Hurricane Ian insured losses could reach $39-62 billion: Fitch
Hurricane Ian insured losses in Florida could range from $US25-40 billion ($39-62 billion), ratings agency Fitch has estimated in an initial analysis after the storm became one of the most powerful to hit the state.
Ian crossed the coastline near Fort Myers on Wednesday local time, causing record storm surges and bringing sustained maximum wind speeds of 240 kph. It then travelled northeast across the Florida peninsula, reformed as a Category 1 hurricane and made landfall again in South Carolina.
“Florida is expected to have substantial economic and insured losses from Hurricane Ian from heavy rainfall, storm surge and flooding,” Fitch said in a report last week.
Standard US homeowners’ insurance doesn’t typically cover flood, and those who purchase the cover mostly do so through the government-supported National Flood Insurance Program (NFIP), run by the Federal Emergency Management Association (FEMA).
“The expected levels of flooding and storm surges associated with Ian may trigger private market reinsurance coverage of the NFIP,” Fitch says.
Most large national underwriters do not have substantial market share in Florida and have cut policies in force via non-renewals to manage balance sheet exposure and cost of their reinsurance programs, Fitch says.
But Florida insurance specialists unrated by Fitch have suffered financial losses and diminished capital in recent years and remain vulnerable to large catastrophic events that generate losses in excess of reinsurance limits.
Property analytics firm CoreLogic says estimated losses from the wind and storm surge could reach US$28-47 billion ($44-73 billion), making it the costliest Florida storm since Hurricane Andrew made landfall in 1992.
Associate Vice President, Hazard and Risk Management Tom Larsen says a record number of homes and properties were lost due to Ian’s intense and destructive characteristics.
“Hurricane Ian will forever change the real estate industry and city infrastructure,” he said.
“Insurers will go into bankruptcy, homeowners will be forced into delinquency and insurance will become less accessible in regions like Florida.”
CoreLogic estimated wind losses for residential and commercial properties at $US22-32 billion ($34-50 billion), with insured storm surge losses in Florida expected to be an additional $US6-15 billion ($9-23 billion).
Recovery will be slow and difficult, with inflation at a 40-year high, interest rates nearing 7%, and labour as well as materials still in high in demand, CoreLogic says.
“We’re at a crossroads with Hurricane Ian in terms of adapting to today’s catastrophe risk environment,” Mr Larsen said.
“Infrastructure and building codes will evolve so that we can be more resilient ahead of what are bound to be more history-making storms in the near future. We cannot just rebuild; we need to restore for resilience.”
The Insurance Information Institute says Hurricane Katrina in 2005 is the costliest hurricane to hit the US, causing insured losses of $US89.68 billion ($138.4 billion), adjusted for inflation and including the NFIP. Losses in dollars of the day were $US65 billion ($101 billion).
In adjusted dollars, Hurricane Ida last year ranks second with losses of $US36 billion ($56 billion), while Hurricane Andrew is the seventh costliest with $US30.8 billion ($48 billion) in losses.
