Analysts at Goldman Sachs believe that a hurricane Milton insurance industry loss of above $25 billion will be sufficient to change the pricing narrative for property catastrophe risks at the end of year reinsurance renewals.They note that still loss projections are coming in a very wide range, with anything up to triple digit billions still projected by model runs.As hurricane Milton’s forecast track has shifted slightly south of Tampa Bay it is easy to think the worst case scenarios may be off the table.But there remains significant uncertainty and, with wind shear expected to influence the storm and expand its wind field, there could still be wobbles in the path and fluctuations in still major hurricane Milton’s direction and impacts.

Which makes it challenging for the insurance, reinsurance, catastrophe bond and insurance-linked securities (ILS) industry to know just what kind of financial impact to expect still.As we reported earlier, .We also reported that .

While catastrophe bond fund manager , with the corresponding hit to the cat bond market anything from zero to as much as 15%.All of which drives home the still substantial uncertainty in the eventual losses hurricane Milton will bring, with the precise landfall locations, size of the storm, heights of storm surge that run onshore and the path across Florida all set to define the eventual impacts.What is clear at this stage is that hurricane Milton remains an extremely dangerous storm for west-central Florida coastal communities and those in its path as it moves inland, so it is to be hoped that evacuation orders are being followed.

But also becoming increasingly clear is the fact the losses it does drive will have the potential to be market-moving.Goldman Sachs analyst team said that hurricane Milton has the potential to change the trajectory of future property and property catastrophe reinsurance pricing.While also having meaningful implications for the Florida insurance marketplace and those companies most active in it.

The Goldman Sachs analysts said, “We think that a $25bn+ storm starts to change the pricing narrative that we had previously laid out for reinsurance property CAT (mid-single-digit rate decrease at 1/1/25 absent material incremental CAT losses), while all implications for that FL property insurance market are unfavorable for a state that has been heavily impacted by insurance increases in recent years.” Adding that, “Insurance brokers likely benefit from stronger pricing all-else equal, while insurers are impacted by yet another year of total annual catastrophe losses well-in-excess of $100bn.” Homeowners insurers could take the biggest share of losses, as well as their reinsurance panels, the analysts believe, followed by commercial lines and personal auto carriers.Exactly how losses fall depends on the eventual passage across Florida and its intensity, as well as the storm surge peak heights and locations.Hurricane Milton remains a dangerous Category 4 storm with 155 mph winds and is still expected to push across Florida while retaining its hurricane wind speeds, so the path inland could be just as critical to the eventual industry loss as the landfall location is, it seems.

At greater than a $25 billion insurance industry loss, hurricane Milton would take annual catastrophe losses well above the $100 billion level again, it seems, as third-quarter global losses are seen into the $30 billion range by some analyst reports we’ve seen and first-half were estimated above $60 billion.That should serve to steel reinsurer and ILS manager resolve for maintaining attachment points at higher levels and to be less flexible on price at the January 2025 reinsurance renewals, suggesting thoughts that a slight softening would be seen in property cat may now be less likely.– .

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