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RMS says hurricane Nicholas insured loss could reach $2.2bn

24th September 2021 - Author: Luke Gallin

Hurricane Nicholas, which made landfall near Matagorda, Texas as a minimal Category 1 hurricane on September 14th, is expected to drive insurance industry losses in the U.S. of between USD 1.1 billion and USD 2.2 billion, according to analysis by RMS.

hurricane-tropical-storm-nicholas-rainfallThis RMS estimate represents insured losses associated with wind, storm surge, and precipitation-induced flooding, including losses to the National Flood Insurance Program (NFIP).

Nicholas was the fourteenth named storm of the Atlantic hurricane season, and losses estimated by RMS reflect property damage, and business interruption to residential, commercial, industrial, and automobile lines of business, and considers sources of post-event loss amplification.

The catastrophe risk modeller expects the majority of the insured loss, between USD 700 million and USD 1.4 billion, to come from wind and surge losses, based on analysis of ensemble footprints in Version 21 of its North Atlantic Hurricane Models.

The up to USD 2.2 billion loss range also includes USD 200 million to USD 300 million of private inland flood losses, and between USD 200 million and USD 500 million of NFIP losses.

RMS

The NFIP estimate, explains RMS, is for losses in Texas and the Gulf of Mexico region, and were derived using RMS’ view of NFIP exposure based on 2019 policy-in-force data published by FEMA, Version 21 North Atlantic Hurricane Models, and the U.S. Inland Flood HD Model.

Jeff Waters, Senior Product Manager, RMS North Atlantic Hurricane Models, said: “A notable impact from this event is the rainfalls, especially in Louisiana, where many towns and cities are still in the early stages of recovery after Hurricane Ida.

“RMS event response teams estimate roughly 40 percent of postal codes in Louisiana that were impacted by flooding in Nicholas were also impacted by flooding from Ida a few weeks earlier. We expect the overlapping nature of these two storms to further amplify losses, including the risk of rainfall infiltration, and to prolong the claims settlement process.”

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