RMS Range of Insured Losses From Ian $53-$74B, ‘Best Estimate’ of $67B
Catastrophe modeler RMS chimed in on Hurricane Ian with an estimate of private-market insured losses from the storm of $67 billion.
The Moody’s Analytics company said the amount was a “best estimate,” and also supplied a range of between $53 billion and $74 billion. RMS said the National Flood Insurance Program could see another $10 billion in losses.
The RMS estimate includes insured wind and storm-surge losses from property damage, contents, and business interruption for residential, commercial, industrial, automobile, infrastructure, watercraft, and other specialty lines in Florida, South Carolina, North Carolina, Georgia, and Virginia.
“Aside from property damage, we expect significant losses to automobile and watercraft lines in this event due to fewer evacuations in the worst-affected region,” said Jeff Waters, staff product manager, product management, RMS.
The estimate also considers the impacts of post-event loss amplification, inflation, and non-modeled sources such as the Assignment of Benefits and litigation, RMS said.
“Ian was a historic and complex event that will reshape the Florida insurance market for years to come,” said Mohsen Rahnama, chief risk modeling officer at RMS, adding that the firm’s reconnaissance teams were critical analyzing losses due to the the complexity of the hurricane and the multiple drivers of loss.
RMS said the same structures impacted by hurricanes Irma in 2017 and Charley in 2004 were affected again by Ian. Those that were repaired to recent building codes performed well but those that were not saw damage resulting in total loss or the need for roof replacements.
In addition, Rajkiran Vojjala, vice president of model development, said: “A sizable portion of the losses from Ian will be associated with post-event loss amplification and inflationary trends. A combination of high claims volume, additional living expenses related to the massive evacuation efforts, prolonged reconstruction in the worst-affected areas, and the prevalent higher-than-average construction costs will contribute to a significant economic demand surge.
“We expect the Assignment of Benefits and litigation – despite recent legislative efforts to curb their misuse, to influence the overall loss severity, especially in cases where coverage leakage of water losses onto wind-only policies is likely. All these social inflation factors will lead to complex and lengthy claims settlement processes in this event, amplifying loss adjustment expenses and corresponding claim costs.”
RMS expects the majority of total insured losses from Ian to be driven by wind. However, a sizable portion (up to 25 percent) of the total insured losses (incl. NFIP) will be driven by surge and flood. While insured wind losses and losses to the NFIP will be driven by residential lines, surge and inland flood losses to the private market will be dominated by commercial, industrial, and automobile lines.
Other loss estimates from Hurricane Ian: