Hurricane Florence loss estimates range from $2.5bn to $5bn

Hurricane Florence, which made landfall in North Carolina on Friday, is estimated to cost insurers less than feared at between $2.5bn and $5bn, according to a range of industry estimates, and will be easily absorbed by the market, experts say. AIR Worldwide has estimated insured losses of between $1.7bn and $4.6bn from Hurricane Florence’s wind and storm surge. AIR said its estimate does not include the impact of ongoing flooding from Florence’s “unprecedented” rainfall, or claims from the National Flood Insurance Program (NFIP). The cat modelling firm's figures are consistent with initial estimates from catastrophe risk modeller Karen Clark & Co (KCC), which said insured losses – excluding NFIP claims – could reach $2.5bn. Risk analytics firm CoreLogic pitched losses at between $3bn and $5bn. Commenting on suggestions that insured losses will be in the $2.5bn to $5bn range, Willis Towers Watson’s head of property broking, Gary Marchitello, said the “well-capitalised global property/casualty insurance market will easily absorb losses in this new range”. It was initially feared that Florence might causes losses up to $20bn. “Barring successive storms this season, we would not expect any prolonged hardening of the market,” said Mr Marchitello. However, Willis Towers Watson expects to see some short-term disruption in the market. “Companies, particularly those with catastrophe exposures, should start their insurance programme renewal process early; ensure their information for underwriters is complete, current and accurate; and work with their broker to access the entire global insurance market,” said Mr Marchitello. Moody’s said the slow-moving path of the storm has caused property damage, outages and deaths, but added that insurers have escaped predictions of higher losses. “We expect that insured losses will dampen third-quarter earnings for primary insurers, but will be readily manageable,” Moody’s said. Hurricane Florence, once a category four storm, made landfall near Wrightsville Beach, North Carolina, on Friday as a category one storm with 90mph winds. AIR said Florence’s slow movement means rainfall has been deposited over an extremely wide area. According to preliminary reports from the US National Weather Service, about 36 inches fell in Elizabethtown, North Carolina, breaking the record set by Hurricane Floyd in 1999. Willis Towers Watson noted that lower wind speeds will likely make Florence more of a flood event than a wind loss. Insurance penetration rates for flood risk are generally low in the affected area, it added. Florence has caused several bodies of water to rise above record levels and some of the gauges used to record river levels have been submerged, according to AIR. It said the heavy rainfall deposited by Florence has caused widespread riverine and flash flooding in many parts of North and South Carolina. Flooding may worsen in many locations across South Carolina, North Carolina and Virginia as precipitation continues to fall on saturated ground and run-off water drains slowly towards the coast, it added.

Hurricane Florence loss estimates range from $2.5bn to $5bn

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