Excluding any National Flood Insurance Program (NFIP) claims, Karen Clark & Company (KCC) has estimated the total insurance and reinsurance industry loss from hurricane Harvey to be at around $15.4 billion.
Broken down, KCC estimates inland flooding to drive the majority of the insured loss, accounting for $12.4 billion of the loss. With storm surge losses making up $500 million of the loss, and wind damage accounting for $2.5 billion of the total insured loss.
Harvey became the first Category 4 landfalling hurricane in the U.S. since hurricane Charley in 2004, bringing record levels of rainfall to the state of Texas with wind speeds reaching 130 mph just prior to landfall.
The slow motion of the storm and its duration produced record rainfall in southern Texas, with Houston experiencing some of the worst flooding on record. After moving back out to the sea, the storm then made a second landfall near Cameron, Louisiana, as a tropical storm.
Looking at the inland flood loss, which is responsible for much of the insured loss, Harvey resulted in substantial damage to residential and commercial properties, and, with the flooding taking place in an urban area, auto losses are also expected to be high.
“Harvey’s inland flooding impacts quickly drew media attention as Houston found itself underwater with record rainfall exceeding 50 inches in certain areas. Such rainfall was made possible by the storm’s continued presence over the Gulf of Mexico, which provided Harvey with a sustained source of water.
“Additionally, because the storm moved little, the rain was concentrated in southeastern Texas and western Louisiana and quickly inundated rivers and reservoirs in the region,” explains KCC.
The peak of the storm surge occurred around the landfall point at 13.5 feet, and Harvey generated further storm surge in Louisiana as it made its second landfall, although this surge was less due to the storm weakening.
Regarding the wind element, KCC explains “Harvey had an unusual windfield in that hurricane winds dropped off rapidly, but tropical storm force winds extended far from the track. Texas sustained the majority of the $2.5 billion in wind losses.”
Despite the severity of the storm, and while in current dollars Harvey is expected to be the largest insurance industry loss in the state of Texas, KCC explains that the event is not a record breaker when factoring in growth in population and the increased property values in the region.
According to KCC, two Category 4 hurricanes, being the 1900 and 1915 Galveston storms, would both drive a $50 billion insured loss if they occurred today.