AIR Worldwide cuts hurricane Maria insured loss estimates
Catastrophe modelling firm AIR Worldwide has updated its loss estimates for hurricane Maria in the Caribbean to between $27 billion and $48 billion.
Losses in Puerto Rico are estimated at between $25 billion and $43 billion.
In September, Air had estimated insured losses for hurricane Maria in the Caribbean at between $40 billion and $85 billion with Puerto Rico accounting for more than 85 percent of the loss.
The update comes after the company re-examined hurricane Maria’s meteorology; analysing findings from AIR’s damage survey conducted in Puerto Rico in late October; and reviewing the latest information about insurance practices and policies in Puerto Rico.
The reduction in the high end of AIR’s loss estimates is driven primarily by the review of Maria’s intensity over Puerto Rico. A re-examination of the storm parameters, augmented by newly available reports, revealed lower wind speeds than previously estimated, particularly in and around San Juan, as well as a narrower overall wind footprint.
A significant portion of the AIR modelled losses for Puerto Rico are generated by the industrial line of business, which comprises a wide variety of industries and physical assets. However, it is also the case that the industrial line accounts for much of the remaining uncertainty in the loss estimates, particularly as it relates to business interruption (BI) losses.
Claims will continue to develop over the course of the next six to eight months, largely as a result of continuing BI losses. Adding to the uncertainty (and to the estimated range of losses) is to what extent demand surge—which is the increase in the cost of labour and materials that is often observed in the aftermath of major catastrophes—will play a role in ultimate insurance payouts, according to Air.
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