Re/insured losses from Hurricane Michael, which struck the Florida Panhandle coast as a Category 4 storm yesterday, are expected to be in the range of $2 billion to $4.5 billion, according to initial estimates from catastrophe risk modelling firm CoreLogic.
CoreLogic’s estimate includes re/insured damages for wind and storm surge, and consists of residential losses in the range of $1.5 billion to $3 billion and commercial losses in the range of $0.5 billion to $1.5 billion.
Hurricane Michael made landfall near Mexico Beach, Florida with sustained wind speeds of up to 155mph before tracking northeast into Georgia as a Category 3 storm, the strongest to ever hit the southern part of the state.
At just 2mph shy of a Category 5 hurricane, Michael is also the strongest hurricane to hit the Florida Panhandle since 1900 and the strongest hurricane to make landfall in the U.S since Hurricane Andrew in 1992, CoreLogic said.
Many regions of Florida, Alabama and Georgia have been devastated as Michael caused widespread damage to buildings and cars, downed trees and left nearly 500,000 people without power, in addition to reports of several casualties.
CoreLogic noted that damage will be limited to some extent by Michael’s compact size, with hurricane force winds extending out just 45 miles from its centre.
However, it added that intense storm surge has impacted a wide area from Mobile, AL to Tampa, FL, with the maximum storm surge anticipated to be east of Panama City to coastal cities south of Tallahassee.
Michael developed with unprecedented speed and intensity, only gaining tropical storm status on Sunday, October 7, but due to its fast-moving nature rainfall forecasts are low, and it is not expected to cause large losses in terms of flooding for the immediate landfall areas, CoreLogic said.
Nonetheless, there will be some element of localised and inland flooding as Michael continues on its path, particularly as it moves into North and South Carolina, which are still recovering from the intense flooding brought by Hurricane Florence last month.
The scope of the impact of Hurricane Michael on the insurance and reinsurance industries will remain difficult to forecast until the full extent of the damage emerges.
The industry will continue to watch developments closely as more information is released about surge flooding along the coast and wind and flood damage further inland.