The leading catastrophe risk modellers have been furnishing their clients with projections for the potential impacts to the industry from hurricane Florence and according to various data sources the mean for wind insured losses appears to sit in the $3 billion to $3.5 billion range.
With hurricane Florence currently making landfall on the North Carolina coast as a weaker Category 1 storm, the projections of losses have been dropping steadily.
At one stage Florence was a monster Category 4 storm with 140 mph winds, but the slowing of the approach and land interaction mean the landfall is not expected to feature sustained winds much higher than 80 mph to 90 mph.
Meanwhile the storm surge forecast has also lessened, with 11 foot said to be the maximum now expected. However the surge will be wide-spread along the coast, so this will be damaging.
But it is still the inland flooding, plus damage caused by tropical storm winds in a rain-sodden region, that will likely drive the bulk of losses now.
The latest modeller update we’ve seen is from Corelogic who recently put the estimated wind and surge industry loss from Florence at $3 billion to $5 billion.
We’re told that fellow catastrophe risk modellers RMS and AIR both show projections where the mean loss, so middle of the risk curve and a 50% probability, from wind could sit at just above $3 billion to as much as $3.5 billion.
Of course these are just projections made using catastrophe risk models, based on simulations, old storm data, and layering on top fresh exposure information.
Hence they are unlikely to prove precisely accurate, but do provide valuable indicators to the marketplace of where (roughly) the eventual insurance, reinsurance and ILS market loss from hurricane Florence’s wind and storm surge could sit.
They don’t include any data for inland flood from the rainfall, and until Florence has passed through the region and the rainfall totals, plus river flood heights, are understood we won’t know how much flooding contributes to economic and industry losses.
However, if wind and surge combined proves to be sub-$5 billion even, the loss from the inland flooding could still near or exceed it, given the extreme totals being forecast.
Until Florence has passed it is impossible to predict the eventual exposure for the industry, but risk models give good direction and it’s clear the potential for industry losses has been reducing.
Important to note that these figures could be quite old now, so industry participants should contact their risk modelling firm representatives to gain fresh modelled projections for potential industry impacts.