Hurricane Milton hits south of Tampa Bay as Cat 3 storm
Insured loss estimates before Hurricane Milton made landfall near Siesta Bay in Florida, a barrier island in front on Sarasota, reached as high as $100bn, but many of these were based on a direct hit to Tampa Bay, 60 miles of north of Hurricane Milton’s actual landfall.
Steve Bowen, chief science officer at Gallagher Re, said: “Location makes all the difference”. In a LinkedIn post before the storm made landfall, Bowen said a high proportion of housing stock in most coastal counties at risk from Hurricane Milton were built prior to Florida’s post-Hurricane Andrew building codes.
“The exact landfall point will make a big difference in how much damage occurs, and how much of the highest populated parts of the Tampa Bay area are affected. Literal miles will matter. The peak winds of Milton will only be felt within 10-20 miles of the centre, and this matters a lot from the perspective of both wind impacts and maximum storm surge inundation,” Bowen said.
Gallagher Re’s pre-landfall financial loss guidance, based on the US National Hurricane Center’s (NHC) track forecast, placed private insured losses at between $30bn and $40bn. But Bowen added that a “wobble slightly further south closer to Venice…would be closer to the lower end of the range”.
The NHC recorded maximum sustained winds of 120mph when Milton made landfall with wind gusts of 78mph logged in Venice.
Maximum sustained winds of 106mph were recorded 30 minutes before landfall. Six hours later wind speeds reduced to category 1 strength of between 40 and 80mph across most of Florida, Moody’s said in a live feed.
Before the hurricane made landfall, Moody’s said 235,000 commercial properties sat in the direct path of the storm with an estimated value of $1.1trn. According to its analysis, 235,000 commercial real estate properties have a greater than 50% probability of facing wind speeds of at least 50mph.
AM Best said Hurricane Milton posed a significant threat to Florida’s property insurance market, in particular for carriers already hit by claims from Hurricane Helene.
“The back-to-back punches from Hurricanes Helene and Milton could prove too devastating for some,” while heavy losses will trigger property cat reinsurance, it said.
Christopher Graham, senior industry analyst at AM Best, warned: “Debris from Hurricane Helene that has not been secured or disposed of could become airborne once Hurricane Milton makes landfall, exacerbating potential property losses.”
AM Best said diversified, large insurers and reinsurers should be able to absorb losses from Hurricane Milton as an earnings event, dependent on the intensity, location and the magnitude of the storm.
But the losses for Florida’s property insurers come ahead of reinsurance renewals at 1/1 and could make these more difficult for insurers, it added.
“The upcoming 1 January renewals for property reinsurance programmes could be more problematic for primary insurers because of the effects of these recent hurricanes,” AM Best said.
In advance of the storm making landfall, S&P Global Ratings said the scale of damage was uncertain but could match Hurricane Ian in 2022, which recorded insured losses of about $60bn. It said the event could “fully deplete” US P&C insurers’ nat cat budgets, but that it expects capitalisation to remain stable.