Onshore property losses covered by insurance after recent hurricane Grace are expected to reach around US $330 million, according to catastrophe risk modeller Karen Clark & Company (KCC).
Hurricane Grace impacted parts of the Caribbean and Mexico, where it made two landfalls.
KCC splits the onshore insured property loss into $300 million for Mexico and $30 million for the rest of the Caribbean.
At those levels reinsurance impact is expected to be negligible.
KCC’s insurance industry loss estimate includes privately insured damage to residential, commercial, and industrial properties.
Hurricane Grace made landfall in Guadeloupe and Montserrat in the Caribbean on August 14th with 40 mph maximum sustained winds, Haiti and the Dominican Republic on August 16th with 35 mph maximum sustained winds, and Jamaica on August 17th with 50 mph maximum sustained winds.
Hurricane Grace then went on to make two landfalls in Mexico. The first near Tulum with 80 mph maximum sustained winds on August 19th and second near Tecolutla with maximum sustained winds of 125 mph on August 21st.
As we explained at the time, neither of the Mexico landfalls saw the central pressure of hurricane Grace drop to levels low enough to breach the parametric trigger of the World Bank supported IBRD / FONDEN 2020 catastrophe bond.
KCC explained the impacts from hurricane Grace:
Impacts in the Caribbean
Low-level wind damage in the Caribbean was isolated to Jamaica and the Cayman Islands. In Jamaica, tropical storm force winds resulted in down trees and powerlines. In the Cayman Islands, Grace by- passed the islands to the south and brought hurricane force winds onshore. This resulted in some damage to non-structural building components such as roof coverings in areas along the island’s southern coast. Structural damage was typically the result of downed trees.
Heavy precipitation associated with Grace produced scattered floods in Haiti, the Dominican Republic, and Jamaica. In Haiti, the region most impacted by Grace was still recovering from a Magnitude 7.2 earthquake that ruptured a few days before Grace made landfall, complicating the emergency response to flooding.
Impacts in Mexico
Category 1 wind speeds in the Yucatan Peninsula resulted in widespread low-level wind damage. Light metal roofs, used in non-urban areas for industrial warehouses, appurtenant structures, and residential buildings, were most frequently damaged while heavy concrete buildings commonly used for commercial and residential buildings sustained minimal damage. Downed trees throughout the region contributed to power outages to nearly 700,000 customers and caused scattered structural damage.
Central Mexico has historically experienced fewer hurricanes the Yucatan Peninsula and, as a result, the building inventory exhibits construction characteristics more vulnerable to wind impacts, such as a higher proportion of light metal roofs. Category 3 wind speeds resulted in extensive damage near the coast, and frequent damage to envelope openings, roof covering and decking, and siding was observed. Throughout the affected region, trees and utility poles were also damaged.
Inland locations also experienced wind damage, principally from downed trees and powerlines. Light metal roofs and other highly vulnerable building components also sustained damage.
In addition to high winds, Grace produced significant levels of precipitation in eastern and central Mexico, which saturated soils and overwhelmed drainage networks. States affected by heavy precipitation included Hidalgo, Puebla, and Veracruz. Surface and riverine flooding washed out roadways and inundated residential and commercial businesses throughout the affected region. Landslides also contributed to infrastructure disruption, making roadways impassable, and caused damage to some residential buildings.
As we explained yesterday, forecast models currently suggest a Gulf Coast hurricane threat may emerge later this week or into the weekend, which has the potential to be a much bigger concern for the ILS market than Grace was, if any of the more intense model scenarios we’ve seen play out.