Three hurricanes came to town and altered lives, property and businesses. Hurricanes Harvey, Irma and Maria blew out an estimated 20 billion to 90 billion of insurance losses according to analysts.

To throw salt on the wound, the fires in Napa Valley and Sonoma County are being modeled by Moody’s at about a billion loss.

Prior to the hurricanes, 2017 premium revenue was lower and losses were trending higher. The hurricanes accelerated things.

Earnings of insurance companies and reinsurance companies will be severely impacted. Surplus accrued over the last 5 years will be tapped. Investment yields were low due to the interest rate environment, and now will be more limited with a depleted surplus base.

So what does this mean to you?

1. Insureds in affected areas could see double digit insurance premium increases, on par with the 10 percent increases post-2005 hurricane.

2. Certain insurance and reinsurance companies who had a concentration of risk in those areas may even need to raise new capital. Insureds of those companies may see premium increases over a longer period than one or two renewal cycles.

3. You should consult with your broker on possible rate impact on your program and discuss strategies to mitigate increases.

Despite all this, sector analysts are not expecting wholesale larger premium spikes nor sustained premium increases. Why? Competition was already vibrant and should continue. Where premiums become opportunistic, new insurance investments will mobilize capital to start competition.

I liken it to my experience of buying an air mask in San Francisco last week when the air quality was waffling between yellow and red alerts from the wine country wildfires. The store owner was charging .99, for a mask which normally sells for .99. This week, it is selling at .99. No doubt, short lived pricing that will likely decline again next week.

For additional information, and a discussion of the specific impact on your upcoming property and casualty renewal, please contact your Newfront broker.