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East Coast flooding could add up to $10B to Hurricane Ida claims, Scor exec says

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East Coast flooding could add up to $10B to Hurricane Ida claims, Scor exec says

Flooding on the U.S. East Coast caused by Hurricane Ida could add between $5 billion and $10 billion to industrywide insurance claims, according to Scor SE's nonlife reinsurance head.

Jean-Paul Conoscente, CEO of Scor Global P&C, told analysts at the French reinsurer's Sept. 8 investor day that the Ida claims bill had two elements the wind losses suffered in Louisiana and the subsequent East Coast flooding. Conoscente said Scor estimates that the Louisiana wind element will cost the market between $20 billion and $25 billion, while RMS's recent insured loss estimate for Ida of between $25 billion and $35 billion "aligns with our view of that loss."

He noted that the East Coast flood losses would be shared between the U.S. government's National Flood Insurance Program and the private market.

In addition to Ida, the insurance industry has also been hit in this quarter by heavy flooding in Europe in July, impacting Germany in particular. Conoscente said the German Insurance Association had recently raised its loss estimate for the country to €7 billion and that "we believe this number will continue to go up." He noted that Scor's estimate for the flood loss in Germany was between €8 billion and €8.5 billion and the event in total would be "closer to a €10 billion market loss," making it "the largest insured loss in Europe over the last 15 years."

Conoscente said it was still too early for Scor to give precise estimates of its own losses for Hurricane Ida and the European storms, but noted that the company's market share in the U.S. "tends to be 1% or below" judging from past events. The reinsurer's market share in Europe tends to be larger, he added, and that given the size of Scor's industrywide loss estimate "it will be a three-digit loss" to the company.

On the life side of its business, Scor is also facing continued mortality claims from the coronavirus pandemic mainly driven by the U.S. Scor Global Life CEO Frieder Knüpling said while the reinsured population is more likely to be vaccinated and continued to be less affected than the general population, "it must be said it is a very uncertain time with many questions remaining."

Scor is now expecting 400,000 COVID-19-related deaths in the U.S. for full-year 2021, up from its previous estimate of 280,000, with 150,000 deaths in the second half adding to the first half tally of 250,000, Knüpling told analysts. He said the impact on the technical result for Scor's life business would be €5.5 million to €6.5 million for every 10,000 deaths in the U.S. general population. This is down from previous guidance of between €7 million and €8 million, with the reduction caused by the recent life retrocession deal with Covéa.

However, Knüpling said previous pandemics had a positive effect on long-term mortality as people became more conscious of their health, and technological advances, including the development of mRNA vaccines, were improving outcomes. "All of those things are giving us much comfort that in the long term, COVID will be more positive than negative when it comes to mortality," Knüpling noted.