RMS says $67bn best estimate for hurricane Ian losses

Insured losses from hurricane Ian will sit between $53bn and $74bn, according to the latest estimate from RMS, with a best estimate of $67bn for wind and storm surge losses across five affected states.

In addition, RMS said hurricane Ian could cost the National Flood Insurance Program (NFIP) an additional $10bn from storm surge and inland flooding claims.

The majority of private insured losses will come from wind damage claims, RMS said, with an estimated loss range of between $46bn and $67bn. A further $6bn-plus in losses is expected from storm surge claims against commercial lines, excluding NFIP coverage for residential properties, and $1bn from inland flood claims. In total, RMS said up to 25% of insured losses from hurricane Ian, including NFIP, will be driven by surge and flood.

“Ian was a historic and complex event that will reshape the Florida insurance market for years to come, said Mohsen Rahnama, chief risk modelling officer at RMS. Losses will fall against several lines of business including residential and commercial property, contents, business interruption, automobile, watercraft and specialty lines.

Rahnama added that RMS field teams have already conducted damage assessments in Florida, including badly-damaged areas such as Fort Myers and Cape Coral.

“Their assessments have proved invaluable in helping our modelling teams to reconstruct and validate the extent and severity of Ian’s wind and water impacts, and our assessment of the magnitude of the various drivers of the total industry loss,” Rahnama said.

RMS said its loss estimate covers damage caused by Ian on its path that started in Florida before moving over to South Carolina, North Carolina, Georgia and Virginia. It also takes into account the impact of post-event loss amplification and inflation, RMS said.

“A sizeable portion of the losses from Ian will be associated with post-event loss amplification and inflationary trends. A combination of high claims volume, additional living expenses related to the massive evacuation efforts, prolonged reconstruction in the worst-affected areas and the prevalent higher-than-average construction costs, will contribute to a significant economic demand surge,” said Rajkiran Vojjala, vice-president, model development, RMS. Vojjala added that claims settlement could be complex and lengthy.

CoreLogic raised its estimate of the insured loss bill from hurricane Ian to up to $53bn.