AIR Worldwide has estimated Hurricane Harvey’s initial Texas wind and storm surge insured losses will range from $U.S. 1.2 billion to $U.S. 2.3 billion.
This figure doesn’t include the growing impact of the increasing levels of catastrophic flooding or business interruption losses resulting from the closure of oil refineries in the region.
Hurricane Harvey’s Category 4 wind speeds devastated Texas and surrounding towns when the storm made landfall last Friday.
Its full impact remains to be seen as torrential rains cause continued flooding at a scale that’s expected to increase into September.
Dr. Eric Uhlhorn, principal scientist at AIR Worldwide, said; “As devastating as the wind damage was in Rockport and surrounding towns, flooding from Harvey’s torrential rains has had the greatest impact.
“With a lack of large-scale atmospheric steering, Harvey’s motion was stalled resulting in extremely heavy and continuous tropical rainfall in a concentrated area.
“Harvey has already unleashed catastrophic and unprecedented flooding in southeastern Texas, and these conditions are expected to last for several more days. Louisiana is already experiencing heavy rainfall; the flood threat there will likely spread eastward once Harvey begins its northeastward path toward Houston.”
Hurricane Harvey is reentering the Gulf and is predicted to potentially make a second landfall near Houston later this week, but not at hurricane levels as forecasters say it lacks an organized core and is encountering strong southwesterly wind shear.
Dr. Uhlhorn continued; “As a result of the unprecedented rainfall that has fallen in Houston and its surrounding areas, 66 of the 120 river gauging stations of the National Weather Service in Houston and Galveston are currently at various stages of flooding.
“By September 2, 74 of these gauging stations are expected to have flooded, about 50 of which will experience major flood stages. Many of the rivers in the area will crest with new record-setting flood levels.”
Only about 20% of homeowners currently have flood insurance, according to the Insurance Council of Texas, almost all of which is through the FEMA run National Flood Insurance Program (NFIP).
AIR said Harvey may be a catalyst for lawmakers to reform the NFIP programme – which is to be reauthorised at the end of September – as the hurricane could push the programme against its borrowing limit of $U.S. 30 billion.
In Harris County alone—home to Houston—the NFIP holds more than 240,000 policies, representing more than $ U.S. 60 billion in coverage. As we wrote earlier today, if the NFIP suffers more than $4 billion of loss from Harvey, then private market reinsurance will help it to pay some of its claims.
AIR’s $U.S. 1.2 billion to $U.S. 2.3 billion wind and storm surge insured loss estimations include onshore residential, commercial, and industrial properties and their contents, automobiles, and time element coverage – additional living expenses for residential properties and business interruption for commercial properties.