Major Hurricane Idalia insured losses to hit $3bn-$5bn: Moody’s RMS

Major hurricane Idalia will render private market insured losses in the range of $3 billion to $5 billion, with a best estimate of$3.5 billion, accounting for damages from wind, storm surge, and rainfall-triggered flooding, according to leading cat risk modelling firm  Moody’s RMS.

Additionally, Moody’s RMS estimates losses to the National Flood Insurance Program (NFIP) could be in the range of $500 million, primarily in Florida.

Estimates of insured wind and storm surge losses from Idalia are based on analysis of ensemble footprints in Moody’s RMS Version 23 North Atlantic Hurricane Models. These ensemble footprints are reconstructions of Idalia’s hazard that capture the uncertainties surrounding observed winds and storm surge.

Moody’s RMS developed and validated the wind, storm surge, and inland flood reconstructions and corresponding loss estimates using publicly available data, including wind station observations, river gauge water level data, web reconnaissance, and analysis of aerial imagery.

Jeff Waters, staff product manager, North Atlantic Hurricane Models, Moody’s RMS, said: “Major Hurricane Idalia could have been much more impactful had the storm taken a different track or not weakened just before landfall. As a result, the tight gradient of damaging winds combined with limited exposure and low flood take-up rates in the worst-affected area should reduce the overall level of insured losses.”

“Nevertheless, we expect this event will test Florida (re)insurers on the heels of new legislation passed over the last several months to stabilise the market and curb the impacts of social inflation.”

Estimated losses reflect property damage and business interruption to residential, commercial, industrial, watercraft, and automobile lines of business, and consider sources of post-event loss amplification (PLA), inflationary trends, and non-modeled sources of loss.

While insured losses from Idalia will be driven by wind and storm surge, flood could contribute up to a third of the total event losses, Moody’s RMS said. Insured wind and NFIP losses will be driven by residential lines, while private market water losses will be dominated by commercial and automobile lines, mostly in Florida.

Julie Serakos, senior vice president, Moody’s RMS, added: “Prior to Idalia, Florida’s ‘Big Bend’ region was largely untested by landfalling major hurricanes. Much of the building stock affected by Idalia is older and built before the onset of statewide building codes during the 1990s. However, wind observations from the event suggest Idalia’s wind speeds were just around the design windspeed levels for the region. In addition, newer roofs on many properties installed in recent years after Hurricanes Irma and Ian should help minimize extensive damage in Florida.”

“As for water impacts, Idalia caused significant storm surge-related damage in several areas along the Florida and southeast U.S. coastlines. For inland flooding, while it was wide in its extent, it was nominal in severity.”

Rajkiran Vojjala, vice president, model development, Moody’s RMS, commented: “While post-event loss amplification is typically nominal for such low magnitude events, we must consider the ongoing effects of inflation and residual impacts from Major Hurricane Ian on claims severity for Major Hurricane Idalia.

“Construction costs have come down from record levels in recent years, but they remain higher than their long-term averages. Additionally, Florida requires state-certified contractors to complete roof repairs, and the widespread extent of wind damage in Idalia may exacerbate the existing fragile labor situation in Florida and lead to an unexpectedly long recovery.”

Hurricane Idalia was the ninth named storm of the 2023 North Atlantic Hurricane Season, the third hurricane, and the second named storm to make landfall in the US this season.

Idalia was the first major category hurricane to make landfall in the Florida Big Bend region since recordkeeping began in 1842, and the eighth major hurricane to make landfall in the continental US since 2017 (Harvey, Irma, Michael, Laura, Zeta, Ida, Ian).

Idalia made landfall on August 30, 2023, near Keaton Beach, Florida as a Category 3 hurricane on the Saffir-Simpson Hurricane Wind Scale, with maximum sustained winds of 125 miles per hour (205 kilometers per hour), resulting in the fourth consecutive year that a major hurricane has made landfall in the US.

The storm brought a combination of strong winds, storm surge, and heavy rainfall to coastal and interior areas of Florida’s Big Bend region, before weakening and moving inland through parts of Georgia and the southeast US, including the Carolinas. Prior to impacting the US, Idalia hit parts of Cuba as a Category 1 hurricane.

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