Zeta intensified into a hurricane prior to making landfall on Mexico’s Yucatan peninsula and while it may emerge back into the Gulf of Mexico a little weaker, the forecast suggests hurricane Zeta will approach the Louisiana region of the northern Gulf Coast for a Wednesday landfall.
Still hurricane Zeta according to the NHC with 75 mph sustained winds and higher gusts, Zeta is bringing strong winds and heavy rains to the Yucatan region, its second encounter with a hurricane in just a few weeks.
Hurricane Zeta will then emerge over the Gulf of Mexico and head north towards the United States, where it is forecast to become the latest landfall in this busy 2020 hurricane season.
If hurricane Zeta makes landfall in Louisiana late on Wednesday, as the cone and forecast currently suggests, it will become the fifth storm to do so this season, the highest on record.
Louisiana has been drenched and battered, particularly western areas of the state and further hurricane force impacts could exacerbate ongoing insurance claims assessment activities, while also potentially driving further impacts to some reinsurance capital providers.
Hurricane Zeta is forecast to strengthen to high Category 1 or low Category 2 status as it travels north through the Gulf of Mexico.
The offshore energy industry is facing its latest Gulf of Mexico storm and tens of thousands of barrels of production have been shuttered once again, while rigs are bracing for potential further damages.
Wind shear and reduced sea surface temperatures are still expected to hinder development and intensification somewhat as hurricane Zeta travels north. But conditions are slightly improved for development it seems, with the latest NHC forecast suggesting a Cat 1 landfall is the current most likely outcome.
That would put hurricane Zeta in the realm of industry loss scenarios driving insurance and reinsurance market impacts in the hundreds of millions of dollars, to very low billions at most, so not a significant event for the reinsurance or insurance-linked securities (ILS) market.
However, as yet another landfalling hurricane, the potential for further erosion of aggregate deductibles, in reinsurance and catastrophe bonds, is high, while some smaller carriers aggregate protection could end up responding again.
You can see the latest forecast wind speed intensity guidance from certain models, thanks to TropicalTidbits.com, below:
The 2020 Atlantic hurricane season has already caused somewhere around US $23 billion to US $26 billion of insurance and reinsurance market losses (based on averages of modelled estimates and including offshore as well as onshore insured losses), which storm Zeta will still take a little higher at least.
Forecasters remain in consensus about the expected wind-shear preventing significant intensification prior to landfall, which should still save the northern Gulf Coast region, as well as insurance or reinsurance capital, from another multi-billion hit this week.