Insurance and reinsurance broker Aon has said that hurricane Eta has likely caused around $550 million of insurance market losses in the United States, but its economic toll in Central America was significantly higher.
Hurricane Eta struck and caused extensive losses in Nicaragua in November, also impacting Honduras and Guatemala in Central America.
The hurricane then crossed the Caribbean and made landfall in south central Cuba as a tropical storm.
In total, Aon’s Impact Forecasting estimates that total economic losses in Central America from hurricane Eta were almost $7 billion, the majority of which were not covered by insurance or reinsurance given the still low penetration rate of coverage in the region.
Eta moved on to make two landfalls in Florida as a tropical storm, driving locally heavy rainfall and flash flooding, storm surge, and tropical storm-force wind gusts across the state.
Hurricane Eta has been ignored by the risk modelling companies, who typically put out loss estimates for most hurricanes and tropical storm events, but haven’t for this storm.
However, Aon said that total U.S. economic losses are estimated at around $1.1 billion, with roughly half of this, so around $550 million, expected to fall to public and private insurance coverage.
Hurricane Eta was a more costly event than expected it seems, as many had been anticipating the insurance market impacts to be below $200 million, including NFIP claims.
November also saw Central America slammed by a second major hurricane, as Hurricane Iota became the first Category 5 hurricane of the 2020 Atlantic Season on November 16th and struck Nicaragua on the same day.
Extensive impacts were seen in Nicaragua and Honduras, with damage was compounded as many localities were still recovering from the impacts of hurricane Eta, Aon said.
Total economic losses from hurricane Iota are expected to reach $1.25 billion, again, the majority not being covered by insurance or reinsurance.
Aon’s Impact Forecasting also highlighted super typhoon Goni from November, which became the strongest storm at landfall in recorded history.
Damage was widespread, with economic losses to agriculture and infrastructure alone were estimated at PHP20 billion ($415 million), but the overall economic toll only expected to approach $1 billion and insurance unlikely to play a particularly significant roll in covering the loss it seems.
Michal Lörinc, catastrophe analyst for Aon’s Impact Forecasting team, commented, “While not historically one of the most active months for tropical cyclones, November 2020 set multiple records. Most notable was the landfall of Typhoon Goni in the Philippines, which unofficially came ashore as the strongest landfalling global storm on record. Hurricanes Eta and Iota became two of the fastest-intensifying storms in the Atlantic, and Iota was the latest-forming Category 5 storm on record for the basin. While 2020 storms have not set any new financial loss milestones, the scientific records serve as a reminder of the risks posed to both developed and emerging markets.”
The two hurricane landfalls in Central America and typhoon Goni both show that insurance penetration remains too low in those regions and there is much more work for the industry to do, in providing affordable coverage to cover peole and businesses.
November also saw more U.S. severe weather losses, after four notable outbreaks brought strong straight-line winds, tornadoes and large hail, with economic losses estimated to exceed $1 billion.
In total insurance market losses in the United States from hurricane Eta and severe weather looks like it drove at least another $1.2 billion of impacts in November 2020, potentially exacerbating some reinsurance deductible erosion.