Hurricane Matthew: Early Loss Estimates and More

Early estimates put the insured property loss to U.S. residential and commercial properties from Hurricane Matthew at up to $6 billion.

While this figure covers wind and storm surge damage to about 1.5 million properties in Florida, Georgia and South Carolina, CoreLogic’s estimate does not include insured losses related to additional flooding, business interruption or contents.

Parts of North Carolina are expected to remain under dangerous flood risk for at least the next three days, according to the state’s governor Pat McCrory in a report by the Capital Weather Gang blog.

As Dr. Jeff Masters’ WunderBlog reminds us, the potentially huge cost of damage caused by inland flooding is still unfolding.

The WunderBlog post suggests:

“A roughly comparable storm, Hurricane Floyd in 1999, produced about $9.5 billion in U.S. economic damage.”

And given the ongoing flooding across the Carolinas and southeast Virginia, that is a fair starting point for Hurricane Matthew, according to Wunderblog’s account of a conversation with Steve Bowen, director and meteorologist at Aon Benfield.

Catastrophe modeler RMS expects the losses to commercial lines will be the primary driver of total flood insured losses, predominately through multi-peril or all-risks policies.

In a blog post, Tom Sabbatelli, RMS hurricane expert noted:

“We expect that the contribution to insured losses by residential claims will be limited because a proportion of the residential property losses will be covered by the National Flood Insurance Program (NFIP).”

As of July 31, 2016, there were approximately 417,000 NFIP policies in-force in Georgia, South Carolina, and North Carolina.

Penetration of NFIP coverage varies significantly by distance to the coastline, RMS said. While in coastal regions it can be as high as 25 percent in some areas, inland participation can be less than 1 percent.

“This means that although much of the storm surge-driven coastal flood losses will be covered to some extent by the NFIP, many flood-related losses further inland are expected to be uninsured.”

Ratings agency Fitch has said that the insured loss from Hurricane Matthew “is not expected to present a major capital challenge” to the industry.

Fitch estimates that if the storm results in insured losses in excess of $10 billion, a greater proportion of losses will be borne by reinsurers as opposed to primary companies.

More than 30 fatalities have been attributed to Hurricane Matthew in the U.S. alone, but in Haiti the rising death toll is now more than 1,000.

Hurricane Matthew became post-tropical on Sunday, after heading eastward from the North Carolina coast out to sea.

The Insurance Information Institute offer the following tips for filing an insurance claim in the wake of Hurricane Matthew.

 

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