AIR Worldwide Updates Hurricane Maria Loss Estimate
Catastrophe modeling firm AIR Worldwide has updated its loss estimates for Hurricane Maria, reporting that insured losses in the Caribbean will be between $27 billion and $48 billion.
Losses from Maria in Puerto Rico alone are estimated at between $25 billion and $43 billion, according to the firm, a division of Verisk.
In September, AIR estimated that industry insured losses for Hurricane Maria in the Caribbean would be between $40 billion and $85 billion.
AIR said its revised estimate came after re-examining Hurricane Maria’s meteorology, analyzing 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. AIR said a re-examination of the storm parameters revealed lower wind speeds than previously estimated, particularly in and around San Juan, as well as a narrower overall wind footprint.
AIR said that a significant portion of the modeled losses for Puerto Rico are generated by the industrial line of business, which comprises a wide variety of industries and physical assets. However, the industrial line also accounts for much of the remaining uncertainty in the loss estimates, particularly as it relates to business interruption losses.
Claims will continue to develop over the course of the next six to eight months, largely as a result of continuing business interruption 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 labor and materials that is often observed in the aftermath of major catastrophes—will play a role in ultimate insurance payouts, according to the modeling firm.