An opportunity in catastrophe

I recently attended a highly valuable meeting with QBE Insurance where I learned some emerging trends in the US insurance market. Effectively, the US insurance market is not pricing in risk appropriately. There has been no landfall Category 4 hurricane (the second highest classification) in the last decade. The last decade that this has happened was 1841 to 1851. This has seen many market participants price risk inappropriately through lower reinsurance rates. We think if a serious hurricane hits landfall it will cause repercussions throughout the insurance industry. This will be advantageous for appropriately provisioned insurance companies like QBE as they can potentially capitalise on players getting themselves into trouble.