Insured Losses from Hurricane Milton Expected to Hit Both Primary Insurers and Reinsurers

A new report from Moody’s highlights the significant insured losses expected from Hurricane Milton, which made landfall in Sarasota County, Florida, on October 9 as a Category 3 hurricane. The storm caused extensive damage from wind, flooding, storm surges, and tornadoes, impacting both personal and commercial lines. The report warns that losses are likely to hit both primary insurers and reinsurers, especially as the scale of damages grows.

Moody’s explains that Florida is a high-risk area for property catastrophe reinsurance, and the widespread damage could lead to significant losses being ceded to reinsurers. Although reinsurers have tightened their terms and raised prices in recent years, they still face potential financial strain if Hurricane Milton’s losses penetrate higher reinsurance layers. Strong financial performance in the first half of the year may help mitigate the impact for some reinsurers, but if losses reach the excess layers, combined ratios for catastrophe-heavy insurers could rise by year-end.

The report concludes by suggesting that if aggregate losses from the hurricane season significantly burden the reinsurance sector, prices during the 2025 reinsurance renewals may increase to attract sufficient capacity to meet demand.