Property and auto-focused insurance group, Progressive, has revealed a significant rise in catastrophe losses for the second quarter of 2023, driven by a surge in severe weather events across the U.S.
The company reported a total net catastrophe loss of $1.024 billion for Q2 2023, marking a substantial increase from the $528 million recorded during the same period last year.
Progressive disclosed that they were impacted by a total of 19 catastrophic weather events in the three months ended June 30, 2023. This figure reflects a slight decrease from the 23 events reported in the corresponding period of the previous year.
Similarly, the six-month data ending June 30, 2023, showed 43 catastrophic weather events compared to 34 events during the same timeframe in 2022.
The state of Texas, Florida, and Colorado bore the brunt of the severe weather, contributing to over 50% of the total catastrophe losses for the quarter.
Remarkably, despite these concentrated impacts, a total of 35 states were affected during the quarter, with 44 states experiencing catastrophic events in the first half of 2023.
To mitigate the impact of these losses, Progressive has strategically entered into a new aggregate excess of loss reinsurance contract.
The reinsurance coverage includes multiple layers, with the initial retention threshold ranging from $500 million to $575 million, excluding named tropical storms and hurricanes. The subsequent retention layer has a threshold of $600 million, covering named tropical storms and hurricanes.
The first and second layers of coverage offer protection up to $100 million and $85 million, respectively.
While Progressive currently stands below the annual retention thresholds of its 2023 catastrophe aggregate excess of loss program, the company anticipates exceeding a portion of these thresholds in the third quarter of 2023.
Upon surpassing the retention thresholds, Progressive’s reinsurance coverage will extend to cover non-named storm property catastrophe losses up to $100 million.