Hurricane Florence impacted the Carolina’s right through the weekend, with a damaging storm surge, hurricane or tropical storm force winds and feet of torrential and prolonged rainfall that has severely flooded the region.
Hurricane Florence was destined to be more of a water threat than wind after the storm weakened before landfall and slowed down. But tropical storm force winds for around 48 hours, a 10 foot storm surge and the extreme levels of rainfall have left severe damage in the storms wake.
The shift to a water focus meant that the higher level projections of insurance and reinsurance industry losses around the $20 billion mark, which had been mooted when a Category 4 landfall was possible, are no longer expected.
But still, there are projections of wind damage in the low single digit billions, storm surge damage also in low single digit billions, while private flood insured losses could also be in the low billions and then the NFIP losses layered on top.
Suggesting a provisional assumption that there could be a level of insurance and reinsurance impact for the private market of up to $10 billion, from wind, surge and private flood policies, with the NFIP losses additional to that.
Following a Category 1 landfall hurricane Florence has been impacting the coast with a prolonged storm surge that has caused significant coastal damage, as it slowed and stalled, followed by extreme rainfall and flooding that spread inland.
NOAA said that catastrophic and historic river flooding continues across the Carolina’s, with cities like Wilmington particularly badly hit, and other major urban areas such as Charlotte also experiencing severe flooding.
Many parts of North and South Carolina are now impassable by car, with a significant number of road closures due to swollen rivers across the region. The flood threat is expected to continue through the coming days. With river levels still set to peak in some places, the dangerous flood situation will continue through the next day or so.
Catastrophe risk modeller RMS said that the rainfall equates to a 1,000-year return period.
The company explained:
An initial analysis of rainfall return periods from the RMS flood team, using yesterday’s rainfall forecast, shows that many areas in southern North Carolina may experience rainfall equating to over a 100-year return period (RP) and localized areas of rainfall exceeding the 1,000-year RP. A weather station in Atlantic Beach, North Carolina has already recorded a total of 12.73 inches (323 millimeters) for a 24-hour period.
On the storm surge RMS said:
Up to ten feet (3 meters) of storm surge is being experienced in some areas along the coastline, including New Bern, Edenton, Jacksonville, Wrightsville Beach, and Beaufort, all in North Carolina. Authorities in the city of New Bern (pop. ~30,000), North Carolina, reported that at least 200 people had been stranded by storm surge and had to be rescued. A gauge in the Neuse River near the town of Oriental indicated the water was four feet (1.2 meters) over flood stage and more than five feet (1.5 meters) above normal levels. Current projections of surge call for widespread areas of three to six feet of surge above ground, with some areas anticipated to face surge more than six to nine feet above ground.
The risk modeller explained that impacts from hurricane Florence would last for several days, “It is the sheer amount of rainfall and the risk of storm surge, together with the glacial pace in Florence’s movement means that severe conditions will be prolonged for several days.”
The rainfall continues, with local emergence management teams saying that the danger from flash flooding could persist for some more days under the path of the now remnants of hurricane Florence (now a tropical depression).
Still forecasts are suggesting 15 inches or more of rainfall along the path, with storm totals across the Carolina’s now widely into the 30 inches to 40 inches range.
The National Weather Service said the threat of life threatening flooding will continue, “Slow moving Florence will continue to produce significant rainfall amounts across the Southeast as the system moves inland. Up to 15 inches additional rainfall will exacerbate ongoing flooding, and heavy rain farther inland will bring new areas of flooding and flash flooding, with the potential for landslides in the Appalachians. Damaging winds and isolated tornadoes are also possible.”
At the moment it does not look like there will be a significant impact to ILS fund markets or collateralized reinsurance from hurricane Florence, but some impact is likely to many strategies, as losses leak through from collateralized quota shares, perhaps retro and also some sidecars.
In addition, aggregate reinsurance contract deductibles will be depleted somewhat by the losses from the storm, it is expected.
The catastrophe bond market won’t see any impact from Florence’s wind damage, sources said, but the flooding still keeps the NFIP’s FloodSmart Re cat bond on watch and it will be some time until we know the extent of the FEMA flood programs losses.
The size of the loss to the insurance, reinsurance and ILS market won’t become clear until the flood waters subside and the NFIP’s claim statistics are better understood and with catastrophic impacts continuing across the region that may take some time.