Analysts at KBW have estimated that insurance and reinsurance industry losses from Hurricane Ian will be in the “low $30 billion range.”
Source: Nasa Earth Observatory/AFP
Although the storm is still ongoing, KBW believes that the hurricane’s relatively rapid weakening suggests insured losses closer to the lower than higher end of the $32.5 billion to $40 billion range previously estimated by KCC and RMS.
Additionally, Florida’s residual market insurer, Citizens, has reported a preliminary estimate of a $3.8 billion loss, which analysts say signals a similar level of overall losses, based on Citizens’ market share of 12-13%.
Citizens’ estimate is currently based on 225,000 claims potentially in the path of the national weather service NWS hurricane track, and takes into consideration the company’s policy footprint in the expected hurricane affected areas, at the time of that forecast.
However, Citizens added that these are preliminary estimates and may change significantly in the coming days and weeks.
Additionally, while the current Citizens figures do align roughly with preliminary industry estimates by KCC, it’s worth noting that these figures came out on September 27th, after which Ian strengthened significantly before making landfall further south than anticipated.
One of KCC’s modelled loss estimates showed hurricane Ian making landfall near Longboat Key and causing $30 billion of insured loss from wind, with another $2.5 billion from flooding as it tracked inland towards the northeast, while a second scenario predicted a landfall further south, around Venice, suggested a $17 billion insured loss from hurricane Ian’s wind damage and $2 billion from flooding.
In reality, Ian made landfall even further south in the Cayo Costa area, bringing maximum sustained winds of around 155 mph that caused widespread flooding, property damage, and power outages.
Extensive flooding was also reported in Orlando and Port Charlotte, leaving 2.5 million residents without power, and 12- to 18-foot storm surges were reported near Fort Myers, with damaged hospital roofs point to significant losses that should reinforce reinsurance demand while eroding reinsurance capital.
This will likely result in some major recalculations of loss estimates, with reports that some catastrophe risk modelling specialists have now been hinting at a potential re/insured loss of more than $50 billion, according to our ILS-focused sister publication, Artemis.
Nevertheless, even at the lower $30 billion range, KBW analysts expect Ian’s losses to add momentum to 2023 property catastrophe reinsurance rate increases, and to further disrupt Florida’s already-challenged property insurance marketplace.
And looking ahead at the path of the storm, The National Hurricane Center expects Ian (now a tropical storm) to move northeastward across central Florida and into the Atlantic Ocean before veering westwards and hitting South Carolina by Friday afternoon.
Accordingly, state of emergencies have been issued in Georgia, Virginia, and the Carolinas as experts warn that the dangers from hurricane Ian are far from over.
