With Tropical Storm Debby now making its way up the Southeast Coast, insurance carriers are not only keeping an eye on their customers, they're also looking at their own protection. "We expect a majority of insured losses to fall within primary insurers' retentions under their reinsurance coverages," James Eck, vice president and and senior credit officer at Moody's Ratings told PropertyCasualty360.com. "Primary insurers are retaining more risk this hurricane season as the threshold for policy coverage moves higher, with primary companies taking on more of the loss burden from reinsurers for small to midsize catastrophe events." The National Weather Service said Debby could potentially cause catastrophic flash and urban flooding, life-threatening storm surge, and strong winds across portions of north Florida and as it tracks along the Southeast coast over the next couple of days. "The slow-moving system is expected to cause extreme flooding over the southeastern United States," Ming Li, head of Catastrophe Modelling at Acrisure Re, said in a prepared statement. "The heavy rainfall across southeast Georgia and the coastal plain of South Carolina through Saturday morning could result in historic, catastrophic flooding." Eck said the first $25 million in losses from Debby are kept by the primary insurer, "but the next $25 million in losses are ceded to the reinsurer." "If the insurer has $45 million of gross losses from the event, its net loss is just the $25 million," he added. "Primary insurers buy property catastrophe reinsurance to protect their own capital. It's difficult to say if weather events like this are getting worse, but there has been a significant increase in the total insured values of property in areas prone to hurricane and flooding over the past 20 to 30 years. As a result, the insured losses from these events are much higher than they would have been years ago." Heavy rainfall will likely result in considerable flooding in northern North Carolina, portions of the Mid-Atlantic and southern New England through Sunday morning, according to the National Weather Service. Debby is expected to produce potentially historic rainfall totals of 10-20 inches, with maximum amounts of 25 inches. For personal insurance, Eck said flood insurance is not required by a mortgage lien holder unless the property is in a FEMA-designated flood zone, in which case the flood insurance is provided by the National Flood Insurance Program. "There are likely to be some flood losses that are not covered by insurance," he added. "For commercial property policies, it will depend on the contract language and whether floods are a covered peril under each policy. Historically, a significant amount of economic losses arising from flooding events are not covered by insurance."     See also:

• How insurers are positioned to respond to the 2024 hurricane season
• Early forecast calls for 'well above-average' 2024 hurricane season
• The costliest hurricanes to hit the U.S.