The insurance and reinsurance industry loss from Hurricane Michael in Florida continued to slowly creep higher in the last two months, now having reached almost $7.2 billion according to the regulator in Florida.
At the last count at the beginning of August, Florida’s Office of Insurance Regulation (FLOIR) assessed that claims from hurricane Michael had risen by 4% to reach $6.91 billion.
Now, the toll has risen by another almost 4% to reach just under $7.2 billion, as claims continue to get settled.
Hurricane Michael made landfall in the Florida panhandle region in October 2018 and the insurance and reinsurance market has been fearful that hurricane Michael’s industry loss toll would continue to creep higher.
Given the experience with loss creep that came from 2017’s hurricane Irma this is no surprise, as that storm still has yet to see all its claims settled at this time, making the industry particularly nervous of a repeat from Michael.
The latest industry wide estimate of hurricane Michael’s insurance and reinsurance loss is for an impact of around $11 billion, according to broker Aon, a figure released in April and that was higher than prior estimates given for the storm.
With hurricane Michael it seems there will be further for the estimate to creep though, as at the last count as of September 27th there were still 17,347 claims open and not settled.
At the current rate and cost of claims settlement, based on almost 150,000 claims filed and 111,000 that received payouts so far, it seems that the FLOIR’s estimate for the insurance and reinsurance market impact could rise by as much as another billion dollars, at the least taking it to $8 billion by the time all claims are settled.
However, it’s worth noting that the lines of business that have seen the slowest rates of claims being closed and paid is the commercial and business interruption lines, where claims can tend to be much bigger.
Overall 88% of claims are closed, but in commercial property and business interruption claims this falls to just 66%.
That could result in even more creep as those claims are closed, with the chance of the eventual final tally for hurricane Michael from the FLOIR reaching even closer to the other industry loss estimates.
It’s important to note though, that claims still remain open from 2017’s hurricane Irma and so it could be some considerable time before the final bill for hurricane Michael is settled.