U.S. property insurers face more than $5 billion in second-quarter disaster-related claims as bad weather such as extreme rain in the Midwest and New York weigh, the Wall Street Journal reported Monday.
These preliminary loss estimates could potentially push the industry to an underwriting loss, the paper said.
While insurers continue to reduce prices, the property-claims services division of the Insurance Services Office reported there has been 15 weather-related catastrophes since April 1, resulting in more than one million claims for a total of around $5.5 billion, according to the Journal.
"Catastrophes" involve events that incur more than $25 million in insured losses and cause major disruptions, the Insurance Services Office said.
These include tornadoes, severe storms, hail, flooding and wildfires.
The third quarter for insurers is usually more costly as it is prone to environmental disasters, especially hurricanes, the Journal reported.
Insurers' profit margins have been squeezed of late, as a soft pricing cycle over the past two years has pushed some insurance policy premiums down by double-digit rates.
The Property Casualty Insurers Association of America, which represents around 40 percent of insurers, reported an industry wide combined ratio of 99.9 percent for the first quarter, which means that losses and expenses ate up virtually all the premiums collected in the quarter.
Insurers may take reserves based on what they expect eventual claims to be, possibly boosting second-quarter loss revenues even more, Don Griffin, vice president of personal lines insurance for insurers association told the Wall Street Journal.