Hurricane Ian may cost insurers $57bn

04-10-2022

Hurricane Ian may cost insurers $57bn

Verisk estimates that insured losses to onshore property for Hurricane Ian will range from $42 billion to $57 billion. The industry loss estimate from Verisk Extreme Event Solutions includes estimated wind, storm surge, and inland flood losses resulting from Ian’s landfalls in both Florida and South Carolina.

The loss estimate excludes certain elements, such as losses to the National Flood Insurance Program (NFIP) and any potential impacts of litigation or social inflation, that could cause the total insured industry loss to exceed $60 billion.

Wind damage of $38 to 51 billion comprises the majority of the loss estimate. Storm surge (excluding losses from the NFIP) account for $3 to 5.5 billion of the loss estimate, and inland flood less than $1 billion. Approximately 1 percent of the total industry loss will come from the impacts of Ian’s South Carolina landfall, Verisk says.  

Wind damage in varying degree was observed in all the areas impacted by Hurricane Ian’s windfield. Damage was more severe in and around the areas where Ian made landfall in southwest Florida. It ranged from significant loss of roof covers in residential homes to torn up roof membranes in commercial structures. Extensive damage is also seen to elements of building components and cladding.

Storm surge also caused massive destruction to communities along the western coast of Florida where Ian made landfall. Residential construction in these areas is predominantly founded on slabs which do not afford a lot of elevation above the local ground surface. Surge damage caused collapse of several rows of beachfront residential homes. In some cases, homes were dislodged from their foundations. 

Manufactured homes constitute a significant portion of the residential inventory in southwest Florida when Ian made landfall. Several manufactured home parks in these areas saw massive damage including loss of roofs, damage to wall siding and near total destruction.

Included in Verisk’s estimate are losses to onshore residential, commercial, and industrial properties and automobiles for their building, contents, and time element coverage. The estimate reflects the impacts of inflation on labour and materials over the past two years, as well as the effects of demand surge, when large numbers of property owners look to rebuild at the same time.

Verisk’s modelled insured loss estimates do not include: losses paid out by the NFIP; losses exacerbated by litigation, fraudulent assignment of benefits, or social inflation; loss adjustment expenses; losses to inland marine, ocean-going marine cargo and hull, and pleasure boats; storm surge leakage losses paid on wind-only policies due to government intervention; losses to uninsured properties; losses to infrastructure; losses from extra-contractual obligations; losses from hazardous waste cleanup, vandalism, or civil commotion, whether directly or indirectly caused by the event; losses resulting from the compromise of existing defences (e.g., natural and man-made levees); other non-modeled losses, including those resulting from tornadoes spawned by the storm; and losses for U.S. offshore assets and non-US property.

Verisk, Hurricane Ian

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