Length of Business Interruptions Will Influence Hurricane Fiona Losses

A CLOSED sign hanging from a chain with black letters on white and blue stripe above and below letters

September 26, 2022 |

A CLOSED sign hanging from a chain with black letters on white and blue stripe above and below letters

Insured losses from Hurricane Fiona in Puerto Rico and the Dominican Republic should be manageable for affected insurers but will be influenced by the duration of business interruptions due to power losses, according to A.M. Best.

In a Best's Commentary, "Hurricane Fiona Insured Losses Depend on Recovery and Resilience," Best said the top 10 insurers in Puerto Rico account for more than 90 percent of the market share for auto, fire and allied lines, homeowners/farmowners, and commercial multiperil (property) lines.

Best said 2 of the groups are well-diversified multinational insurers, but 6 of the top 10 companies have 100 percent of their exposure concentrated in Puerto Rico. Those 6 insurers represent approximately 43 percent of the market share for the lines of coverage most at risk for sizable claims activity due to the hurricane, the rating agency said.

"It could take some time for claims adjusters in Puerto Rico to assess and estimate damages," David Blades, associate director, industry research and analytics at A.M. Best, said in a statement. "However, since Hurricane Maria in 2017, insurance companies on the island have taken significant action to manage their risk profiles better by tightening underwriting guidelines, sharpening risk management techniques, improving pricing, and getting significant rate increases. Furthermore, most losses will be flood-related and not covered by a standard homeowner policy. Those losses would fall under the National Flood Insurance Program."

The Dominican Republic experienced widespread flooding and property damage, with popular tourist destinations left without electricity, Best said. But a large part of the insurance portfolio in the Dominican Republic is concentrated in Santo Domingo, the country's capital, with less insurance distribution in regions where a greater impact from Hurricane Fiona is expected.

Copyright © 2022 A.M. Best Company, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

September 26, 2022