Insurers and reinsurers are watching the weather after Hurricane Iris hit the Caribbean.
They are concerned that a major storm could cause critical claims on their weakened reserves.
Hurricane Iris, classed category four after reaching 140mph, swept across the Caribbean, hitting Jamaica, the Dominican Republic, Belize and central America and causing structural damage and massive flooding.
FM Global executive vice president Ruud Bosman said the industry would be relieved when the US storm season ended in mid-November.
Group director of underwriting and claims at Royal & SunAlliance, Rick Hudson, said the first-line reinsurers hit by the World Trade Centre tragedy would not necessarily be dragged down by a hit from a natural disaster. He predicted some reinsurers would pull out of the property sector, but said most would hang on.
His worry is that smaller, second-tier insurers may collapse because the pool of money will dry up.
"Second-tier insurers still draw water from the same reinsurance pond as first-tier insurers and they might find it difficult to get reinsurance capacity," he said.
GAB Robins' director James Peace said the company's catastrophe coordinator was liaising with GAB's North American catastrophe team, based at Fort Lauderdale, and would send UK experts if requested. He said US insurers were waiting anxiously to be able to ascertain the severity of the hurricane.
"If you look back, other than the events on September 11, the major events in the US property market have been hurricanes," Peace said.
Bosman estimated reinsurers would bear at least 75% of the loss, at a time when they had not posted good results for some years.
"Insurance companies will focus on their ability to buy reinsurance," he said. "If they can't buy appropriate reinsurance, they'll change their products. They'll limit liability, especially in catastrophe-prone areas, and they'll make sure the accumulation stays within the scope of their own balance sheet."
Bosman said insurers would also study the financial stability of reinsurers even more closely.
