P&C industry well-positioned to take on 2013 hurricane season: Fitch

The insurance and reinsurance market has enough capacity available to withstand potential hurricane-related losses in the United States this year, according to Fitch Ratings.

In the eighth edition of the firm’s annual hurricane season desk reference, Fitch said that pricing for the U.S. property business exposed to hurricane risk has generally improved following losses from Superstorm Sandy and Hurricane Isaac last year.

“The emergence of losses related to these events has been a catalyst for positive pricing movement in the primary U.S. property insurance market, specifically in regions and lines of business with significant catastrophe exposure,” the company said.

“However, in the reinsurance space, catastrophe reinsurance pricing, particularly in the higher profile Florida market, continues to be dampened by an abundance of underwriting capacity and growing competition from alternative reinsurance products.”

Continued low interest rates, combined with reinsurance companies using alternatives to the traditional risk transfer market, has allowed for significant growth in new capital from third-party investors, Fitch said.

“The process of insuring higher catastrophe-exposed areas, including Florida, continues to evolve as insurers of high-risk property test the waters of alternative risk transfer,” it added.

Overall, the property and casualty industry in the U.S. is well positioned to take on catastrophe losses from hurricane events, Fitch said.

The National Oceanic and Atmospheric Administration has forecast an active or extremely active Atlantic hurricane season for 2013, with an above average number of named storms.