, pushing insured losses higher

Global nat cat losses soar to $120 billion in 2024, Munich Re reports

Munich Re reports that from January to June 2024, the global average temperature was approximately 1.5°C higher than pre-industrial levels, with record-breaking temperatures occurring worldwide.

The rise in temperature has led to increased losses from natural disasters, particularly in Africa, where recent events highlight the need for the insurance industry to address climate change risks.

Global losses from natural catastrophes in the first half of 2024 amounted to $120 billion, with insured losses making up about half, or $62 billion. In its report, Munich Re suggests that, based on current figures, insured losses could exceed the $100 billion mark by the end of 2024, which has become a significant point of discussion since 2023.

Allstate reveals huge Hurricane Helene losses

Update includes implemented rates

The Allstate Corporation has reported its estimated catastrophe losses for September 2024, totaling $889 million before tax or $702 million after tax.

A significant portion of the figure – $630 million pre-tax – is attributed to the impact of Hurricane Helene. For the entire third quarter, catastrophe losses reached $1.70 billion, or $1.35 billion after tax. Year-to-date through September, Allstate’s catastrophe losses amounted to $4.55 billion pre-tax or $3.60 billion after tax.

In addition to the losses, Allstate conducted its annual review of its run-off property-liability reserves during the third quarter. The assessment resulted in unfavorable reserve reestimates of $58 million, or $46 million after-tax.

Notably, the insurer also implemented rate increases for its Allstate brand auto insurance. The adjustments led to a 2.9% premium impact in Q3 and a cumulative 6.3% for the year. The rate hikes included approvals from insurance regulators in New York, New Jersey, and Texas.

AG Brown Joins Coalition to Defend HUD's Anti-Discrimination Rule

Attorney General Anthony G. Brown has joined a coalition of 19 state attorneys general in filing an amicus brief urging a federal court to uphold the Department of Housing and Urban Development's (HUD) Discriminatory Effects Rule. This rule holds insurers and other parties accountable under the Fair Housing Act for housing practices that may have a discriminatory effect on individuals in protected classes, even if discrimination was not intentional. This form of discrimination, known as "disparate impact," is at the center of the case.

The homeowners insurance industry is challenging the rule, arguing that HUD should exempt them from liability when their state-authorized pricing and underwriting practices result in discriminatory effects. The insurers contend that federal fair housing laws should not apply if state-level insurance laws allow those practices.

In response, Attorney General Brown and his colleagues argue that HUD's rule is essential to preventing housing discrimination and that it complements state anti-discrimination laws in many states, including Maryland. They assert that the industry's request for a blanket exemption would undermine efforts to address discriminatory practices in the insurance market.

The coalition of attorneys general previously filed a similar brief in 2023, which the trial court acknowledged as "significant" in its decision to uphold HUD's rule. The current brief, filed with the U.S. Court of Appeals for the Seventh Circuit, continues to oppose the insurance industry's challenge.

Lawsuits Related to Non-OEM Parts, Insurers Suing Shops, Crash Reports See Court Activity

There was recent activity in five industry-related lawsuits as they proceed through the process in U.S federal courts around the country.

The Florida Supreme Court in September ruled that GEICO cannot sue an auto glass company in that state under the Florida Motor Vehicle Repair Act (FMVRA). Glassco, Inc., had originally sued the insurer over what it called “deeply discounted” reimbursement for insurance claims. GEICO countersued, alleging Glassco would have insured customers assign rights to all insurance payments for repairs without informing the customers what services would be needed.

A federal appeals court ruling in the case asked the Florida Supreme Court whether the FMVRA gives an insurer the right to sue the shop for failure to provide a written estimate. That court now has answered “no” to that question, saying the law in question focuses almost exclusively on the interactions between a “repair shop and the person who presents the car for repair.” It mentions insurers only once, relative to prohibiting substitution of used parts for new without notifying the insurer.

“GEICO concedes that it is not a ‘customer’ under the statute’s definition of the term,” the opinion said, and the FMVRA only gives a shop’s customer the right to sue. Glassco may have violated the FMVRA, the court said, but that doesn’t give GEICO a cause of action.

The ruling also said violations under FMVRA do not necessarily render “a subsequent repair invoice entirely void,” the other issue the appeals court posed to the Florida Supreme Court. The case now returns to the appeals court.MORE