Hurricane Ian’s Insured Losses Estimated at Up to $63 Billion
The fallout from Hurricane Ian includes insured losses anywhere from $28 billion to $63 billion and lasting effects on insurance, infrastructure and real estate, according to estimates and commentary from catastrophe modeling firms.
“Hurricane Ian will be a challenging storm for insurers due to the tremendous amount of coastal flooding and the unique nature of the Florida market with respect to a likely high proportion of litigated claims,” wrote Karen Clark & Co. (KCC) in a recent flash estimate. The firm estimated a privately insured loss of close to $63 billion, with $200 million in the Caribbean and the rest from wind, storm surge and inland flooding in the United States. KCC estimated total economic damages exceeding $100 billion.
Ian was a “historical event and very complex,” Mohsen Rahnama, chief risk modeling officer of RMS, said in a statement. The Category 4 event had maximum windspeeds of 150 miles per hour and a 50-kilometer radius, record storm surge and inland flooding. Ian will likely be “one of the costliest events in Florida,” according to Rahnama.
A CoreLogic analysis puts wind and storm surge losses between $28 billion and $47 billion. It estimated wind losses between $22 billion and $32 billion and storm surge losses between $6 billion and $15 billion.
“Hurricane Ian will forever change the real estate industry and city infrastructure. Insurers will go into bankruptcy, homeowners will be forced into delinquency and insurance will become less accessible in regions like Florida,” Tom Larsen, associate vice president of hazard and risk management at CoreLogic, said in a statement.
Verisk Extreme Event Solutions estimated wind, storm surge and inland flood losses between $42 billion and $57 billion. Including elements such as losses to the National Flood Insurance Program (NFIP) and potential litigation or social inflation, Verisk expected the total insured industry loss will exceed $60 billion.
The split of losses between wind and storm will be “contentious,” and the industry will grapple with what portion of losses will go to primary, reinsurance layers, retro and the NFIP, said Rahnama. Further driving up costs will be inflation, materials and labor shortages and litigation.
“As shown in the recent events, particularly Hurricane Irma in 2017 where many cases ended up in the litigation process, we saw increases in claims cost,” Rahnama said. “For Ian, we expect that some of the claims’ closers will take more than a year due to potential litigation.”
Rahnama added, “Basically, I believe this event will change the Florida insurance market landscape.”
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