Analysis from CoreLogic reveals that over 200,000 homes in Texas, with a reconstruction cost value of nearly $40 billion, are at a potential risk of storm surge damage from Hurricane Harvey, which continues to intensify as it tracks towards the state.
Hurricane Harvey, currently a Category 2 storm that is predicted to intensify to a Category 3 storm as it makes landfall late Friday to early Saturday, with sustained winds of 111mph or higher, has the potential to bring substantial damages to homes in Texas.
Based on Harvey making landfall as a Category 3 storm, CoreLogic analysis shows that 232,721 homes along the Texas coast are at a potential risk of storm surge damage, amounting to a total reconstruction cost value (RCV) of $39.6 billion.
Should Harvey intensify to a Category 4 storm, which is not expected, the number of properties at risk rises to 354,853, with a RCV of nearly $63.8 billion. Lift the intensity to Category 5 and more than 482,000 homes are at risk of storm surge damage, with a RCV of almost $87 billion, according to Corelogic’s analysis.
Storm surge flooding as a result of a hurricane can cause substantial damage to properties, so insurers and reinsurers will be keeping a close eye on the storm as it tracks towards the state of Texas.
Reinsurance firms have significant exposure in Texas and while the rainfall threat may not be as fully-insured, the coastal surge and wind threats likely are more so. Furthermore, uncertainty regarding Harvey’s track remains, with some models predicting that the storm could come inland before heading back offshore, and possibly re-intensifying and then making a second landfall further along the East coast.
Hurricane Harvey forecast path:
Hurricane Harvey forecast track and path (from the NHC)
As shown by the above, Hurricane Harvey currently has sustained winds of 105 mph, higher gusts, and is forecast to strengthen further, possibly all the way to a landfall on the middle Texas coastline late Friday night, or Saturday morning local time.
For reinsurers margins are already thin in light of high competition, falling rates and ample capacity. Pressures that have been exacerbated by the benign loss experience in recent times. Market commentary suggested recently that a major hurricane is unlikely to turn the reinsurance market from its soft phase, but a series of modest storm losses, which Harvey has the potential to bring, could push firms into losses.
