4 September 2017Insurance

Hurricane Harvey top three loss event for NFIP

Hurricane Harvey will be a top three loss event for the National Flood Insurance Program (NFIP), according to analysis by risk modelling firm RMS.

RMS reported last week that, based on its modelling, the overall combined wind, surge, and inland flood losses from Hurricane Harvey will be $70-90 billion. Economic losses from Harvey will outstrip insured losses by a considerable margin because the uptake of private flood insurance in the US is very limited, it pointed out.

It has also stated that Harvey will produce at least $4 billion in flood claims, triggering the NFIP reinsurance programme.

Now, in the context of the NFIP up next month for reauthorisation and reform, RMS has revealed further insights into the performance of the NFIP based on a 2015 Freedom of Information Act request relating to its exposures.

Using this exposure, RMS estimates that the gross losses accrued in the NFIP will be between $7-10 billion. About 40 percent of those claims are expected to come from Harris County alone, it said.

On the basis that an average paid loss is around $65,000, RMS has estimated that the programme will receive approximately 100,000 to 150,000 claims from this catastrophic event.

“Assuming our estimates are reasonably accurate, it seems clear that Harvey will be a top three loss event for the programme,” RMS said.

“While it appears unlikely the NFIP’s losses in Harvey will be as great as those sustained as a result of Hurricane Katrina (2005), there is no reason to assume that they will not be as large if not larger than those from Superstorm Sandy (2012).”

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More on this story

1 September 2017   Total flood losses stemming from Hurricane Harvey could reach almost $40 billion but some 70 percent of these losses could be uninsured, according to CoreLogic, the property information and analytics provider.
31 August 2017   Reinsurers providing the National Flood Insurance Program (NFIP) with flood reinsurance protection could suffer a total loss given the magnitude of Harvey flooding, Fitch said on Aug. 30.