According to AM Best’s industry rating, losses in Puerto Rico from Hurricane Ernesto are expected to be covered by insurers based on the island.

Initial feedback from AM Best-rated insurers – although it is still early in the claims process – suggests that property damage from the storm will be moderate and within reinsurance limits. It looks like most of the damage will be from storm surge and flooding, the latter of which is not covered by standard home insurance.

Jason Hopper, deputy director of industry research and analysis at AM Best, said there remains some uncertainty regarding business interruption losses due to the widespread power outages reported in the country.

“Many independent domestic insurers who write commercial policies and offer power outage supplementary insurance have stated that a large percentage of insureds do not take up this supplementary insurance,” said AM Best.

The rating agency said premiums in Puerto Rico had been flat for years before hurricanes Maria and Irma in 2017. Since then, net premium income has grown an average of 6% annually. Additionally, non-affiliated companies based in Puerto Rico have a growing share of total net premium income in Puerto Rico. These companies had a 78% market share in 2023, up from 68% in 2018. In addition, premiums ceded to reinsurance companies for the non-affiliated companies based in Puerto Rico have more than doubled since 2017.

Photo: Broken power lines above homes damaged after Tropical Storm Ernesto hit Fajardo, Puerto Rico, on August 14, 2024. Photographer: Jaydee Lee Serrano/AFP/Getty Images

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Disaster Natural Disasters Carrier Profit Loss Hurricane AM Best