Bermuda’s reinsurers have been watching as the killer hurricane Ian marches over Florida after plunging Cuba’s entire population of 11 million people into darkness, collapsing the electrical grid and leaving massive devastation in its wake.

It seems certain that the sprawling storm will challenge 1992’s Hurricane Andrew for economic damage, as it continues to grow from a Category 3 storm.

The hurricane was just shy of Category 5 status as the eye made initial landfall on Cayo Costa, Florida, around 3pm yesterday, with maximum sustained winds of 150 miles per hour, according to the National Hurricane Centre.

It is estimated that the hurricane could bring a storm surge along Florida's Gulf Coast that could make some locations potentially uninhabitable for weeks or months.

Joe Petrelli, president of Demotech Inc, said while it could be a massive economic event, he believes Bermuda reinsurers will be able to take it in stride.

Demotech is an insurance rating agency headquartered in Columbus, Ohio, that focuses on independent, regional and specialty companies in the property and casualty insurance industry.

Mr Petrelli said: “The Bermuda reinsurers were quite selective in their pricing and choice of clients. I think for them it will be business as usual.

“They are probably the most professional group in terms of catastrophe responses so I don’t think it is going to be any surprise for them.”

A local reinsurance industry source told The Royal Gazette: “Everyone (Bermuda reinsurers) pulled back on Florida. A lot sits with the state run facilities and cat bonds, which attach pretty high.”

Industry authority, the publication Artemis, said this could be the first major test for the re-underwriting that insurance-linked securities fund markets have been undertaking over the last few years.

Artemis said this would have ramifications for ILS funds, structures and their investors.

But Mr Petrelli is certain this event will also harden the market further, driving reinsurance rates higher.

He said: “For January 1 renewals and beyond, this will be just another reason you can expect companies to increase pricing and control availability.

“The other wild card I’m afraid of is that there will be so many incidents created by Ian, that there will be an increased level of litigation that can be expected. It has been problematic in Florida for years.”

Mr Petrelli said that it will take some time after the event to get a full understanding from the various insurance companies he works with in Florida.

“We’ll want to be down there, but we won’t be able to try travelling for the next couple of weeks. Once the situation is under control, they will be having out of state traffic from catastrophe adjusters all over the country and of course, utility people dealing with power lines.

“They will have to clear the roads and remove a mountain of garbage that will have accumulated in very short period of time. So we will have to wait.”