Lloyd’s of London says it is expecting net losses of $4.5bn (£3.4bn) on policies covering the Caribbean and Florida after hurricanes Harvey and Irma.
The world’s largest specialist insurance market forecast a surge in claims from wild weather events in the second half of the year following a benign first six months of 2017.
It said that low rates from strong competition had taken a toll on the industry and its own first half pre-tax profits, falling 16% to £1.2bn, and much higher natural disaster costs would also impact the final six months.
Lloyd’s said that its 80-plus syndicates had already paid out hundreds of millions to cover claims from Harvey and Irma – which destroyed much in their path across many islands over the past month.
Video: ‘Apocalyptic’ scenes on Irma-ravaged Tortola
Its chief executive, Inga Beale, hinted the net loss figure was likely to rise as it was based on “known exposures” and did not include the impact of the most recent storm, Hurricane Maria, which devastated Puerto Rico last week.
Analysts have estimated the cost of Maria to insurers could outstrip the $80bn forecast from Harvey and Irma combined.
Ms Beale said: “It’s not just the hurricanes but we’ve got the Mexican earthquakes, floods in Asia, typhoons in Asia.”
Video: Barbuda after Irma: Grand scale destruction
Shares in FTSE 100 insurers were up following the Lloyd’s trading update – suggesting investors were not spooked by the market’s predictions.
It issued its trading update as Thomson owner, Tui, maintained its forecast for a 10% rise in annual profits despite a surge in costs from the storms across many of its top holiday destinations.
It said its primary focus had been on supporting customers in resorts hit by Hurricane Irma.
While it did not provide a figure, a spokesman admitted it saw “lower double-digit” costs for cancellations, customercare and repatriation for holidaymakers across Florida, Cuba, the Dominican Republic, as well as some smaller locations like St Martin.
Video: Red Cross says ‘long haul ahead’ after Irma
Tui has around a million holidaymakers a year in the Caribbean alone.
Fellow travel group Thomas Cook said on Wednesday that 22,000 of its customers were in destinations impacted by Irma, with 15,500 from the UK.
Source: SKY News