Hurricane Milton will change the strategic future of the property catastrophe market, according to one ILS expert.

Chris McKeown, chief executive of reinsurance ILS and innovation at Vantage Risk, said: “I thought we had retired the word ‘unprecedented’ after the last pandemic, but this is an unprecedentedly large storm, and it is defying a lot of expectations from meteorologists and scientists.”

Speaking at the ILS Bermuda Convergence 2024 Conference, Mr McKeown said the storm will be a sizeable event for Florida residents and for people in the Sunshine State’s insurance industry.

He said Hurricane Milton will prove the continued high relevancy of the insurance industry.

“Maybe we will not be as relevant as we should be in terms of covering loss, whether it is because of federal aid structures or because of non-take-up of insurance,” he said.

But he said there are a lot of risks in the world today.

“We need to start thinking about capital and access to that capital on a broader basis,” Mr McKeown said. “Milton will be yet another reminder of that.”

He added that his firm’s strategy is demand-driven.

“Where we see more capital coming in and prices being compressed because of supply, we find other ways to sell product,” he said. “Where the counterpart has more in demand in the last few years has happened to be more of an aggregate product.”

He said at the beginning of this year’s hurricane season the forecast predicted it would be active in the Atlantic and very quiet in the Pacific.

“That has not been the case,” Mr McKeown said. “I do not know if the meteorologists have figured out why that is.”

He said that early hurricane predictions have limited usefulness for a variety of reasons, including that they come too late for insurers, who write 60 per cent of their portfolio exposed to North American wind in January.

And early hurricane season forecasts do not come out until April and May.

“By that time you are already 60 per cent down the road,” he said.

Mosaic Insurance cofounder and co-chief executive Mark Wheeler said the insurance industry is in really good shape at the moment, as he considered the need to stay relevant, manage complex risks and provide capacity.

“I read recently that 25 cents of the dollar on commercial insurance is placed in the US surplus lines market,” Mr Wheeler said. “There is a clear emergence of managing general agencies operating in the space. It would be hard to argue against both of those factors being strong contributors to product growth in the past, especially in niche areas.”

However, he said, the industry has not been great at addressing these species of risk, but is “pretty good” at evolution.

“If you take a product like cyber, none of the coverages are new,” he said.

Mr Wheeler said when cyber launched 25 years ago the main issue was data privacy. That evolved into business interruption, then fraud risk, then ransomware.

He said 25 years ago he would have been sent to the library to read up on the various risks to formulate an opinion.

“Now at least, we have got an empirical and objective analysis around which we can put forward cases of capital applications,” Mr Wheeler said.

“We are doing bonds, insurance, arbitration, default and all things that didn't exist two years ago. There is plenty of risk opportunity to address out there, which is exciting.”