Massive storms, wildfires and other catastrophes wreaked havoc on communities, the economy and the insurance industry in 2018. But they won’t be enough to drive up property-reinsurance prices in 2019, brokers and executives say, the Wall Street Journal reported. Reinsurers provide insurance to other insurers, covering losses from disasters if damages reach a certain contractual threshold. Natural and human-made catastrophes caused an estimated $79 billion in insured losses in 2018 and $150 billion in 2017 — the worst two-year period on record, according to Swiss Re. In the past, large disasters would typically trigger a wave of price increases through the industry. But as negotiations for 2019 contracts progressed over recent weeks, insurers appeared less willing to pay reinsurers more for property-catastrophe coverage. “Reinsurers are trying to push the pricing, which is similar to what they did last year, but I don’t think they’re going to be able to get it,” said Kapil Bhatia, managing director at Raymond James & Associates. The reason is an oversupply of capital. Pension funds, endowments and other large investors seeking diversification and higher returns have plowed billions into catastrophe bonds and other insurance-linked securities over the past decade, allowing insurance companies to turn elsewhere for help paying claims after hurricanes or earthquakes.
