Otis may become Mexico’s most costly natural disaster
Hurricane Otis looks set to become Mexico’s costliest ever natural catastrophe with insured losses likely to surpass $2.7 billion.
That is according to Steve Bowen, the chief scientist of Gallagher Re, who said in a LinkedIn post that Otis, which came ashore last week near Acapulco, may be the costliest natural catastrophe ever recorded in Mexico.
The storm underwent a 24-hour rapid intensification which caught the city by surprise. The hurricane has been described as a “remarkable and monumental” miss by some in the risk modelling community, as weather models failed to predict its rapid intensification.
“The Mexican insurance industry is facing an expensive event with initial expectations of this being a multi-billion-dollar event and likely surpassing the insured costs in Mexico from Wilma in 2005 ($2.7 billion in today's dollars),” Bowen said.
“Footage from Acapulco shows extensive and widespread catastrophic damage to coastal commercial and residential real estate that will take years to rebuild. Beyond the physical damage, the scope of major damage to regional infrastructure is expected to bring prolonged business interruption.
“There has also been significant damage to regional crops. All of this will lead to high dollar costs and, sadly, extended disruption to local residents.”
Bowen said Otis made landfall as a Category 5 storm, noting: “With a population of at least 1 million people, it marked one of the largest population centres ever directly impacted by a Category 5 storm since Haiyan (Philippines; 2013) or Andrew (1992).”
“Such behaviour is entirely consistent with climate change research and the expectation of a higher percentage of high-end storms,” he said. “More ocean heat - at the surface and at deeper depths - provides exponentially more energy for storms to use as fuel.
“Mexico does not have a level of building codes to withstand coastal wind speeds experienced during Otis,” Bowen added. “While Acapulco has seen improved building codes for seismic activity, that has not translated to modernized wind codes. This left windows, roofs, and siding especially vulnerable to Otis' intensity.
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