Media accounts after catastrophes discuss two types of losses – economic losses and insured losses. Sometimes they do not distinguish between the two. Insured losses are the claim dollars that insurance companies incur from a disaster. Economic losses are the total losses, some of which is covered by insurance and some of which is not. Another way to say it: insured loss + uninsured loss = economic loss.
A hurricane creates another complication. Hurricanes often involve flooding, but flood losses are not covered by a standard homeowners policy. They are covered by a special insurance policy with the federal National Flood Insurance Program. Often insured loss estimates leave out losses from flood insurance.
Here is a rundown of loss estimates, both insured and uninsured. We’ve tried to specify whether flood is included, or if there is another important nuance to the estimate.
We will keep updating estimates as we receive them.
- 9/6: AIR estimates property losses from wind, flood and storm surge to be $65 billion to $75 billion. Insured losses will be about $13 billion, detailed in the “Insured Losses” section of this post.
- Global risk modeling and analytics firm Risk Management Solutions (RMS) projects economic losses caused by wind, storm surge, and inland flood from the calamity to be as high as $70 billion to $90 billion. The majority of the overall loss is likely to be from inland flooding in the Houston metropolitan area, RMS said. Update 9/4: RMS puts the NFIP-insured tab at between $7 billion and $10 billion, implying a significant if not total loss to its private market reinsurers, who reinsured a little over $1 billion of the $4 billion excess $4 billion layer.
- Update 9/1: Moody’s Analytics estimates economic losses to be between $81 billion and $108 billion, Artemis reported.
- Homes: $45-55 billion
- Commercial Property: $15-20 billion
- Vehicles: $8-12 billion
- Infrastructure: $5-10 billion
- Total damages: $73-97 billion
- Lost economic output: $8-11 billion
- Total cost: $81-$108 billion
Moody’s Analytics estimates economic losses in southeast Texas alone to be between $51 billion and $75 billion, Artemis reported. Moody’s Analytics expects property damage to homes and vehicles of $30 billion to $40 billion, $10 billion to $15 billion in flood damages to businesses, $5 billion to $10 billion in infrastructure damage, and $6 billion to $10 billion of lost output.
- AIR (9/6)
- $10 billion to the insurance industry, of which $3 billion is wind and storm surge
- This estimate excludes NFIP losses.
- Morgan Stanley (9/1):
- Wind – $2-4 billion
- Auto – $3-6 billion
- Commercial Flood – $5-15 billion
- NFIP – $5-15 billion
- Karen Clark (9/1):
- Wind – $2.5 billion
- Storm surge – $0.5 billion
- Inland flood – $12.4 billion
- Catastrophe modeling firm AIR Worldwide, A Verisk Analytics business, estimates that privately insured losses resulting from Hurricane Harvey’s winds and storm surge in Texas will range from $1.2 billion to $2.3 billion.
- Business Insurance notes that S&P puts a $6 billion industry loss on the event, with primary companies, not reinsurers bearing the brunt. The article also discusses the possibility of flood vs. wind coverage disputes, which were a notable issue after Hurricane Katrina and superstorm Sandy.
- RMS says industry wind losses will be in the “low billions” in its continually updated blog. Though it hit shore as a Category 4 storm, “Harvey is not primarily about wind.”
- Update 8/31: CoreLogic estimates
- NFIP insured losses – between $6 billion and $9 billion. This implies losses will hit the private reinsurance layer ($4 billion excess $4 billion, of which reinsurers bear about 26 percent).
- Private flood insurance losses: less than $0.5 billion.
- Uninsured flood loss: between $18 billion and $27 billion.
- Insured wind loss: $1 billion to $2 billion.
Insured loss for Texas and Louisiana is between $7.5 billion and $11.5 billion, according to their estimates. This excludes commercial, loss of business and other, broader economic losses, according to the CoreLogic press release.
Analytics firm Corelogic estimates privately insured losses from wind damage to range from $1.5 billion to $3 billion.