Hurricane Dorian insured losses could reach up to $8.5bn, RMS estimates

Hurricane Dorian may ultimately result in an impact to the insurance and reinsurance industry of up to $8.5 billion across all territories affected by the storm, according to catastrophe risk modelling specialist RMS.

The risk modelling firm had already pegged the industry loss from hurricane Dorian’s impacts to the Caribbean and Bahamas alone at between $3.5 billion and $6.5 billion.

Now, RMS has released an estimate for the United States insurance industry impacts of Dorian at between $500 million and $1.5 billion, while damage suffered further north in Canada could add another $500 million.

That makes the insurance and reinsurance market wide loss range $4 billion to $8.5 billion from RMS, which includes all impacts to the U.S., Canada and the Caribbean including Bahamas.

This compares to estimates of between $1.5 billion to as much as $3 billion of insured losses for the Bahamas and Carribean from AIR Worldwide and Karen Clark & Company’s (KCC) estimate of a total industry impact of $5.23 billion of losses from hurricane Dorian.

As we explained last week, there is not anticipated to be any impact from hurricane Dorian’s losses to catastrophe bonds at this time, although there was a mark-to-market impact that dented some cat bond funds August returns.

However, there is expected to be some exposure and potentially attritional impact to other ILS and collateralised reinsurance structures, but this is likely to be minimal at the loss estimate ranges published so far.

RMS’ latest estimate for hurricane Dorian’s losses includes insured impacts from wind and storm surge damage across the U.S., including losses to the National Flood Insurance Program (NFIP).

Jeff Waters, Senior Product Manager, RMS North Atlantic Hurricane Models, commented, “While Dorian caused material damage in several states, the overall impact to the U.S. could have been much worse had the storm taken a different track. We were fortunate that the majority of Dorian’s damaging winds and storm surge remained offshore as it tracked along the U.S. coastline, before weakening, and eventually making landfall in North Carolina.”

RMS expects that once the full economic impact is understood, the insured losses from hurricane Dorian will only constitute a fraction of the total bill.