The ongoing creep of insurance and reinsurance market losses associated with hurricanes that have hit Florida continues in the case of hurricane Michael from 2018, with the total rising another over 3% to reach almost $7.44 billion.
By early August, Florida’s Office of Insurance Regulation (FLOIR) assessed that claims from hurricane Michael had risen to reach $6.91 billion.
By early October that figure had risen by another almost 4% to reach just under $7.2 billion, with the claims count open continuing to come down, albeit at a slowing pace.
Now, the latest update from the regulator as of October 25th shows a total Florida industry loss tally for hurricane Michael of just slightly below $7.44 billion.
For comparison, the latest industry wide estimate of hurricane Michael’s insurance and reinsurance loss is for an impact of around $11 billion, according to Aon, a figure the broker released back in April.
The total number of claims from hurricane Michael now stands at just under 150,000, of which 112,900 have been closed with a loss payment.
As of September 27th, there were still 17,347 claims open and not settled.
Now, as of October 25th, that figure stands at 15,893, showing that the rate of closing claims continues to be relatively slow and there is some way to run before the industry impact of hurricane Michael settles.
Based on the run-rate of costs-per-claim (around $65,890 per claim), it continues to appear that another $1 billion could be added to the total before every claim is closed down.
It’s important to also note that many of the claims remaining open will be among the more costly, as less than 69% of commercial property claims are closed, compared to almost 89% of residential.
In addition, business interruption claims continue to be slow to close down, with less than 69% of them also closed.
Interestingly, there also appears to be a trend towards some claims re-opening and then getting paid out, something that was also seen with hurricane Irma.
The FLOIR explained that the number of reported closed hurricane Michael claims without payment has decreased, which it says may indicate insurers have reopened claims after determining the policyholder met the deductible, meaning coverage, which was previously not afforded, was in the end deemed valid under the policy.
The regulator has some concerns on this trend and so is reaching out to insurers for more data on these specific re-opened and paid out claims.
Perhaps the most interesting data point on hurricane Michael is the fact that per-claim it is a significantly more costly storm than 2017’s hurricane Irma.
While Irma drove more than $10.8 billion of industry losses, according to the FLOIR’s data 14 months after the storm struck (which is well below where other insurance and reinsurance market estimates now sit at closer to $20bn), that storm triggered more than 1 million claims, making the cost per claim particularly low at around $10,800 per claim.
Hurricane Michael meanwhile has only driven the roughly 150,000 claims in approximately 14 months. But at around $7.44 billion of industry loss so far, the average cost per claim is significantly higher at $62,661.
Of course, 2017’s hurricane Irma impacted almost the entire state of Florida, where as Michael was much more localised in terms of damage to the Panhandle region.
But it shows that storm impacts can vary significantly, depending on the footprint and expanse of a hurricane.
The industry loss tally for hurricane Michael will continue to creep for some time, as claims slowly close down. At this stage the reinsurance market has likely paid its claims for the storm, hence any further costs are likely to fall to insurers and the FHCF.