Shares in European reinsurers fell today as assessors counted the cost of a hurricane that hit Florida on Friday, but analysts said industry changes meant the impact will be far less damaging than Hurricane Andrew in 1992.
Hurricane Charley killed 16 people and left thousands homeless as it swept over south west Florida on Friday with winds of up to 233 kilometres per hour.
Hurricane Andrew caused losses of at least $22 billion 12 years ago and since then government funding pools have been set aside to reduce the exposure insurers face.
Munich Re said it expected to have claims in the low €3-million range from Hurricane Charley. Total industry exposure was likely to be between $7-$14 billion, it added.
Rivals Swiss Re and France's Scor fell 2.1 and 1.9 per cent, respectively, while Zurich Financial shed 1.1 per cent and Converium lost 4.2 per cent.
Although some insurers and reinsurers were likely to suffer losses in the short-term, the longer-term impact may be good, analysts said.
"There will be a negative impact on the second half earnings, but the effect on the insurance industry for next year should be to hold rates at a higher level than would otherwise prove to be the case," British stockbrokers Bridgewell said in a note.
"It is for this reason that we believe that companies are unlikely to rethink their interim dividends, to be announced next month."