Onshore property losses for the private insurance and reinsurance market from recent hurricane Sally are estimated at just $2 billion by catastrophe risk modeller Karen Clark & Company.
The estimate released today includes private insurance market losses caused by wind and storm surge damage to residential, commercial, and industrial properties and automobiles.
KCC said that the estimate of $2 billion does not include NFIP losses, losses to offshore assets, or any potential impacts on losses due to COVID-19.
The $2 billion estimate of onshore property losses for the private insurance and reinsurance market compares to an unofficial and preliminary estimate of losses from hurricane Sally that AIR Worldwide had put out last week of between $1.5 billion and $3.9 billion.
Hurricane Sally intensified on approach to landfall in Alabama last week, but it was the rainfall related damages and flooding that caused the majority of the damages.
While wind damage was quite widespread in some coastal areas, hurricane Sally’s losses for private insurance and reinsurance market interests, including for ILS funds, were never going to be as high as recent hurricane Laura.
KCC notes that as a result of hurricane Sally’s rapid weakening as it interacted with land, the “peak winds were experienced in a small coastal area.”
That has helped to keep the overall onshore property loss down it seems, at least for the private insurance and reinsurance market.
KCC explained the impacts of hurricane Sally:
Severe wind damage was limited to areas near the coast that experienced the highest wind speeds. Isolated instances of structural damage occurred, including damage to roofs and walls. Lower levels of damage, such as to roof covering and siding, were more widespread. Over 500,000 residents were left without power as severe winds brought down power lines in parts of Florida and Alabama.
Significant storm surge flooding in downtown Pensacola affected both residential and commercial buildings. A portion of the newly constructed Pensacola Bay Bridge was destroyed, and automobiles in the area also sustained damage.
Heavy storm surge flooding impacted coastal Alabama where water submerged residential and commercial buildings in Gulf Shores and deposited numerous boats and vehicles around Orange Beach. Multiple bridges in both cities experienced damage.
The total loss, including onshore and NFIP related claims, plus any private flood insurance claims, will likely increase the total significantly. But much of this would not be relevant to reinsurers or ILS funds, given the impacts are expected to largely flow to the NFIP, or go uninsured, and at this stage it seems relatively unlikely that the NFIP’s reinsurance would be tapped by losses from Sally.