The eventual industry loss to insurance and reinsurance interests from tropical storm Gordon’s impacts in the Gulf Coast region and inland, after its Tuesday evening landfall, are not expected to be significant, with catastrophe risk modelling specialists Karen Clark & Co. estimating an industry loss of just $125 million.
Karen Clark & Co. (KCC) used its high resolution US Hurricane Reference Model to come up with the modelled estimate of insurance wide industry losses from tropical storm Gordon, saying that the fact Gordon eventually failed to quite reach hurricane strength has helped to minimise the losses from the storm.
KCC’s estimate includes losses to residential, commercial, and industrial properties as well as automobiles.
Also helping to keep losses lower was the fact that Gordon weakened rapidly when it came ashore after its landfall near the Alabama-Mississippi border at 11:15 PM EDT on September 4 with 70 mph sustained wind speeds.
KCC explained, “Due to warm Sea Surface Temperatures and relatively low wind shear over the Gulf of Mexico, Gordon had been expected to become a Category 1 hurricane before landfall. However, the expected intensification did not occur.”
Tropical storm force winds were widely felt though, across Florida, Alabama and Mississippi, but it is likely rainfall that will have driven the majority of the insurance loss.
In fact, now as a depression Gordon is dropping large amounts of rainfall along its track inland, exacerbating the potential for flood conditions in some areas that have already experienced heavy rainfall in recent weeks.
But given the minimal impacts at landfall, the modelling firm expects an insurance loss of roughly $125 million, which will be easily manageable by primary insurers and require little support from reinsurance capital.