hurricane Harvey 2017

Risk modelling experts at RMS have estimated the industry loss from hurricane Harvey’s impacts to both private and public insurance and reinsurance interests at up to $35 billion, with an upper bound of $40 billion, and up to $10 billion expected to fall to the National Flood Insurance Program (NFIP).

The private insurance and reinsurance market faces a loss of over $10 billion from hurricane Harvey’s winds, flooding and storm surges, according to risk modelling firm AIR Worldwide, while the total property damage from flooding alone is seen as high as $75 billion.

Keefe, Bruyette & Woods analysts say they are most concerned about the Bermudian insurance and reinsurance group of companies, in the wake of hurricane Harvey’s impacts, as they feel them to be over-valued and to have too little protection of their own.

Risk trading based on industry loss triggers linked to hurricane Harvey’s eventual insurance and reinsurance industry toll continued last week, with so-called “dead cat” trades taking place and the focus of counterparties shifting to higher levels of loss.

The $1.042 billion reinsurance program of the National Flood Insurance Program (NFIP) looks increasingly likely to be a total loss, as estimates continue to suggest that the hurricane Harvey loss to the NFIP is likely to mean the reinsurance program at least triggers, but most likely pays in full.

The first two smaller primary insurers to report on the impact of hurricane Harvey are both likely to claim on their reinsurance for help paying hurricane Harvey losses, reflecting one source of loss for traditional and alternative reinsurers.

The insurance and reinsurance industry loss from hurricane Harvey has been estimated at $15.4 billion by catastrophe risk modelling firm Karen Clark & Company, excluding the impacts to the National Flood Insurance Program (NFIP).

Hurricane Harvey is expected to result in “extremely complex loss circumstances” making predicting the eventual toll that will be paid by reinsurance capital providers, both traditional and alternative, extremely difficult, according to A.M. Best.

Moody’s Analytics has now increased its estimate for the economic loss caused by hurricane Harvey to as much as $108 billion, reflecting an expectation that the insurance and reinsurance loss will rise further.

Analysts have updated their estimates for the insurance and reinsurance loss caused by hurricane Harvey’s impacts on Texas and the surrounding area, with Morgan Stanley now pegging the industry loss at up to $40 billion including the NFIP portion of flood losses, or up to $25 billion for the private market alone.