The Colombian city of Mocoa, in the Putumayo municipality, was struck by floods and landslides on March 31, and Moody's believes the natural disaster will be credit negative for Colombian insurers exposed to the region.

Total insured losses are expected to take months to accurately estimate, while the government believes the natural disaster will be one of the most costly in Colombia's history, according to a statement emailed on April 10.

Moody's already expects quarterly claims costs will be higher than expected. The rating agency noted Colombia's claims costs grew in 2016 linked to the La Niña phenomenon, wherein paid claims spiked annually to 51% of premiums, compared to 44% in 2015.

The rating agency said La Previsora S.A. Cia de Seguros' ability to absorb unexpected losses will be challenged, given the Colombian insurer's above-average property and casualty exposure in the region.

"However, most Colombian general insurers are relatively well prepared to manage an increase in losses without significantly compromising their financial strength. Industry wide, exposures in the affected region are generally small, and most insurers have strong reinsurance coverage," Moody's said.

The rating agency noted, in particular, that Seguros Generales Suramericana SA and Compañía Aseguradora have carried agreements with strong international reinsurers.