Hurricane Dorian threatens significant storm surge losses

If hurricane Dorian makes landfall on the Florida coastline at Category 3 or Category 4 strength, it potentially puts tens of billions of dollars of residential property at risk of storm surge damage.

Update, Sep 2nd: Hurricane Dorian slammed the Bahamas as a significant Category 5 storm. The forecast for Florida remains uncertain though, with hurricane force winds, storm surge and torrential rain likely for much of the coast, but any shift west in Dorian’s path set to bring larger impacts. Our latest here.

Catastrophe modeller and data analytics specialists Corelogic said that as much as $206.7 billion of residential property reconstruction cost value is at risk from a Category 4 hurricane Dorian landfall in Florida.

Our latest on hurricane Dorian can be found here.

A slightly weaker Category 3 hurricane Dorian landfall in Florida still exposes around $145 billion of residential property reconstruction cost values, while a Category 2 is around $77 billion of property reconstruction cost value at risk from the storm.

However, it’s important to note that this is the total property exposed in the cone of hurricane Dorian and only the reconstruction cost value (RCV) exposed to storm surge risks.

It doesn’t take into account damage to residential property from hurricane force winds, or rainfall, the likely tornadoes that will be seen, or flooding should hurricane Dorian slow and stall.

It also doesn’t take into account the damage that could occur much further inland, from wind, rain and flooding, which with some forecasts showing hurricane Dorian making landfall as a major Category 3 or 4 storm on Monday and then turning north up the peninsula still as a hurricane by Tuesday or even sustaining hurricane force winds into Wednesday, means these figures are useful in terms of immediate storm surge impacts around the landfall area, but don’t give a full picture of the potential loss.

In reality storm surge damage will be concentrated around the landfall site and then lessen the further away from it you get, typically, meaning that while there is over $200 billion of RCV within the cone that is exposed, the actual amount that gets hit will of course be much lower.

For the insurance, reinsurance, insurance-linked securities (ILS) and catastrophe bond market, the contribution of storm surge to overall industry losses tends to sit in the 10% to 30% range, we understand, depending on factors around the location of landfall, timing with the tides etc.

The latest National Hurricane Center (NHC) forecast warns of a “life-threatening storm surge” with the potential to raise coastal water levels by as much as 10 to 15 feet above normal in areas affected by onshore winds in the northwestern Bahamas, as hurricane Dorian approaches.

With Dorian forecast to continue intensifying and expand as it proceeds, then make an almost direct beeline after the Bahamas towards the Florida coast, the potential for a growing hurricane to push up a significant storm surge cannot be discounted.

The NHC also noted that, “The risk of life-threatening storm surge along portions of the Florida east coast has increased, although it is too soon to determine where the highest storm surge will occur.”

It’s still too soon for storm surge forecasts from the NHC, but when they do emerge risk modellers will be able to get a far better handle on just how significant the surge could be. Timing with the tides is also key here, as a peak storm surge from a Category 4 hurricane Dorian landfall at high tide, could be devastating for the regions worst affected.

Also read:

– Hurricane Dorian analogues show $11.3bn to $37.2bn industry loss range: RMS.

– Cat bonds trade on hurricane Dorian, but uncertainty reigns.

– Hurricane Dorian stronger, forecast worse, loss estimates say up to $25bn.

You can always visit our 2019 Atlantic hurricane season page for the latest and we will update you as new information is reported to us.

For details of every catastrophe bond every issued visit the Artemis Cat Bond Deal Directory.