RMS estimates Michael losses at up to $10bn

Published in: Risk, Cat risk, US - Canada - Bermuda

Companies: RMS

Catastrophe risk modelling firm RMS has estimated the insured loss from hurricane Michael at between $6.8bn and $10bn.

This estimate represents losses associated with wind and storm surge damage across Florida, Georgia, and other parts of the Southeast and Mid-Atlantic regions, including losses to the National Flood Insurance Program (NFIP) estimated at $250m-750m.

The California’s firm’s figure is consistent with rival estimates from AIR Worldwide ($6bn-10bn) and KCC (close to $8bn), both of which exclude the NFIP. 

According to RMS, most of the losses will arise from wind damage ($6.4bn-8.7bn) while storm surge accounts for relatively little ($400m-1.3bn) compared with other recent hurricanes Harvey and Florence where inland flooding was the main driver of loss.

The estimate includes property damage and business interruption across residential, commercial, industrial, and automobile lines of business. It also factors in post-loss amplification and accounts for non-modelled losses. RMS expects the majority of insured losses to impact residential lines.

RMS estimated economic losses at between $8.5bn and $14bn. At least 50 deaths have been associated with the storm, including 35 in the US.

Michael made landfall on 10 October near Mexico Beach, Florida as a category 4 storm, although RMS vice-president of modelling, Mark Powell, said he would not be surprised if it was reclassified as category 5.

“This event reminds me of the damage level we saw in hurricane Andrew back in 1992. The intensity of Michael caused significant damage, however Michael was relatively concentrated, unlike hurricanes such as Florence or Harvey which were spread out over a larger geographical area.”

Christopher Cundy