Updated – 11:00 AM UTC on September 10th: Major Hurricane Irma continues on its path towards the state of Florida, slightly weakened after striking Cuba but still with winds sustained at 130 mph with higher gusts, and a chance of some further intensification before it strikes the Florida Keys in the coming hours.
Hurricane Irma is forecast to retain at least Category 3 hurricane status and intensity as it aims for southern Florida and the U.S., with a landfall expected early on Sunday local time. Irma struck and meandered along the Cuba coastline which has weakened it a little, but it remains a very dangerous and large storm.
The current forecast shows hurricane Irma crossing the Florida straits, where waters are very warm and sufficient to fuel some reintensification, then crossing the Keys and travelling north on or near the western coast of the Peninsula. The precise location of the track north could ultimately reduce the damage and cost to the insurance and reinsurance industry somewhat. However, Irma is now so large that the entire Florida peninsula is at risk of hurricane force winds and storm surges, so impacts will still be widely felt and very costly.
Hurricane Irma remains an exceptionally dangerous storm, with sustained winds of 130 mph, higher gusts and a minimum central pressure of 929mb as at 11:00 AM UTC on September 10th. The central pressure has dropped at recent updates, showing Irma could intensify before landfall and the storm has increased its windspeeds in the last hour.
As you can see from the above forecast map from the NHC hurricane Irma is now predicted to come ashore across the Florida Keys and into south-west Florida. This has removed the prospects of a direct Miami or Palm Beach area hit, perhaps the worst case scenario, but with Irma’s strongest winds in the northeast quadrant of the eyewall there is a chance that wind damage could be high across the Peninsula, given Irma’s wide swathe of winds.
Following on the heels of Harvey, hurricane Irma will alert insurance, reinsurance, catastrophe bond and ILS market interests to the potential for a second landfalling hurricane event in quick succession, which could stimulate trading and protection buying activity today. This is the last chance buyers of live cat protection will have to secure additional protection.
Irma battered the northern Leeward Islands, causing significant damage and destruction to islands such as Barbuda, Antigua, Anguilla, St Martin, St Barts, the British Virgin Islands and the Turks & Caicos. Hurricane Irma also made a close pass by Puerto Rico, but it appears to have been spared the worst of the storm.
Irma has impacted Cuba, causing significant damage along the northern coast, then stalled to a slow crossing of the Florida straits.
In the Leeward and Caribbean islands reports, photos and video footage show significant damage, with at least fourteen lives lost according to media and some calling it the worst devastation they have seen.
As we expected, the parametric CCRIF SPC sovereign disaster insurance policies will pay out for Anguilla, Antigua & Barbuda and St Kitts & Nevis. More details here.
A.M. Best said that re/insurers providing property and casualty coverage in the Caribbean area affected by hurricane Irma will likely face “substantial losses.”
The forecast models show less uncertainty now and the hurricane models expect a landfall through the lower Keys and into southwest Florida at the bottom of the peninsula, with hurricane Irma then tracking north along the length of the state.
Hurricane Irma is a very large storm with a wide wind swathe, which can mean even a near miss can be devastating for islands or coastline in its path. Hurricane-force winds extend outward up to 70 miles and tropical-storm-force winds up to 205 miles from the center of Irma. Hurricane Irma at well over 400 miles across including the eye and this could straddle the Florida peninsula entirely bringing damage to a broad area of the state.
There are estimated to be 8.5 million properties at significant risk of wind damage due to hurricane Irma, according to Corelogic, with almost 3.5 million residential and commercial properties in Florida at risk of hurricane-driven storm surge damage.
The insurable value exposed to hurricane Irma is still enormous, even with the more westerly track and industry scenarios continue to point at a loss in the region of $30 billion to $70 billion (down from yesterday), although the Miami-Palm scenarios of higher losses now seem to be discounted, as long as Irma remains west.
Any shift back further east at the point of turning north could bring hurricane Irma directly onshore with its strongest winds over the highest value areas of Florida. That could be catastrophic in terms of damage potential.
Hurricane Irma’s track north will affect the potential for damage and losses as well. A track inland could weaken the storm more quickly, while a track just off the west coast with the most damaging northeast quadrant eyewall winds on the Gulf coastline of Florida could result in significant damage along the length of the peninsula.
The global reinsurance industry will be meeting in Monte Carlo for the annual Rendez-vous de Septembre event over the coming days, where discussions are typically focused on industry trends and on the key January renewal season as it approaches. Hurricane Irma coming so soon after Harvey could change the focus for this year’s event.
Hurricane Irma has stimulated some live-cat trading activity as it approaches the U.S., but this has been limited by a wide spread between buyers and sellers expectations for triggers and pricing. But today is the last chance for live cats, which could push more protection buyers to come forward.
As well as live cat trading activity (as we report here), hurricane Irma has also stimulated protection buyers to look for back-up covers or second-event protection, given this hurricane is coming so soon after the last multi-billion dollar industry loss event. At least one live cat trade was reported at an $80bn trigger on Friday, this now feels a little high given the latest scenario.
Some re/insurers may feel they lack protection in the wake of Harvey, with their reinsurance programs expected to be eroded somewhat, potentially providing opportunities for those markets looking to underwrite peak cat risks on a live basis. This could be attractive for any ILS funds with cash sitting waiting for an investment opportunity.
A landfall from Irma as a major hurricane will without doubt further erode aggregate deductibles, on traditional reinsurance contracts, catastrophe bonds, collateralized reinsurance and private ILS arrangements. A severe landfall in a highly populated coastal region could cause major losses across the sector, including to cat bonds and there are billions in cat bonds exposed to the storm.
A second hurricane loss event will also push more of the bill into reinsurers sidecars and retrocessional arrangements as well. Retrocessionaires could find themselves picking up a significant bill given the accumulation of losses from multiple events.
For the catastrophe bond market, secondary market trading has been relatively light, with few willing to buy cat bonds seemingly exposed to major losses.
The cat bond market has not reacted in a big way, as yet, although some selling off has been seen but these are said to be edge cases where investors do not want to get caught with exposed positions.
At this time the insurance, reinsurance and ILS investment community remains on alert and on watch for hurricane Irma, as it’s still too early to know whether a major impact is a likely outcome, but the chances of a hit are perhaps rising with each passing day.
NOAA warns of a dangerous storm surge, heavy rainfall and potentially devastating winds for Florida.
Cape Sable to Captiva…10 to 15 ft
Captiva to Ana Maria Island…6 to 10 ft
Card Sound Bridge through Cape Sable, including the Florida Keys…5 to 10 ft
Ana Maria Island to Clearwater Beach, including Tampa Bay…5 to 8 ft
North Miami Beach to Card Sound Bridge, including Biscayne Bay…3 to 5 ft
South Santee River to Fernandina Beach…4 to 6 ft
Clearwater Beach to Ochlockonee River…4 to 6 ft
Fernandina Beach to Jupiter Inlet…2 to 4 ft
North of North Miami Beach to Jupiter Inlet…1 to 2 ft
The Florida Keys…10 to 20 inches, isolated 25 inches.
The Florida peninsula and southeast Georgia…8 to 15 inches, isolated 20 inches.
The eastern Florida Panhandle and southern South Carolina…4 to 8 inches, isolated 10 inches.
Rest of eastern Georgia, western South Carolina, and western North Carolina…4 to 8 inches.
Western Georgia, eastern and northern Alabama, and southern Tennessee…2 to 5 inches.
We’ll continue to update you as hurricane Irma nears the Florida and the U.S. coastline.
You can track the hurricane season over at our dedicated page and all the graphics in this article will update automatically, so stay tuned.