Industry analysts are now predicting a potential insured loss scenario of $10 billion to $30 billion as Hurricane Dorian intensifies and continues on its path towards Florida.
Dorian has now strengthened to wind speeds of 85mph, and looks set to make landfall on the east coast of Florida as a major Category 3 hurricane on Monday morning or late Sunday night.
Some forecasts are also warning of a potential double-landfall, as Dorian could move across the Florida peninsula and enter the Gulf of Mexico, before turning to the north and making a second landfall in the Florida panhandle region.
This scenario could entail significant losses for the insurance and reinsurance industries if Dorian reaches Category 3 status, which would mean wind speeds of between 111mph and 129mph.
Florida Governor Ron DeSantis has already told residents in the storm’s path to prepare for “strong winds, heavy rain and flooding,” with significant storm surge also expected.
Credit Suisse believes a major landfall could drive industry losses of up to $30 billion, based on a comparison with Hurricane Michael in 2018, which caused insured losses of $11 billion.
Dorian currently threatens an area with much greater insured values in its path and, with four days still to go until projected landfall, there is still a chance that the storm could move further south towards even more high-value areas, such as Ft. Lauderdale and Miami.
Weather forecaster Accuweather is more conservative in its estimates and pegs economic losses at up to $15 billion, but this could prove too low considering how Michael, Matthew and other storms have played out in recent years.
As we reported yesterday, analysts at Keefe, Bruyette & Woods (KBW) believe that the majority of losses from a major Florida landfall would fall to reinsurers, rather than the primary insurance market.
However, most analysts have yet to release any kind of industry loss forecast, with meteorologists warning that it is still too early to predict exactly how the storm may develop.
According to the most recent data from the National Hurricane Center (NHC), Dorian is moving northwest at 13mph, with this motion expected to continue through Friday.
On this track, Dorian should move over the Atlantic well east of the southeastern and central Bahamas on Thursday and Friday.
The storm seems to have largely spared Puerto Rico, which had been bracing for a Category 1 landfall today. However, the territory’s smaller islands, Vieques and Culetra, were still battered by heavy rain and high winds.
“Dorian should continue to move near or over the U.S. and British Virgin Islands this afternoon and then move over the open Atlantic well east of the southeastern Bahamas,” the NHC said in a statement.
Hurricane-force winds currently extend outward up to 15 miles from Dorian’s centre, with tropical-storm-force winds extending outward up to 90 miles.
The minimum central pressure of the hurricane has also dropped 991mb, and the structure has become more arranged, with a more defined eye emerging.
Now clear of the Caribbean Islands, Hurricane Dorian has plenty of time to intensify further as it crosses warm sea surface temperatures (SST’s) on its way towards the Bahamas and Florida.
Almost all potential scenarios now point to a U.S coastal landfall, with Florida remaining the focus, and the possibility of a double-landfall also growing.
At present, forecasts show Dorian bringing potential rainfall of up to 6 inches in the central Bahamas, and up to 12 inches in the US, which could cause life-threatening flash floods.
Sea swell is also expected to begin affecting the east-facing shores of the Bahamas and the southeastern US coast over the next few days, which could cause dangerous surf and rip current conditions.
Click here to read the latest Reinsurance News updates on Hurricane Dorian.
