Hurricane Florence wind & surge insured loss potential put at $3bn to $5bn: Corelogic

Hurricane Florence could result in between $3 billion and $5 billion of insured wind and storm surge losses, according to analysis by risk analytics firm Corelogic.

The data analysis shows that insured property losses for both residential and commercial properties from hurricane Florence, which is currently pounding the North Carolina coast, could potentially result in an estimated $3 billion to $5 billion of losses from wind and storm surge.

Corelogic noted that this estimate does not include insured losses related to rainfall, river or other flooding, a full rainfall footprint would be required to come up with a total insurance industry loss impact for the hurricane.

Corelogic said that as many as 250,000 homes in North Carolina could be affected by the hurricane.

The total estimate does include storm surge related NFIP flood losses, the company said.

It remains very difficult to forecast insurance, reinsurance and of course ILS market losses from hurricane Florence, particularly as the storm is expected to result in more of a water related loss than wind.

However, Corelogic’s data is useful in helping the reinsurance and ILS markets in particular understand their exposure, as most of the losses that flow through towards insurance-linked securities (ILS) funds would be expected to result from wind and surge damages.

A 10 foot storm surge has already been reported in some areas of coastal North Carolina, with widespread lower figure inundations, hence surge is likely to be a reasonable component of the loss in some counties.

But with wind speeds dying down the property damage from hurricane winds is likely to be confined to a smaller area than originally thought, hence the inland flooding may end up being the biggest drive of hurricane Florence industry losses.

At $3 billion to $5 billion of industry loss from wind and storm surge, Florence is unlikely to pose too much difficulty to the ILS fund market. However the NFIP’s FloodSmart Re cat bond does remain an outlier due to being at-risk from the eventual inland flood damages.