Hurricane cover shortfall

This is what happens when you start meddling in the insurance markets for short-term political gain — the markets dry up and blow away. In the Gulf and southern states likely to be affected the situation is thus:

• Primary capacity is down by an estimated 30-40%
• Traditional RI capacity is down by about 10%
• There have been cutbacks in the State reinsurance fund
• Capacity from hedge funds has dropped by about 30%

Net result? If they can get it at all, putative insureds are seeing rate hikes of anywhere between 20% and 100%.

If we have a hard hurricane season, the whole area could get a severe stress testing.