RMS estimates Hurricane Ian losses at $105 billion

Risk modeller RMS has estimated Hurricane Ian private market insured losses could range from $US53-74 billion ($83-116 billion), with a “best estimate” of $US67 billion ($105 billion).

The estimate includes wind and storm surge losses in Florida, South Carolina, North Carolina, Georgia, and Virginia, as well as impacts from precipitation-induced inland flooding in the same regions.

“Ian was a historic and complex event that will reshape the Florida insurance market for years to come,” Chief Risk Modelling Officer Mohsen Rahnama said.

The analysis includes input from damage assessments conducted by RMS field reconnaissance teams in Florida, including from the heavily affected areas of Fort Myers and Cape Coral along the southwest coast.

The private market total includes $US46-67 billion ($72-105 billion) from wind and $US6 billion ($9.4 billion) from storm surge, and $US1 billion ($1.6 billion) from inland flood, while RMS also estimates the government-backed National Flood Insurance Program could see an additional $US10 billion ($15.7 billion) in losses from storm surge and inland flooding.

“A sizable portion of the losses from Ian will be associated with post-event loss amplification and inflationary trends,” Model Development Vice President Rajkiran Vojjala said.

High claims volume, living expenses related to evacuations, prolonged reconstruction in worst-affected areas, and higher-than-average construction costs are expected to contribute to a significant economic demand surge.

“Additionally, we expect the Assignment of Benefits and litigation – despite recent legislative efforts to curb their misuse – to influence the overall loss severity, especially in cases where coverage leakage of water losses onto wind-only policies is likely, Mr Vojjala said.

“All these social inflation factors will lead to complex and lengthy claims settlement processes in this event, amplifying loss adjustment expenses and corresponding claim costs.”