Moody’s Analytics has now increased its estimate for the economic loss caused by hurricane Harvey to as much as $108 billion, reflecting an expectation that the insurance and reinsurance loss will rise further.
Moody’s Analytics had originally pegged the economic loss from Harvey at $75 billion earlier this week, but now raises its estimate to between $81 billion and $108 billion.
At the upper end of that range hurricane Harvey will be confirmed as the second most costly natural disaster to strike the United States, after hurricane Katrina which is now seen as a $175bn loss by Moody’s Analytics.
The analysts break down this economic loss projection as follows:
Homes: $45-55 billion
Commercial Property: $15-20 billion
Vehicles: $8-12 billion
Infrastructure: $5-10 billion
Total damages: $73-97 billion
Lost economic output: $8-11 billion
Total cost: $81-$108 billion
Interesting to note the size of the commercial property, auto and infrastructure loss, as a relatively significant portion of those losses could fall to reinsurance markets.
Meanwhile,. Corelogic has estimated the economic costs of residential flooding at between $25 billion and $37 billion, with around 70% of the total uninsured.
Of this figure the National Flood Insurance Program is estimated to take $6 billion to $9 billion of the loss, which puts the NFIP reinsurance program firmly in play.
Just $500 million of the residential flood loss is expected to be insured by the private market, according to Corelogic, while another $1 billion to $2 billion of insured residential property wind damage is also expected.
In total, the uninsured flood loss, so damage from storm surge and inland flooding not covered by any insurance policy, is estimated at $18 billion to $27 billion.
So Corelogic suggests a total residential property market loss that will fall to private insurance and reinsurance of just $1.5 billion to $2.5 billion, low for a Category 4 hurricane but with Harvey’s rains and floods the major cause of damage it is unsurprising for the protection gap to be so wide.
According to the NFIP, as of 2.30pm EST yesterday 31st August the federal flood insurer had received over 51,000 claims in Texas alone, a number that is expected to keep rising, having increased by 14,000 since the previous day.