Florida is facing a significant hurricane threat this week, as tropical storm Idalia is forecast to become hurricane Idalia later today, before then heading over extremely warm Gulf waters towards Florida’s coast where the NHC forecast it could be near or at major intensity by landfall.
Update: The latest NHC advisory, published since our article, states “Idalia is now forecast to become a major hurricane before it reaches the Gulf coast of Florida.”
For the insurance and reinsurance industry, hurricane Idalia’s forecast landfall in Florida could be a decisive blow, if the industry loss proves relatively significant, with ramifications for carriers and the hard market being sustained.
There is great uncertainty at this stage over how significant an insurance market loss hurricane Idalia could cause, given the uncertainty in the track and intensity forecast this far out from land.
But, as tropical storm Idalia has meandered around the Yucatan peninsula over super-warm ocean temperatures, it has organised itself and the forecast models intensity predictions have been rising.
Currently, tropical storm Idalia has 60 mph sustained winds and higher gusts, but is anticipated to become a hurricane within hours. You can see the latest location with wind speed forecast in Tomer Burg’s forecast map for Idalia below:
Once Idalia becomes a hurricane it will move into the Gulf of Mexico where there is little to slow its intensification aside from a chance of dry air, with wind shear expected to become more conducive to storm development and intensification as well.
As a result, the latest NOAA NHC forecast advisory states, “Strengthening is forecast, and Idalia is expected to become a hurricane later today. Idalia is likely to be near or at major hurricane intensity when it reaches the Gulf coast of Florida.”
As the tracking map above shows, already hurricane Idalia is expected to bring 100 mph winds to landfall.
The NHC’s forecast calls for peak sustained winds of around 110 mph before landfall, with gusts of 132 mph.
But, some of the hurricane models call for higher intensity, with a Category 3 or stronger storm, with model runs showing peak intensity prior to landfall of 140 mph and even more in certain cases.
So, there remains significant uncertainty in just how strong hurricane Idalia can become before reaching the Florida coast, but intensification is expected and as a result hurricane watches are in-force for a wide area of the Florida Gulf coast and Panhandle.
Storm surge is also expected to be significant, with a wide area of the Florida coast now warned of peak storm surge from hurricane Idalia of 7 feet to as much as 11 feet.
The Gulf waters shallow as you near Florida’s coast and so there are concerns of a significant coastal flooding event as hurricane Idalia nears, with water likely to be pushed ashore.
“The risk continues to increase for a life-threatening storm surge and hurricane force winds along portions of the west coast of Florida and the Florida Panhandle beginning as early as Tuesday,” the NHC warns.
Given the wide area potentially exposed to hurricane Idalia’s most significant impacts and the fact there are large differences in the concentration of insured values along the Florida Gulf coast, this does mean a wide range in industry loss scenarios for the insurance and reinsurance community.
At this stage, we need to see how well Idalia navigates the passage between Mexico and Cuba, as land interaction could slow its intensification, while the influence of dry air could also hinder its ability to intensify.
The other scenario is that hurricane Idalia navigates into the Gulf with no hindrance to its intensity, then encounters little to slow its strengthening, under which scenario we could see a very significant major hurricane approach Florida this week with serious ramifications for insurance and reinsurance interests.
As for where losses will hit, it’s still too early for meaningful industry loss estimates, but it is clear that primary insurance companies operating in Florida, as well as Florida Citizens, will likely bear the brunt of the hit from Idalia.
On the reinsurance side, given the higher attachments now in place across the market, primary carriers would be expected to retain more of the losses from any catastrophe event. While, the larger the industry loss the greater the proportion that the reinsurance sector would be expected to bear.
