Harvey economic losses may reach $90bn
Economic losses caused by wind, storm surge, and inland flood from Hurricane Harvey could be as high as $70-90 billion, according to data provider RMS.
Hurricane Harvey developed into a Category 4 and made landfall near Rockport, Texas on Friday, Aug. 25. In addition to direct losses, the storm is causing heavy rainfall and storm surge-related losses along coastal Texas.
The majority of the overall loss is likely to be from inland flooding in the Houston metropolitan area, where there are over seven million properties representing over $1.5 trillion in value, RMS said in an Aug. 30 statement.
Considerable uncertainties around final losses remain, as the flooding is still ongoing and will take some weeks to come to an end, according to the statement.
Michael Young, RMS head of Americas climate risk modelling, said: “Hurricane Harvey has already broken all U.S. records for tropical cyclone-driven extreme rainfall, with observed cumulative amounts of 51 inches. And with the rain still falling heavily and the waters rising, the situation is too fast-moving to be stating with certainty what the losses in Texas could be.”
The majority of the losses will be uninsured, given that private flood insurance is limited, the company said. Although the insured losses will remain uncertain for some time they will be significant, as private coverage is not consistent: there are significant variations in how coverage is provided by individual insurers.
Coverage for some of the residential losses has been provided by the National Flood Insurance Program (NFIP). There are approximately 500,000 NFIP policies that will be affected by Harvey, and the losses to the program will be very significant – potentially the largest event to date. However, NFIP penetration rates are as low as 20 percent in the Houston area, and thus most of the losses will be uninsured. This will rekindle the public policy debate around this issue.
Get the latest re/insurance news sent to your inbox every day - Sign up to our free email newsletters
Today’s stories
NFIP reinsurers may face total loss due to Harvey
Texas chemical factory likely to explode due to Harvey
Prudential Group Insurance rehires former exec as chief underwriting officer
Lloyd's premium may decline in 2017/18
Neon hires Hiscox underwriter to further build property team
Partner Re Bermuda general counsel moves to Hamilton Insurance
Navigators reveals new Liberty hire and promotions in US marine division
