The insurance and reinsurance industry loss due to the impacts of hurricane Irma on the Caribbean islands and the United States is estimated to be up to $55 billion by catastrophe risk modeller RMS, with economic losses expected to be up to $95 billion.
RMS puts the total insurance industry impact in a range from $35 billion to $55 billion, the majority of which is due to damage in Florida, but the contribution to the industry estimate from the Caribbean is growing.
RMS said its latest estimates include insured losses from wind, storm surge, and inland flood damage across Florida and the southeast United States, including the National Flood Insurance Program losses. It also includes insured losses due to wind and storm surge in the Caribbean.
For the United States, RMS estimates an insurance and reinsurance industry impact of $25 billion to $35 billion, $2.5 to $5.5 billion of which is estimated to be NFIP flood losses.
So the private insurance and reinsurance market impact from Irma’s hit on the U.S. is estimated to be in a range from $22.5 billion to $29.5 billion.
For the Caribbean, RMS expects an industry loss in a range from $10 billion to $20 billion, which is up on previous estimates that had suggested $10 billion or $12 billion might be the upper end of the range for the islands losses.
With hurricane Maria devastating Caribbean islands including Puerto Rico this week, the hurricane season impact in the Caribbean could be one of the highest on record for the insurance and reinsurance sector.
“In the U.S., the losses from Irma will be significant and many communities have been severely disrupted. But had the hurricane made a direct impact on Tampa, the biggest city on Florida’s west coast, the losses would have been much higher. However, while the majority of Irma’s losses will come from Florida, it’s important not to overlook the Caribbean where several islands were devastated,” commented Michael Young, RMS head of product management for U.S. climate models.
Economic losses are expected to be driven higher by significant levels of loss due to uninsured rainfall-driven flood losses in the U.S., and uninsured wind and storm surge losses in the Caribbean.
Demand surge is also expected to be a factor in Florida, which could drive the eventual bill for the insurance industry event higher.
The gap between economic and insurance industry losses is expected to be highest in the Caribbean, where a lower rate of insurance take-up is seen, according to RMS.