- 2025-05-07
- Posted by: kimsite
- Categories: Commentary, Insights, News
Click here to listen to the full interview.
IAN OLIVER: The first quarter of 2025 has set a grim record. According to a report by Gallagher, global natural catastrophe losses soared to at least $110 billion. This amount is nearly double the 10-year average for the period. Of that total, $56 billion was covered by insurers, marking a staggering 176% increase over the past decade. The historic wildfires in Los Angeles heavily contributed to these totals. And while the final numbers may rise, this marks one of the most expensive starts to any year on record. To discuss this further, let’s bring in Scott Martin. He’s the Chief Investment Officer at Kingsview Partners.
Scott, it’s always great to have you back. Tough subject here. These are rough numbers. Insurance prices have ballooned for millions of people across the country, and now we’re talking about this. So how does this impact the industry in the short term?
SCOTT MARTIN: Well, the short term probably gets pretty worrisome. I mean, Ian, I’ll tell you—if you look at these data points, you look at these storms that have happened, and look at the incidents—the sad part is the insurers and the reinsurers, by the way, the folks behind the insurers, they’re not reacting, I don’t think, Ian, to a one-off kind of event anymore—a bad quarter here and there.
I mean, yes, the data’s even worse—or the worst it’s been in 2025, as you noted there in the intro—but the reality is, they’re reacting to many, many quarters now of other big events that have happened in the recent year. So this is putting a big strain on the industry itself—and obviously a big strain, as I rhyme or rap here—a big strain up the chain as it goes back to the reinsurers who back the insurers, who then charge the customers and the clients their premiums.
IAN OLIVER: Right, right. That’s a really good point. I mean, these numbers, Scott, they’re skewed by the tragedy that played out to start this year out in L.A., but that was the latest in what have been so many billion-dollar disasters across the country.
How lasting are impacts like this? I mean, we’ve seen this across the board in a lot of spots—when prices go up on anything, it’s tough to get them back down.
SCOTT MARTIN: They usually don’t come back down, do they? And we’ve seen that—economically speaking, things we talk a lot about on Fox Business—about consumer inflation and things like that as it relates to products and services, or goods that you buy in the store.
How about these now, in insurance prices? And the sad thing too is that these big, big historical events, they are occurring every several quarters—or every couple quarters. So now the insurers aren’t just reacting to one event. They’re not just reacting to this big wildfire event. We’ve had several wildfires recently. This was the worst one, obviously, but we’ve had several recently that have popped up in California and in other places around the country, for example. So those names, or the numbers of which those are occurring quarter after quarter, are going up—and going up fast.
IAN OLIVER: And the piggy bank, it’s a bit light, right? The report suggests that the losses have already consumed a meaningful portion of the reinsurance budgets for the whole year.
And Scott, it makes me think of Florida. We know that with Helene, with Milton, you had folks that—hopefully the insurance made things right, or at least partially—but then it gets more and more challenging to get reinsured, or to keep the policy that you already had in place before those storms.
So what does that mean for the broader market?
SCOTT MARTIN: Sticker shock. It means that higher prices are coming. And you make a good point—the reinsurers have to reprice, just like the insurers have to reprice, the chances of some of these disasters occurring—and the probability of them occurring more frequently.
That’s the funny thing now—the modeling, if you will, the actuarial work that gets started at the reinsurer level goes through kind of the insurance level, basically to try to figure out how much it’s going to cost them to insure this, or how likely is a scenario or a situation like this to pop up, that happened in, say, the past.
And now these insurers—now these reinsurers—have to price for what’s called basically probability or possibility. They have to figure out, what’s the risk of some of these things—or something similar—occurring, or maybe something worse occurring than what we’ve seen already happening in, say, the near future, because of the frequency at which they’re popping up faster.
So that’s again, like you said, just a whole impact to the industry that’s going to be sticker shock down the road, because they’re going to have to reprice everything they’ve probably modeled on previously.
IAN OLIVER: Yeah. Scott, how much regionality is there in a setup like this? I mean, these are businesses—they’re trying to make money.
We know that there are spots that are more vulnerable to natural disasters, but overall, these are national companies—and I know that some have gone out of business, some have been strained considerably.
Does everybody feel this, to an extent, even if you don’t necessarily live in a trouble spot?
SCOTT MARTIN: You just might—because how about this: places that weren’t trouble spots previously in the last five years are now—guess what—trouble spots to some degree.
I mean, my goodness, that’s another scary thing, Ian, you brought up—is that businesses that have put, say, economic activity and things like that, like you said—a store, retail, whatever—in an area that was not a danger zone before, is now maybe in a danger zone now too, because of the fact that the weather has been so violent.
There’ve been so many random occurrences of bad events—but that does affect a lot of other companies. Because if those companies go away, then you’ve got other companies that maybe come in and try to set up shop there, but then they take on certain risks as well.
It just really throws off the economic ability of that area to continue to function. And so hopefully, what we end up having is maybe a lull in some of the rough events that have been going around—some of the impactful economic events. But if we don’t, I think you’re going to continue to see this happening—where you have people moving in, moving out, like I mentioned—the turnover and the cost of doing that going up as well.
IAN OLIVER: Yeah, it’s a great point. You have so many people that are feeling the strain, and with each passing one of these high-impact events, it gets harder and harder to keep things affordable for so many people.
So yeah, this is a conversation that we’re going to have to pick back up, no question—especially as we’re moving into another hurricane season now.
That’s the Chief Investment Officer at Kingsview Partners, Scott Martin. Scott, it’s always great to see you. Thank you.
SCOTT MARTIN: See you.
