On the back of hurricane Harvey, major hurricane Irma has battered parts of the Caribbean and maintains its track towards the state of Florida, with analysts at Peel Hunt citing a $131 billion Lloyd’s Realistic Disaster Scenario (RDS) for the storm, should it make landfall in Miami-Dade.
Hurricane Irma remains an extremely dangerous category 5 storm, packing sustained winds of 180 mph, with higher gusts and a minimum central pressure of 921mb. The storm has already battered the Leeward Islands of the Caribbean, and is en route to pass close to the Dominican Republic, Turks & Caicos, the Bahamas and Cuba around Friday, before heading to the U.S. coastline.
The latest track, and as highlighted by Peel Hunt in its Lloyd’s insurers industry note, shows a potential worst case scenario with a Miami landfall this weekend, although the track is still subject to change as the storm develops.
“It is too early to know if and where Irma will make US landfall, but there is a high probability it will in the Miami-Dade area. The Lloyd’s Realistic Disaster scenario is for a $131 billion Florida Miami Dade windstorm loss,” explains Peel Hunt.
Broken down by segment, Peel Hunt explains that of the potential loss from Irma, $66 billion will come from residential property, $65 billion from commercial property, $2.25 billion from auto, and $1 billion of marine losses.
“Florida is one of the best modelled and stress tested catastrophe insurance markets and the Lloyd’s Market will be well prepared to absorb the inevitable losses that a Miami landfall will bring,” continues Peel Hunt.
The economic and insured loss totals from hurricane Harvey remain unclear, and while it’s expected to be an earnings event for the reinsurance industry as much of the loss falls on primary players, it has eroded some firms’ catastrophe budgets for the year, according to reports.
Peel Hunt highlights this point, and warns that a major loss in Florida “would erode cat budgets completely and drag returns down to around break even in our Lloyd’s Insurer’s stress test scenarios…”
A major loss event in Florida would certainly test the resolve of traditional reinsurers and the alternative reinsurance capital players, and with the storm maintaining its Florida coastline track, it will be interesting to see how companies and the broader marketplace reacts to what could be a significantly dangerous landfalling hurricane in the U.S.