Up to Friday evening hurricane Hermine is estimated to have caused an insurance and reinsurance industry loss approaching $500m, with economic loss approaching $1 billion, according to catastrophe risk management and modelling firm Karen Clark & Company (KCC).
It’s very early days for an estimate of insurance industry losses from hurricane Hermine, as the storm which is now tropical again continues to impact the U.S. southeast and is expected to have much larger impacts along the Atlantic eastern seaboard throughout this weekend.
KCC calls its early estimate of insured and economic losses a ‘flash estimate”, which likely acknowledges the fact that it is very early in Hermine’s life to assess damages yet.
The estimate suggests that as many as 50,000 claims are likely, which KCC says will be primarily from residential property and autos lines of business, across the states of Florida, Georgia, North Carolina and South Carolina.
KCC also notes that Hermine is expected to cause damage typical for a Category 1 hurricane, including power outages and destruction due to falling trees, which can be a significant issue in the area of Florida where the hurricane came ashore. Additionally, damage from coastal flooding is expected along with low-level damage from tropical storm and hurricane force winds to roofs and siding, KCC says. As of 4:00 pm EDT Friday, there were over 250,000 customers without power in Florida and Georgia, the company explained.
KCC agrees with the prospects for the Atlantic coast, saying that Hermine could “potentially stall off the coast of New Jersey on Sunday.” That is the dangerous scenario that we highlighted on Friday here and the meteorologists prognostication is not improving at this time, a major storm still with tropical characteristics is expected off the New Jersey shore by the majority of weather models.
In fact some meteorologists are anticipating that Hermine will strengthen again to hurricane force off the coast, pushing a “life threatening” surge and coastal flooding into bays and the New Jersey shoreline. Already Hermine has strengthened back to 60mph winds, as of 03:00ET Saturday.
The scenario that is developing for the eastern seaboard will exacerbate any insurance or reinsurance industry loss. However it is uncertain whether Hermine could make another landfall in that area, or remain off shore and the distance offshore will matter when it comes to impacts along the coastal regions most affected.
Whatever the eventual scenario, insured losses will still be manageable by an industry characterised by ample capital, even if a scenario similar to Sandy played out, but prolonged impacts on the coastline do mean larger insurance losses and hence greater chance of reinsurance payouts.
Keep watching the weather models to track Hermine this weekend.
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