RMS pegs Hurricane Otis insured losses at $2.5bn to $4.5bn
Insured losses from Hurricane Otis are expected to be between $2.5bn and $4.5bn, according to Risk Management Solutions (RMS), a Moody’s Analytics company.
This estimate represents insured losses associated primarily with wind damage from the “devastating” Category 5 hurricane that made landfall on 25 October in Acapulco, Mexico, said Moody’s RMS.
It includes property damage and business interruption losses to residential, commercial, industrial and automobile lines of business. It takes into account the potential for post-event loss amplification, inflationary trends and non-modelled sources of loss, including infrastructure damage.
The estimate does not cover losses for any sovereign protection programmes as a result of this event, which include both traditional (re)insurance and insurance-linked securities, the company said.
AM Best said earlier this month that insured losses from Hurricane Otis will likely range between $1.8bn and $6.5bn. It added that the losses are likely to fall on reinsurance and cause further reinsurance market hardening.
Moody’s RMS said insured losses from Otis will be driven by wind damage, with minor contributions from storm surge and precipitation-induced flooding. Insured wind losses will predominantly fall on commercial lines, including commercial multi-family dwellings, it added.
Rajkiran Vojjala, vice-president of model development at Moody’s RMS, said that “Otis caused some of the most incredible wind damage to modern-day high-rise structures we have ever seen”.
Hurricane Otis was the 15th named storm of the 2023 Pacific Hurricane Season, the tenth hurricane, and the eighth major hurricane. Otis was the first Category 5 hurricane to make landfall on the west coast of Mexico since recordkeeping began.
