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How has Harvey affected global reinsurance rates?

Global reinsurance rates are likely to remain low despite Hurricane Harvey’s impact on parts of Texas and Louisiana. Reinsurance provides some of the financial capacity for insurance companies.

The main differentiator between Harvey and other devastating US storms is the amount of flood damage Harvey has inflicted. This has had considerable impact on economic and insured loss estimates.

There are a number of factors affecting the potential size of these losses. Underinsurance plays a big part on the personal lines side. Not many people take out personal lines flood insurance, so this area is likely to see higher economic losses than insured losses.

Despite Harvey’s significant size, Fitch Ratings is not predicting a huge impact on pricing. Harvey is not large enough to cause a widespread turn in pricing, so global rates are likely to remain low.